Why Should Clients Take Us Seriously?

Of all the things that drive me crazy in the incentive and performance improvement industry the one that tops the list is the industry’s lack of rigor relating to the results and effects of incentive programs.  The more we try to prove our solutions work the more we prove we have something to hide.  I put myself in this company to a degree because I don’t have anything better to offer just yet.  Believe me, it is on my list of things to do before I die.

But let me give you a great example of what I mean when I talk about the industry’s inability to bring integrity and intelligence to the practice of performance improvement.

I was doing some research on the history of the incentive industry and was reviewing the information on the Manage Smarter web site which is an aggregation of sites for the industry comprising SalesandMarketing.com, Incentivemag.com, Trainingmag.com, Potentialsmag.com and Presentations.com.  There was a headline "New Study from Northwestern Proves Quantitatively That Sales Incentives Work".  Well, you would think this would finally put to rest the issue of whether incentives work or not.

Let’s analyze the results as they are provided in the article.

Point #1 -

Sales of the focal product—or "incentivized" product—nearly doubled during the program, resulting in a 12 percent return-on-investment when dynamic effects, such as a successful post-contest period, are evaluated. Specifically, the incremental margin of sales was $180,000, while the cost of the incentive program was about $164,000.

Not only does the article use the word "incentivized" (see post on this here) but the research doesn’t indicate whether the cost of the program was deducted from the incremental margin (true definition of the word incremental) and the 12% is suspect since the return based on the numbers provided is 9.7%.  What is the real number and why obfuscate it?   

Point #2 –

Incentives appear to generate "delayed" sales effects. Although there is a declining trend prior to the incentive period, possibly indicative of a "holding back" of sales until the incentive period, sales remain at a level higher than baseline sales during the post-contest phase.

Be cautious any time you see the words "appear", or "possibly" – those words are substitutes for "we don’t know."  Remember the title of the article is "…Proves Quantitatively…"  This doesn’t sound like proof or quantitative results.  Also, no mention of what the historic sales level were in order to arrive at true baseline metrics.  Instead they appear to use the declining numbers prior to the incentive as the benchmark.  The study uses this level for claims of higher sales in the post-contest phase.  They don’t really define what they used as baseline but the average reader would assume they were referring to the sales prior to the program.  Again, why not be specific.

Point #3 –

Though there is a positive impact on sales of the focal product, there is no evidence to support or refute cross-product effects, that is, sales "cannibalization" on sales of other products.

Put another way – we don’t know if it helped or hurt the other product lines.  So much for quantitative analysis.

I’m being a bit picky here but when you lead your story off with such a strong statement such as "proves quantitatively" you’d better put more into it than what is presented.

I give my clients more credit.  They’re too smart to fall for this stuff.  If the industry is going to have an Association work toward improving its image – then it ought to hold that Association to a higher standard.