On-the-spot rewards are an effective way to encourage employee participation toward attaining specific behaviors. They are especially effective when put into place for a limited time (to maintain excitement) and are simple to understand. Sometimes, revenue-generating behaviors may not seem natural to your team, but a simple suggestion, backed up by an offer to the customer, can increase revenue dramatically. Under the proviso that “what gets measured, gets done”, on-the-spot rewards go a bit further, moving toward, “what gets mentioned, gets sold”.

For firms considering an on-the-spot program, here are some basic rules:

1) Consider whether on-the-spot rewards are suitable for your venue.

Do not attempt on-the-spot programs if you capture individual customer information. As with traditional mystery shopping , the anonymity of the shopper is important. Anonymity ensures shopper candor. Not every consumer venue is appropriate of on-the-spot rewards. Banks, for example, would have stringent rules prohibiting this type of “disbursement” within a branch. Automotive service dealers, spas, pharmacies and other types of organizations that must capture customer information before making a sale would also not be suitable for on-the-spot rewards.

2) Define a measurable goal and how to measure program success. Consider what your program should do and how you will measure it. Examples include:

• Increase sales at each unit: renew interest in customer service behaviors.
• Increase sales of a specific product or category at each unit: new product introductions, test products, POP support.

• Increase average transaction amount: renew interest in selling and customer engagement.

Knowing how you will define success means you know how to determine appropriate costs of prizes, shipping, communication, mystery shopping services, etc. It also means you know how you will track progress during the program and at the conclusion.

3) Sourcing the reward: costs and pitfalls.

There are many reward options available. Gift cards are currently popular, as they are easy to purchase, easy for shoppers to conceal during the shop visit, and easy for employees to use. Cash is never recommended as an option, as there are temptations on all sides and there are loss prevention measures which might be compromised. Fees per card and shipping charges can vary widely across the many providers. Check the fine print on the card. Retailer-based cards usually have a fee imposed when cards are not used, until the card value declines to nothing. Bank-issued major credit/rewards cards will have the logo of a major credit card issuer, but check the fine print to be sure the card is good in all the countries it will be rewarded. Many U.S. issued cards may not be used in Canada. Reward premiums, such as logo merchandise with your company’s name on it, are less valuable to employees, unless they boast the logo of your team’s efforts. Think “Acme’s Top Performer” on a t-shirt, as opposed to “Acme Retail Store”.

4) Clearly communicate to employees what is required to win the reward.

A prize-based program is a promise. The point of the program is to encourage employees toward an expectation, so the last thing you want to do is discourage employees by failing to follow your promise. For example, if your reward program will be based upon the employee mentioning a specific product, make sure the product is indeed available. Ensure that behaviors needed to win are clearly defined. On-the-spot programs are more effective when quantifiable behaviors are addressed (“Were you asked if you would like to try the Super Duper appetizer?”) Create multiple communication methods that ensure employees know the requirements: emails, rallies, paycheck reminders, bulletin board postings, huddles, etc.

5) Back-office costs and planning issues

When evaluating the feasibility of a sales-based on-the-spot prize program, be sure to include others in the decision, as there may be more impact than you first envisioned:

• Shipping costs
• Gift cards—lost and stolen cards, card activation

• HR costs and back-office payroll accounting for the prizes given to employees

 

On-the-spot programs may seem intriguing, but they require careful planning and additional time to put together. However, many firms find that the benefit in sales or successful product introduction is worth the cost. The idea is to move behavior toward expectation. Running the program for limited time periods, or changing it up periodically, will ensure maximum benefits and results.