by Paul Hebert, VP, Individual Performance Strategy with contributions by Jonathan Irvine
Think for a minute about being a normal, everyday, doesn’t-travel-the-world-all-the-time person (like a lot of us, actually). Now imagine you’ve been told you’re going on a 5-day, 4-night trip to a five-star resort in an exotic, distant, tropical locale. You’d be thrilled! Fact is, most people would be thrilled with 2 nights in Daytona Beach, right? So, a fabulous trip like the one described would feel pretty luxurious – and aspirational. Well, that same luxury principle applies to Individual Incentives, too.
Incentive Reward Currency
One of the core elements of an individual incentive program is the use of non-cash currency – i.e. “points.” Points are used to keep the incentive program from becoming confused with ongoing compensation. By using points, you can start and stop a program without impacting the participant’s standard of living.
When your organization simply uses cash for an incentive, it can unintentionally create a very real problem for an employee or channel partner. They might come to see that little extra cash as a “given” and make decisions on what to buy – or even borrow – assuming that money will always be there. Until you stop the program. Yikes. See the problem? Using points means the participant can’t fall into that trap.
Another big reason to use points is that it helps the participant focus on redeeming for things they wouldn’t normally use their own money to buy. It’s easy to say “no” to that $400 Bose Clock Radio, or that $800 Gucci handbag when you have to decide between it and rent. But when you have points that can’t be used for life maintenance it’s easy to say, “I’ve earned that.” The guilt is gone. And that’s huge.
Now, don’t get me wrong, if a participant is really in need of rent money, it might be best to look a little closer at the compensation system instead of running an incentive. But that’s a separate issue. The programs we run are about rewarding people with items they consider luxury goods….things they wouldn’t buy, but really want.
And knowing what to include in a program award catalog is all about understanding what “luxury” is to different audiences and what is viewed as a reward by the program participant. We need them to WANT the items in the catalog – ideally picking a specific item they’re shooting for. Of course, knowing exactly what to include or feature is a science in itself – and something that is constantly changing.
If This Was 1899 We’d All Be Considered Social Elite
Back in 1899 an economist named Veblen wrote about the elites in society. His book was called “The Theory of the Leisure Class” in which he coined the phrase “conspicuous consumption” to describe how “stuff” was used to signal one was “elite” or wealthy. Back in those days, silver spoons and corsets were the signals of wealth. The goal was to own something no one else had – or, in many cases, wouldn’t likely think they needed to own. The idea of buying something with little real value solely so you can show people you own it reminds me of a quote from the standup comedy routine Steve Martin did in the late 70’s after he became a star (Yes, he was the top standup comic long before he was an actor):
“I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”
STEVE MARTIN, actor, writer, comedian, musician
Conspicuous consumption is how people still signal they’ve “arrived.” And, to a degree, you want your award offerings to include these types of items – items that elevate your participants’ status in both their own eyes and their peers’.
But something interesting is happening in the world of material consumption today. Luxury goods are significantly more accessible than in the 1890’s. Investments in mass-production, outsourcing production to China, and the cultivation of emerging markets where labor and materials are cheap has made many goods once considered luxury, more attainable by more people than ever before. If you don’t have a flat-screen HD TV these days, it’s probably because you don’t want one. So, now that everyone can own an electric dog polisher how do the “rich” signal their status?
The New Signals of Wealth
Sure, we will always have the ultra-rich – with their planes and their Bentleys – but the aspirational class is who sets the pace for the majority of the working world. And those folks aren’t buying “stuff” quite as much as they used to.
So, what are they buying to signal their status?
They are spending more on organic, non-GMO foods and pricey private kindergartens for their kids. The aspirational class is looking for something that can’t be “mass produced” because everyone can get that. Therefore, things like craft brews, craft furniture, craft clothes are in greater demand.
Of course, we will always have the basics in our awards catalogs. There will always be significant numbers who want commoditized goods– but we must also be alert to changes in what is considered “luxury goods” and what will excite the imaginations of your participants. No one uses their points to redeem for last year’s model. There’s a reason there aren’t any Ronco Rotisserie ovens in our catalog.
Simply put, when people aspire to a certain reward that they view as luxury, they are actually aspiring to do what you need them to do – which why we implement incentive programs in the first place.