Are Your Channel Incentives Creating Too Much Competition?
One reason channel incentive programs work is that they appeal so well to participants’ competitive natures.
The premise is that channel partners—especially sales professionals who tend to have competitive Type A personalities—will use the promise of greater rewards to challenge themselves and others to push for better sales or other achievements.
“The reason this technique has stood the test of time is because, for the most part, it works,” confirms Paula Shearstone on thebalancesmb.com. “The dangling of the proverbial carrot is an ancient art that is commonly understood to be at the heart of human behavior, psychology, motivation and in particular business.”
The human drive to compete can be a very good thing when it comes to revenues; in Harvard Business Review, researcher Anna Steinhage points to research showing competition can spur employee innovation and effort, leading to higher achievements.
But it can also have a downside. Too much competition can become counterproductive if your partners take it to the extreme, causing more problems than it solves and perhaps casting a bad light on your incentives program.
Here are a few possible signs your program may be fostering too much competition:
- Participants seem to feel more fear and anxiety than excitement. According to Steinhage, some workplace competition spurs negative emotions because those involved fear being laid off, losing income or being humiliated in front of co-workers. “When employees interpret their arousal from a competition as anxiety, they’re less likely to select creative behaviors to solve problems, and more likely to be unethical,” she reports.
- Partner work environments have become dog-eat-dog. Participants may be trying to steal each other’s customers or take credit for each other’s work. Not only can such situations foster toxic distrust and resentment between co-workers, but they can easily disgust customers.
- Participants are using other unethical or questionable methods to achieve their goals. Steinhage points to a program at Wells Fargo in which employees secretly created millions of unauthorized bank and credit card accounts to gain rewards. Another example is an electronics manufacturer who discovered (thanks to the data validation functions within the WorkStride platform) that a few retail sales reps were copying the SKUs for a particular product being promoted and then submitting them without actually making any true sales.
Steinhage concludes that the key to avoiding overly intense competition is to highlight the positive aspects of a rewards system instead of using negative reinforcement to threaten lower achievers.
“The way leaders communicate about competition can make employees experience anxiety or excitement about competing,” she writes. “One powerful example is for leaders to encourage employees to use their ‘signature strengths’ in a way that benefits others as well as themselves. Leaders also can highlight how success will help customers and also help to achieve the organization’s purpose.”
Jenna Puckett on Hubspot.com notes that implementing team-centered goals in conjunction with individual goals can create a less-cutthroat sales environment.
“Splitting salespeople into groups can leverage a competitive environment while also introducing collaborative elements into the contest,” she writes. “Measuring individual contribution as well as overall team progress can be a huge motivator to win. After all, no player wants to let the team down.”
The key to fostering the right kind of competition within your channel incentive program is to run a variety of promotions that are targeted at the partners who will respond best to them. Have a bunch of type-A partners? Go for the “Top Seller” approach. Are some of your partners steadily growing a customer base for you? Try running a long-term tiered loyalty promotion. And for those partners who simply like to make a few extra bucks in a particular time period, go for the classic SPIFF. Having a variety of options ensures that engagement remains high and partners are motivated in the right way.
Need more tips on structuring a channel incentives program that motivates instead of alienates your partners? Talk to WorkStride for suggestions on customizing a system that seamlessly drives your sales and keeps all participants engaged.