New evidence backs non-cash incentives
by Rob Stonehewer
April 15, 1996 - Strategy Magazine
Opinion

So you think cash motivates? Well think again.

How many times have you heard from incentive houses and trade journals that cash doesn’t motivate?  That it has no “trophy” value. That it just goes to paying bills and that it has a low perceived value.

How many times have you heard from your business colleagues that cash is the only thing that will motivate the salesforce or the trade?

Now there is concrete proof that non-cash awards such as merchandise and travel are more motivational, in fact, nearly 50% more effective, than cash!

The Goodyear Story
According to a recent report in Incentive, a U.S. trade magazine, Tom Gravalos, manager of special accounts marketing for the Akron-based Goodyear Tire & Rubber Co., was continually at loggerheads with senior management because they wanted him to use cash for their incentive programs.

After years of defending his recommendations, he decided to settle the argument once and for all by running a program that rewarded half the participants with cash and half with non-cash awards.

The program, which was designed to push sales of Goodyear Aquatred tires, was targeted at sales associates and managers at 900 company-owned stores and service centres, which were divided into two equal groups of nearly identical performance.

For every 12 tires they sold, one group received cash rewards and the other received merchandise and travel awards of an equal perceived value, structured in plateau levels.

The awards were not assigned a points value, and at each level the awards available varied in price sufficiently so as to make it difficult to establish what they were worth; invariably one of the first things that a participant does on receiving a points-based awards catalogue is value the merchandise.

The program operated for six months during which time both groups received the same level of frequent promotional communications.  At the end of the program the results were compared with the previous six months and the achievements of each group.

The Results
According to Gravalos the results were startling:

“I fully expected the non-cash group to perform better in the program than the cash group, but I was startled by how great the margin of difference turned out to be.”

• The non-cash group out-performed the cash group by 46%
• The non-cash group produced a 37% greater increase in product mix sold vs. the previous six months while the cash group achieved only a modest increase
• The non-cash group generated a 31% return on investment  vs. the cash group with a minus 20% ROI

Goodyear has now become a firm advocate of non-cash incentive programs. Gravalos believes the same results would have been achieved even if the program had been targeted at non-sales employees or at consumers:

“This isn’t a question of who you’re trying to motivate, it’s a question of human nature that transcends most differences that separate people,” he said in this article.

With cash awards, the bottom line is always going to be “How much?” and there is usually never enough money in the budget to buy the level of performance required. 

On the other hand, non-cash awards appeal to the emotions that can provide a dramatic motivational force.

Assuming you have structured your program so the objectives are specific, attainable, well timed, acceptable and measurable, and you’ve communicated with your participants on a frequent basis, then the question participants ask is, “What’s in it for me?” 

Providing your program offers the choice of awards that reflects the needs and desires of your participants, and quality brand names that have been purchased at the right price so as to offer a higher perceived value, then there is no reason why your next incentive program can not achieve results similar to the Goodyear experience.

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