Important Trends in Motivating Sales Channel Performance: How Millennials Can Help Us Adapt to a New Performance Landscape

An IESP Perspective

For brands looking to gain mindshare and loyalty with independent distributors and dealer salespeople, the rules of the game are changing. Traditional “do this, get that” incentive programs are still valuable, but are no longer a differentiator that generates long-term brand loyalty. Distributors, partners, sellers and customers are all looking for “more” from brands.  With their work preferences and values, millennials are helping to define that “more” and may be the spark to help companies move beyond a simple, “coin-operated” approach to sales channels.

A recent article highlights the changes required to engage millennials in the sales force.  

What’s significant about this article is that the same forces that make millennials sell differently are impacting ALL members of the selling and service value chain, not just millennials. The article cites a Deloitte study that “by 2025, 75 percent of the global workforce want to work for organizations that foster innovative thinking, develop their skills, and make a positive contribution to society.” Don’t we all?!

The importance of finding meaning that sustains the “self” in work was brilliantly articulated in the important opus The Why of Work by Dave and Wendy Ulrich in 2010.  It is millennials who are embracing greater meaning and are leading the rest of the workforce toward a new and richer definition of work. Their willingness to vote with their feet – sacrificing the short-term rewards and security of a current job – if they don’t find it, is what makes their generation both unique and very influential.

Other important research helps to reinforce this trend:

  1. For many brands, it’s no longer just about transactions; it’s about relationships. You can’t buy loyalty one transaction at a time. The work of Harvard Business School professors Paul Lawrence and Nitin Nohria suggested that our “drive to acquire” is only part of what makes people perform. There are also important intrinsic drives to bond and to create (develop, learn, make a difference) that need to be nurtured to find meaning in one’s work. If incentive program designers don’t engage that intrinsic side of the person within a program, we’re leaving significant motivators back at the starting gate.
  2. In the act of appreciating performance, it’s no longer about just providing a reward, it’s about creating experiences. In The Experience Economy, Joseph Pine and Jim Gilmore state that “in a world of largely undifferentiated goods and services, experiences are the new source of competitive advantage.” We define reward experiences that don’t change over time as “the Champagne Principle”: the experience of the first sip is the true celebration, but every sip thereafter is not the same. Refreshing your rewards will enhance the experience for repeat winners; however, the more impactful strategy is to design a rules structure that creates more first-time winners (for their first sip of champagne), and more ROI-justified winners overall.
  3. Too often, incentive programs simply create financial goals without thinking about how to enable people to get there. Recent research published in the Journal of Marketing Theory and Practice indicates that the emotional connection to the brand is the highest contributor to sales effort. Understanding the foundational tools and behaviors that lead to deeper levels of connection with the brand is the first step to creating sustainable engagement and to building a higher probability of success.
  4. Finally, don’t focus solely on the outcome for the company. An authentic connection with your channel requires transparency with your goals, and an earnest desire help people achieve their own goals as well. Understanding that effective incentives are not “one-size-fits-all” means getting to know the people in your audience: what makes them tick, what is unique to them, how they feel about your brand. There needs to be a sense of mutual benefit that goes deeper than giving points for selling stuff.

These expectations of channel engagement strategies are not new. What’s been missing is a holistic approach to channel engagement that actually moves beyond traditional incentive program structures. We’ve lacked the diagnostic tools to understand audiences at deeper levels that allow us to engage more intrinsic, personal motivators. And until now, businesses haven’t been forced to change their status quo perspectives. Millennials are just the impetus we need to fill those voids.

Creating more effective programs begins with design. Design thinking is putting yourself in the shoes of the members of your target audience, and evaluating your motivation strategy with a focus on the behaviors and experiences that will help inspire your sales channels to connect with your brand. Research from the IRF indicates that the firms with the highest performing incentive programs spend 43% more on design services. Independent design is the first step to creating more effective incentive programs that focus on individuals and their intrinsic motivators, create meaningful experiences, and build sustainable relationships.

The role of incentives is still an important one, and so is achieving a company’s financial goals. Motivating for high performance requires more than just earning rewards. Businesses have to help both millennials and their peers experience a greater purpose and personal meaning when they interact with and represent your brand. Those that do are already outperforming their competitors financially, and are building relationships that are strong enough to withstand offers from other brands.