This document discusses the importance of incentives in motivating employees and customers. It argues that incentives are more relevant than ever as businesses need to do more with less. Effective incentive programs can increase performance by up to 44% for teams and 25% individually. Such programs directly influence the bottom line by improving engagement, productivity, customer loyalty and profitability. The document provides tips for creating successful incentive programs, including collaborating with employees to design relevant rewards, clearly communicating the program, using a variety of rewards to engage participants, and structuring the program to provide different ways for people to participate.

2. Why are incentives important today,
isn’t pay enough?
Doing more with less, incentives are Engaged employees deliver better
more relevant than ever bottom line results
More and more, the conversations RedBalloon Gallup statistics show that businesses with a higher
consultants have with clients are sales or performance than average engagement score deliver 50% lower
related. Businesses are asking the questions: How can turnover, 56% higher than average customer loyalty,
we sell more? Win more customers? Strengthen our 38% above average productivity and 27% more
relationships and gain market share? How can we profitability. Incentive programs are strategy, not nice-
improve profitability? to-haves.
The underlying question for businesses in challenging Whilst this paper focuses on internal incentive
economic times is; ‘How do we do more with less?’ programs the same principles apply to building an
effective customer program as those created for your
Tougher times, squeezed margins, fewer resources for employees.
the same results and the need to be perceived to be
reigning in any non-essential spend make any non-cash
incentive program seem vulnerable to the untrained eye. Get your clients to willingly shout
about your brand
The perception that incentives are a ‘nice to have’ could
not be further from the truth. Effective incentives deliver In the same way an engaged employee applies
obvious ROI because the programs pay for themselves discretionary effort to the business, an engaged client
when people hit their targets and are busy creating long will become a brand advocate.
term value.
According to a global Nielsen survey2 of 26,486
The basis of most incentive programs is very simple - do Internet users in 47 markets, ‘consumer
this and get this. Incentives are proven to increase team recommendations’ are the most credible form of
performance by up to 44% and individual performance advertising among 78% of the study’s respondents.
by 25%. 1 This obviously has a direct influence on the Given the opportunity, brand advocates willingly
bottom line. recommend the business in favour to other people as
though it is second nature.
There is another dimension (even in tough times) to
consider and that is the effect the program has on A non-cash incentive or reward program is not a
employee and client engagement. A program that works replacement for sales commission. In the same way
will not only achieve short term sales, but will be an the money that its costs to offer a discount or price
inspiration and an investment in the future. cut can be better invested to enhance the long term
customer relationship and the chances that your
customers will refer you to others.
This white paper unpacks the mystery of building a
successful incentive program into five key elements
and demonstrates that process driven creativity is
what really delivers results.
RedBalloon’s domain is all about creating a strategy
that can be easily applied and maximises returns.
RedBalloon consultants work with clients imparting
their experience to achieve extraordinary sales
performance, profit and in doing so establishing the
foundations for unbreakable relationships through
engagement.
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3. Introducing the 5 C’s
How to create incentive programs
with impact and long term results, the RedBalloon way.
Collaboration
. Understanding and involving your audience to ensure that there is buy-in
to your big picture is easy – and makes getting traction easier
Communication
Making sure everyone knows what they need to do, what
they are playing for and how they are progressing – then repeat on loop
Captivation
Using language and prizes that inspire everyone no matter their
age, sex or status – everyone can be a hero
Combination
Getting the structure and reward opportunities right for the business and
right for the players – a program that is greater than the sum of its parts
Celebration
Maximise the ROI with an injection of fun and improve performance,
engagement and the bottom line – story telling is what makes it work
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4. Collaboration
Get buy in from all sides and involve the people at the coalface
in the design of your program from day one.
With your overall company strategy in mind, set program Understanding why people work, gives a better insight
goals that are both achievable and measurable and into how they like to be acknowledged. People want to
identify key areas where your employees can make a be acknowledged in different ways, so give them
difference. Research your audience and understand choice such as having rewards that enable the
what life is like in the field. Get into your customers recipient to spend time with their family, help them
shoes and be present to their decision-making progress their career development, or give them the
processes. chance to experience what they love the most but
never have time for.
TIP: Simplicity of message
Don’t try to solve 800 problems with one
program, choose a few behaviours you want to
Input from the ground up leads to
influence and create long lasting change. innovation
Negotiated targets and rewards criteria are more likely Here’s a simple example of collaboration from another
to be realistic and relevant; the people in your business sphere but it demonstrates why the participant
that talk to clients everyday of the week, the ones who perspective can be so valuable in designing a
are the business day in, day out, are the best barometer solution. Company A decides it will save a few
for your world. James Wright, Account Director at thousand dollars a year by ceasing to buy chocolate
RedBalloon stresses to “know your people. Rather than biscuits for staff. Uproar ensues. Company B asks
going top down, go bottom up. Understand the individual employees for ideas as to how they might shave a few
skills and interests of the team and translate them into a thousand dollars off costs, staff volunteer to give up
strategy that aligns with your business goals.” their biscuits and take it turns to bake instead; cash
saved, relationships strengthened. Give your
Set the rules of the game and stick to them employees the chance to work it out for themselves
and you’ll find you get some pretty incredible results.
Is it too easy to make budget or hit targets? Should
thresholds be higher? Does the program deliver A major factor that has contributed to RedBalloon’s
profitable business and maximise the value of Employee Engagement score of 97%3, and it’s ranking
customers? How much flexibility do you have if the as one of the top ten Great Places To Work4 in
market gets tougher? These are all relevant questions Australia, is collaboration within the organisation.
to be asking, and they apply in all economic climates not Communicating the feeling of ‘we’re all in this
just in a down market. together’ will strengthen teams with a strong mateship
culture, intensifying collaboration and resulting in
Whilst the budget for your incentives will be set by the greater efficiency and innovation.
business with return on investment in mind, think
. Naomi Simson, RedBalloon CEO says “transparency
carefully about what is on offer for each individual. Not
only do you need input from your people on the rewards and accessibility, like ensuring free flow of unfiltered
they want to strive for, you need to make sure the information allows individuals to feel empowered to
perceived value of your rewards amounts to the effort make decisions. It is a question of having a shared
and contribution made by those involved. Use facilitated sense of purpose; people thrive when they feel part of
workshops, surveys and market research to identify the something.“
appropriate opportunities for reward, possible behaviour
changes and the right kind of prizes. Agreeing to the rules of the game before you start
playing, and sticking to them, as much as possible
TIP: Make it achievable for all means you’ll achieve better results and everyone will
Don’t just recognise the top performers - have more fun playing.
include the middle 50% who are capable of
achieving outstanding results too.
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5. Communication
The best performing programs are clearly communicated,
completely inclusive and interactive.
RedBalloon clients are typically spending between Communications Checklist
10-25% of their program budget on communications; not
just to launch activities but sustained efforts to report,
1. Have a plan
reinforce and explain again the nature of the game they
2. Regular reminders of the what, when and how
are asking employees and customers to play.
3. Make it interactive
4. Do not rely on e-mail – use a range of mediums
TIP: Launch it - Live it - Talk about it 5. Keep it fun!
A program must have a life and personality if it
is going to gain traction with your target group.
You’ve got to start the fire, watch it burn and
Responding quickly to pockets of
continually stoke it. disengagement
Tools to bring your program alive One RedBalloon client was recently having specific
issues around ‘buy-in’ to their program. The
Even as an online business, RedBalloon is committed to excitement that had gathered pace in the rest of the
maximising the physicality of client programs in their business was not evident in one particular site and
workplaces by equipping managers and team leaders intervention was required. RedBalloon’s internal
with the tools to bring things to life. creative agency worked with the client’s staff and
combined personal letters, on-site posters, all-staff e-
One size does not fit all, and often segmenting groups of mails and a series of explanatory workshops to
employees or customers is required to ensure everyone engage with a specific demographic and witnessed
is on-board. response rates more than doubled over a four week
period.
As well as from the more traditional communication
options such as emails, posters, post-its, videos, TIP: Keep it consistent
calendars we recommend taking advantage of all media People get disconcerted when you change
options, the majority of which are low cost and usually the program and the rules too often
already in place.
Leadership’s influence on the success of
At RedBalloon we take advantage of all options
your program
available:
 The company blog is a forum for everyone to share
their stories throughout the day, from positive client There is not always the budget available to deliver
feedback, interesting conversations to new actual rewards everyday or every week, but with
business wins. effective two-way communication the perception of
 A flat screen overhangs the reception desk success can be intensified, performance enhanced
displaying the number of people the business has and engagement improved.
given an experience to, in real time. (Plus fun photos
of staff on experiences) Gallup research suggests that we forget a thank-you
 Team Huddles happen every Monday and news is just seven days after it’s given and Hays Group
cascaded throughout the business, if something research shows that 70% of engagement is
great has happened everyone hears about it. determined by the direct manager.
 At monthly company meetings, the CEO Naomi
shares individual good news stories and also reads TIP: Authenticity
out the monthly peer to peer nominations for those Be authentic and honest about why you are
who have demonstrated the RedBalloon values. running the program and about your
objectives.
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6. Captivation
Use a variety of tools and techniques to ensure you touch every
participant of a program regularly.
Find a metric that turns your people on Experiences as rewards are immediately more
impactful than cash. This is largely due to the fact they
The Sales team get that they have to hit their revenue are something we would not normally spend our
numbers. The contact centre get that it is all about disposable income on whereas cash gets lost in bank
getting call handling times down and delivering accounts or eaten up by credit cards and quickly
exceptional service. Be creative and come up with some forgotten.
big picture numbers that get your people excited.
TIP: Give people choice in rewards
Keep the rewards range as broad as
What’s your B.H.A.G?
possible. Not everyone wants to skydive!
You’ll be surprised at the number of
At RedBalloon our ‘Big Hairy Audacious Goal’ is to
participants who want the opportunity to
change gifting in Australia and New Zealand forever and
enjoy their reward with a loved one, friend,
when we’ve delivered 2.2m experiences we will have
family or even colleagues.
done it! The big screen in the office tells us how close
we are getting and everyone no matter what they are
doing at work knows they are contributing to this end. Make dreams come true
 How many more customers do you want to win? Incentives and reward programs are as much about
 How many widgets could you sell? acknowledgement as they are about prizes or
 How many on-time deliveries can you achieve? commissions. The Wishlist feature on the RedBalloon
program is one of the most powerful ways to capture
Telstra Business recently saw an uplift of 10% in sales the individual’s imagination. Each person creates a
as a result of their RedBalloon incentive program. Wishlist of their dream experiences from RedBalloon’s
Georgia Lee, General Manager of Sales Programs at selection of 2,500. They are updated every time they
Telstra Business said “it created excitement because it receive points (incentives) from their manager, telling
was something different that everybody could relate to. them how much closer they are to achieving their
It made the actual campaign about Telstra Broadband dream. Managers also have the visibility of knowing
stand out amongst many other internal campaigns going their employees Wishlists and being able to give
on at the same time”. specific rewards for the experience of their dreams.
Another client program recently delivered 1,000 extra The role of the Executive Sponsor
customers, which equated to a 25% uplift in trade sales
and sending over three quarters of their sales team on The Executive Sponsor or Senior Level figure is
experiences. crucial for any incentive program to achieve maximum
results. It is this person who needs to launch the
Why experiences as rewards? program, defend the budget at the board table and be
the visionary for its impact across the business.
RedBalloon use experiences as the prizes in our
programs because they are proven to work best and Recently to launch a program, RedBalloon filmed two
they are more cost effective. As a comparison, it takes Senior Execs from a Financial Services organisation
an increase of up to 8% of an employee’s salary to having a helicopter lesson and flying a Tigermoth.
change behaviour and only a cost of 4% of the They were just doing something they had always
employee’s salary if you are using non-cash incentives wanted to do and having fun, at the same time
as the lever to influence5. delivering an important message to their people. It’s
stories like these that entices others in the business to
keep adding to their wishlists and striving to achieve
more.
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7. Combination
Structure your program with a combination of reward goals to
engage with as many participants as possible.
Playing with your employees Playing with your customers
There are four central combinations available with any When we apply the concept of combination to a
internal incentive program, Structured or Ad hoc; and customer incentive program the central tenants are
Individual or Team. Instant gratification VS Earned gratification; and
Something for everyone VS Something for a few.
The best performing programs include elements of all
four because they are capable of engaging with as many The mix between the four depends on a number of
of the potential players as possible by offering multiple factors:
ways to win.
1. Purchase price and expected frequency
STRUCTURED ADHOC 2. Customer demographics
3. Budget constraints and desired ROI
4. Relationship with audience
 Revenue based  CEO special
targets each quarter recognition
Whether your mechanic is a gift with purchase, new
/ annually for  Deal of the week in
business referral program or game of chance, the age
individuals and the each state
old question “what’s in it for me?” needs to have a
team  Peer to Peer support
compelling answer.
 Number of decision  Largest/most
maker presentations profitable client to
The point about combination, without complicating the
delivered date
rules of the game or muddling the communication is
 New clients signed  Most creative pitch
that it provides for a number of different games within
 Number of service or presentation
the game; there will always be some good news
contracts renewed  Best customer
stories to share across the team or channel to keep it
service
fresh and the momentum going.
RedBalloon ran a promotion through a client’s
Mix it up distributor channel recently where every invoice for a
specific product was entered into a monthly draw for
By offer a variety of individual and team prizes you can three months. By the end of four weeks the client’s
keep employees engaged in the incentive. We play this sales team had real winners to talk to their customers
at RedBalloon across our non-cash incentives by mixing about and drive more unit sales. At the end of the
up the experiences delivered through our points quarter every invoice went into a grand draw with a
program, with tactical milestones along the way. fantastic story to replay to the whole channel once the
winner has been of their experience of a lifetime.
For example every time someone writes the largest
invoice ever, we celebrate with French champagne for
the whole business – it is team effort after all! This type TIP: Instant wins work
of social recognition is just as important as the tangible A guaranteed reward or a handsome instant
reward on offer. Every few months there is an win in relation to the products value is the
opportunity for each team to celebrate achievements most desirable consumer incentive.
together, and each trimester and annually we share in a
company wide experience.
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8. Celebration
Have some fun and celebrate to reinforce success,
improve engagement and to maximise the ROI
Maximising the ROI and performance with an injection A few ideas to consider
of fun allows you to deliver an incentive program that
ticks all the performance improvement boxes and At RedBalloon we are continually coming up with
enhances employee and client engagement. exciting new ideas to support our client programs and
here is just a few of these.
You have invested in stories – so tell them,
again and again  Landed helicopters outside a conference in the
Barossa Valley and whisked two unsuspecting
As human beings we replicate the behaviours of those employees off for adventure to get the stories
around us that are applauded and receive praise. It’s started
pretty simple stuff really and it began in the playground
at school.  Built SMS into a points program so that every
time the sales team reported closing a deal their
If someone does something good and is made a hero of Director responded with an uplifting message
then we are likely to copy their behaviours so we can be
a hero too.  Added landing pages into program websites
where employees talk about their RedBalloon
By developing an incentive program and a experiences and the fun they have had
communications strategy to support it, that captures and
replays hero like behaviours to a wider audience by  For Macquarie University we created a mini-
celebrating their achievements you’ll ensure that your experience Expo with sword fighting, sushi
investment is maximised. making, massaging, circus skills training and a
whole lot more to bring a program to life for over
Using RedBalloon’s range of experiences with 100 managers
something that appeals to everyone as your rewards or
prizes is a double whammy for ROI. People love to share  Abbott Pharmaceuticals use ‘Roving Reporters’ to
their stories about they do with their rewards and will collect success stories and experience
share the reasons why they were rewarded too. testimonials and replay them across the business.
Story telling is how we learn about each other and who  Cummins Power use Wishlist and redemption
we are, so we develop stronger ties and greater levels reports to create email communications that
of engagement. inspire extra sales efforts at the end of the period.
TIP: Use the power of conversation  Ericsson runs roadshows to communicate the
It’s not what you tell them, but what they tell rewards on offer in their Excel program to make
you that propels your program. What people in the link between discretionary effort and having a
the corridors laugh about and compare with good time.
each other – experiences they did on the
weekend, hero boards, photos, and stories.
TIP: Go for it!
Don’t be afraid to think big and try something
new. Remember, if you do what you have
always done, you’ll get the results you’ve
have always got. Most importantly have fun
in the process!
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9. Just to recap…
Good incentive programs look at the behaviours of all the stakeholders and the ripple
effects those behaviours have. Good incentives seek to permanently change behaviour to
win market share, improve processes or relationships with lasting impact through the
activity chain.
The programs that RedBalloon support our clients with, are always designed with the long
term relationship in mind, to add value rather than displace it and contribute to sustainable
business growth.
Businesses in the know are using non-financial incentive and reward programs as the
cornerstone of their ‘do more with less’ strategies. A recent study by the University of
Chicago6 showed non-cash incentives were 25% more powerful at boosting performance
than cash incentives.
The process RedBalloon employs to deliver incentive programs includes facilitated
workshops to aide program design, integrated communication strategies aligned to client
culture and regular review and refresh of activity.
About RedBalloon for Corporate
RedBalloon Corporate transforms workplace cultures through Employee Engagement,
Incentive and Reward and Recognition Programs and Sales Promotions. Using
RedBalloon’s unique resource of over 2500 amazing experiences in Australia and New
Zealand we specialise in creating attachments between employees and their employer
and winning clients more sales and new customers.
Contact us for more information and case studies:
AUSTRALIA 1300 850 944 query@redballoon.com.au redballoon.com.au/corporate
NEW ZEALAND 0800 555 029 query@redballoon.co.nz redballoon.co.nz/corporate
References
1. Stolovich, H, Clark R, & Condly, S. Incentives, Rewards and Workplace Motivation (2002) Society of Incentive & Travel Executives Research Foundation.
Sourced from Iloverewards.com Nov 2008
2. Word of Mouth the Most Powerful Selling Tool, Nielson Online Global Consumer Study (April 2007)
3. International Human Capital experts Hewitt Associates awarded RedBalloon with an engagement score of 97% in 2008, the average score in Australian
businesses is 54%.
4. The Great Places To Work Institute survey involved 220 Australian businesses. RedBalloon was named the ninth Best Place to Work in Australia in April 2008.
5. Jeffrey, S Dr. (2004) The Benefits of Tangible Non – Monetary Incentives Study, University of Waterloo
6. University of Chicago study, 2004 sourced from Increase Employee Performance by Meeting Psychic Income Needs, www.globoforce.com Nov 2008
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