10 Commandments of Incentive Marketing

1. Understand Your Audience

   It’s surprising how many marketers don’t properly tailor their promotions to the audience. Incentive programs are not “one size fits all,” because what’s attractive to one consumer group might not be to another.

   One company ran a sweepstakes offering a trip on the Queen Elizabeth II to electrical workers — a ritzy prize, but was it relevant? They probably would have been much happier with a Carnival cruise and a trip to Disney World. It would be more applicable to their lifestyle.

   You can’t go wrong offering luxury staples like a VCR or DVD player as an incentive. Average homeowners would love a newer model but often don’t have the cash to buy it.

2. Reward Them Appropriately

   The value of an incentive is perceived, not prescribed. Offering access to events or people can be as motivating as money or trips. Employees, for instance, might rather win lunch with the ceo than home entertainment equipment.

3. Offer Attainable Rewards

   An incentive only works if the target group believes it can reasonably attain the rewards. There is nothing worse then making an offer perceived as too difficult or too costly to earn. And you can’t run a successful program without participants.

4. Respect the Tax Man

   Accepting a reward may cost the winner more in taxes than the value of the prize, so that’s important to keep in mind. Winners of a vacation package worth more than $600, for example, must report it to the Internal Revenue Service and pay taxes on it. So make sure to value prizes as low as possible to save the winner cash and your brand potential embarrassment. Or, include “spending money” in the package to offset the tax costs.

5. Take the Middle Ground

   In school, there were always a few people consistently getting 100s and a few people consistently failing every test. The habits of those people were hard to change. The average student fell somewhere in the middle of those two extremes and was easier to effect. The same holds true for promotion: Aim to motivate the 60 percent of the target which falls into the “average,” middle range. The overachievers will succeed without the nudge; the chronic underachievers will fail anyway.

6. Keep in Touch

   The key to a good relationship is good communication. People want to hear that they’re doing a good job and that they’re appreciated. When running an incentive program, make sure to follow up from time to time. Give employees assurances — even better, sing their praises to others. Send preferred customers a gift with a letter of thanks.

7. Provide a Safety Net

   Things don’t always go as planned, so be prepared to make changes. Programs that have no flexibility are flirting with disaster. Pad timetables so efforts don’t stall if a shipment arrives late and make sure the promotional deadline can be extended if necessary. Don’t blow the entire budget up front — a little extra cash may come in very handy later on.

8. Deliver on Promises Quickly

   One of the greatest sins a marketer can make is to keep winners waiting for their prizes. Lagging on delivery can negate the goodwill engendered by the program, and could make winners hesitant to participate in future promotions. When working with outside contractors, develop strict delivery deadlines and levy penalties for lateness to keep them from making the brand look bad.

9. Judge Thyself Constantly

   Let the target audience tell you how to approach them and reward them. Encourage their feedback, and be willing to tailor your strategy to respond to their needs. Nothing should ever be set in stone. Effective programs meet their objectives by understanding the target audience.

10. Be Fun

    It’s all for naught if participants aren’t going to have fun. And that doesn’t just mean offering an exciting reward. Make the communications entertaining as well. Experiment with different vehicles — games of chance or sweepstakes — along the way. Get downright silly where appropriate. That way, everyone involved gets something out of the program instead of just the winners.

Editor’s note: John Zamoiski, ceo of New York City-based Vertical Mix Marketing, presented this advice last fall at the Motivation 2000 conference in Chicago. “There’s nothing here that’s not common sense,” Zamoiski notes. “It’s just that most people don’t think of them when they need to.”