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Puttin’ on the Ritz

Looking to motivate high-profile, highly compensated clients or employees? Traditional incentives aren’t going to get their attention. Here’s how companies can make an impression on their favorite millionaires.

“Show me the money!” That’s what Cuba Gooding’s character, a pampered, high maintenance NFL wide receiver said to his agent, played by Tom Cruise in the 1996 film, Jerry McGuire.

It turns out that life does not imitate art.

Mike Holmgren, head coach of the Seattle Seahawks, learned that lesson the hard way earlier this year when he tried to motivate his already highly compensated players to win Super Bowl XL by showing these millionaires $73,000 – the winner’s share of the Super Bowl money – stacked neatly in one dollar bills. Just to refresh your memory – the Pittsburgh Steelers beat the Seahawks fairly decisively by the score of 21 to 10.

Holmgren should have consulted the motivation industry before he embarked on his flawed attempted to incentivize his team. Any incentive expert worthy of the name would have told him that cash makes a poor motivator. “Sure it’s possible to move the performance needle by offering a cash incentive, but the amount you have to spend makes it prohibitive,” says John Jack, vice president of innovation for BI Performance Services, a Minneapolis-based performance improvement company.

The minimum salary for veteran NFL players is $765,000; that makes the winner’s share of the Super Bowl money less than 10% of their salaries. Try leaving a waiter a tip of less than 10% and see what kind of service you get the next time you dine at his table.

But if $73,000 dollars isn’t enough, what hope is there for any sales or brand manager to use incentives or promotions to motivate highly compensated employees or wealthy customers? Here are some successful examples of how it’s done.

And the Award Goes to…

Anyone who shows up, that’s who. While no one is guaranteed to be walking away with Oscar gold at the Academy Awards, the presenters, entertainers and nominees are all assured of leaving the Kodak Theater loaded down with awards. Only they call it swag, and it comes in the form of an elegant bag filled with all kinds of goodies that has a total dollar value somewhere in the low six-figure range.

This year one of the hottest gifts at the Oscars was Victoria’s Secret’s prize to the best actress nominees: a bra and panty set with a removable gold and diamond brooch. Kodak and Kwiat Diamonds created EasyShare V570 cameras with the best actress nominees’ initials in 75 brilliant-cut diamonds (valued at $20,000). Motorola handed out special edition gunmetal PEBL phones in a custom gift box to directing and acting nominees. And M&M’s Candies presented nominees with personalized M&Ms that had their names and words of congratulations printed on each M.

Okay, not many of us are ever going to have the opportunity to put together a promotion on a scale to match the excess of the celebrity gift bags that are given out on Oscar night. But still there are lessons to be learned from how the big Hollywood players manage such giveaways. The first lesson: Creating exclusive gift bags for top clients or celebrities who attend a corporate party or product launch is a major motivator. “It makes them feel special,” says Josephy Calloway, an event planner in Las Vegas who often creates gift bags for corporate parties and other special events. “If you single out the VIPs with a gift bag, they’re going to show tremendous loyalty in the future.”

Indeed, one organization, the Gay Men’s Health Crisis, employed this strategy when recently hosting the Move Against AIDS Danceathon fundraiser. The event had several hooks to woo celebrities, including a gift bag filled with glam galore, like custom hand-painted jeans by Sol Chicks Designs, Guittard chocolate bars and a Threads handmade scarf with 24K gold threads. Getting celebrities to participate in the event was key, says Francesca Shuster, director of communications and public relations for MZA Events (the organization that coordinated the event), because the celeb buzz helped attract more than 3,000 participants, with donations totaling more than $750,000. As an additional incentive, participants on certain teams had a chance to win the gift bags.

The key to creating a successful gift bag program for high-profile clients or employees is to make the items super-trendy, says Calloway. “If you’re giving away chocolates, for example, they should be high-end, hard-to-get chocolates, not Hershey’s,” he says. “If you’ve got apparel in the bag, make sure it’s something that’s really exclusive or edgy, not something that can be found right down the street. The items have to have some marquee value.”

To boost exclusivity, experts recommend creating a checklist, and having recipients sign in for the gift bags. This process helps make VIPs feel special – and keeps other party guests away from the loot. Organizers at a recent private luncheon at the Diamond Acquifer Oscar suite at the Soho House in Hollywood failed to do that, and about 20 pricey gift bags that included a $1,000 diamond bracelet were snatched up by one of the celebrity guests and her entourage.

To maintain the prestige of the gifts, generally the host of the event and the company putting together the gift bag will refrain from publicizing what’s in the bag. The Academy Awards is perhaps the strictest practitioner in this regard. No one associated with the Oscar basket will speak on the record about it, and companies can start preparing bids for the Oscar basket at least six months in advance. The refusal of the Academy to publicize the contents of the gift bags leaves the publicity in the hands of those sponsors who supply the gifts.

The result? “The mystique surrounding the bags definitely boosts their perceived value,” Calloway says.

Red Hot House Warming Gifts

When it comes to selling big-ticket items, few things are bigger than selling a home. And a big-ticket item requires a big ticket incentive item – especially in a slow market. The Gregory Group, a market-research company, reports that in Sacramento, CA, the value of incentives by homebuilders in the fourth quarter averaged $8,965 – double that of the prior quarter. Incentives include price discounts, upgrades and promotions.

The trend is especially evident among developers and homebuilders who have to act much more decisively than individual homeowners, who have the option of sitting tight. Some recent freebies include trips to Las Vegas, home-entertainment and security packages, furniture store gift certificates, golf club passes for a year – even swimming pools, according to Greg Paquin of the Gregory Group. “Builders don’t want to hang on to standing houses – they have to pay their bills, financing and taxes,” says Paquin.

Steve Melman, a spokesman for the National Association of Home Builders (NAHB), reports that sales incentives have become the rule among its membership and of those incentives, merchandise or perks lead the pack by a wide margin – 56% feature non-cash incentives.

Ron Phipps, a Providence, RI broker, appeared on the CNN show, “Open House,” with anchor Gerri Willis in November. He was giving away the lease to a Lexus (for two years) with the sale of an existing home. “My goal is to differentiate the property and draw attention to it,” says Phipps.

He tries to tie the promotion to some aspect of the property. If the yard is beautiful but requires a lot of care, he’ll offer free landscaping for a year or two. If a bathroom is dated, he’ll throw in a renovation allowance.

One of his favorite freebies wasn’t even aimed at buyers; it went to those merely shopping for a home. Anyone who came to look at one house received 30 days of free groceries. He also targets other real-estate agents. One house came with a trip to Europe for the agent who provided the ultimate buyer. Phipps says he heard of a Florida real-estate broker who was giving away jewelry.

One builder, Georgia-based Forrest Homes, is giving away a two-year lease on a Volkswagen Beetle with a home purchase. That’s right, these houses come with their own Bugs.

Pulte Homes, a Michigan-based homebuilder, is paying the heating bills for six months for anyone who buys a home in one of its Maryland developments. Pulte will also throw in a free gas fireplace, hardwood floors, upgraded cabinets, and a washer/dryer – and a 42″ plasma TV.

The incentive ideas keep, shall we say, flowing. The NAHB’s Melman recently attended a show where many homebuilders showcased their free upgrades. The item that caused the biggest, well, splash, was an upgraded Kohler bathroom that included a toilet that had special buttons for “number one” or “number two.” The lesson for marketers? A high-end customer demands a high-end – and creative – incentive.

Saving Up

Just because your budget won’t accommodate rewarding all of your target audience with luxury items doesn’t mean you can’t get in the high-end game. Many merchandise incentive programs aimed at employees and clients are structured to encourage participants to set their sights on over-the-top awards for which they will have to save up points over a long period of time.

“We establish wish lists on our program sites,” says Bill Termini, vice president of sales, domestic and global, for Hinda Incentives in Chicago. “When people enter a program, we encourage them to put a couple of high-end items on their wish lists. Usually, they set a goal for themselves that is 20% to 30% higher than the company did. They go for bigger carrots, things they wouldn’t dream they could buy, but can earn in their incentive program.”

No one would discourage program participants from quickly flipping points for smaller awards that provide immediate gratification, but “from a program perspective, we highlight highly desirable, high-end items,” says Mark Norquist, manager of recognition and rewards for Minneapolis-based relationship marketing firm Carlson Marketing Group.

Program participants who save up points for a year, or even several years, in order to redeem an extraordinary award, tend to be the highest achievers, many planners say.

In part, that’s because high achievers are the participants who can look at an award worth $10,000 to $20,000 and decide that they have a realistic chance of racking up enough points within a reasonable time frame. But competitiveness also plays a role.

“There are certain people who look at a program catalog and say, ‘That’s the top item, so that’s what I’m going for,’” says Michelle Smith, vice president of strategic sales for the Salt Lake City-based incentive company O.C. Tanner. “The bragging rights for over-the-top items are almost more important than the item itself. You’re really going to engage the Type A personalities.”

Companies have an inherent interest in pushing participants to strive for high-end awards that can’t be achieved too quickly. Savers are a key demographic for companies, says Darryl Hutson, CEO of St. Louis-based American Express Incentive Services (AEIS). “The higher the percentage of savers in a program, the more the likelihood of success.

“It’s an ongoing battle to keep program participants engaged,” Hutson says. “The motivation planner’s dream is to have more people saving points. There’s a direct correlation to keeping people happy.”

There are three reasons for this, Hutson says. First, savers will stay in the game. A long-term goal “keeps them engaged and wanting to earn more,” he says. “If they spend their points right away, you have to reengage them.”

Second, savers will talk to other participants, spurring competition. Hinda does a lot of promotion on its programs’ Web sites, including ranking reports to ensure “everyone knows who’s achieving,” Termini says. “This spurs others to achieve.”

Hutson’s third reason is that winners who have gotten something spectacular will motivate their co-workers. Carlson also encourages clients to publicize stories about high earners, Norquist says. “The focus is on what they did to achieve, as well as what they got.” Some of this can be done by seeding the gossip channel, he notes, but should also be more formal with sales forces that are geographically scattered.

Of course, to make such a program successful, Hutson says, it’s important to offer a variety of high-end, brand-name items that will make achievers want to put in the extra effort. “You’ve got to have the really nice plasma TVs, and other items that even higher earners may not already have,” he says.

By Vincent Alonzo. Reprinted with permission of Successful Promotions, copyright 2006

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