B2B Incentive Strategy Isn’t Built Rewards First.

Are you dangling a carrot to just meet a sales objective or are you addressing a pain point in your distribution and sales channel?

The proverbial dangling of a carrot is commonly understood as an effective way to influence human behaviour and motivate someone. Particularly, in a business setting where a company offers bonuses or rewards for reaching or exceeding goals.

In a B2B relationship, manufacturers and distributors have applied this old technique to persuade their customers and channel partners by adding a motivational value to engage with sales-focused teams to move specific products or services.

Whether that’s offering incentive trips, merchandise rewards or cash, it seems this technique has stood the test of time. However, let me question this old adage and explore the use of this model in business today.

To engage your business partners and sales channel and build customer loyalty, it’s not a matter of simply picking a reward for achieving sales, adding a communications plan and declare an incentive program open for business.

We challenge the validity of a simple approach of the ‘carrot model’ as the foundation of executing incentives and engagement programs. Each corporate we partner with to design B2B customer loyalty programs are recommended to start with a pain based approach which leads into a ‘strategy first, reward second’ design.

The carrot model is outdated and even patronising.

Whilst it’s true that a properly selected reward (i.e. based on the psychographics of your business audience) will be attractive and create a desire for people to want to earn it, a sole focus only on a reward won’t change behaviour to achieve the outcomes your B2B loyalty and incentive program is after.

The model implies that a reward –the carrot, will motivate and make someone act towards a goal. However, a reward alone is not what makes people act. The ignition of action lies in both the person and the business that you’re trying to influence.

Think of personal taste, desires, interests and personal circumstances. They differ from person to person. So, it is questionable that any company’s budget would stretch to cater to every difference and entice everyone to focus on the same carrot and act upon it. Let alone the resources that it would take. Imagine being asked to understand what motivates each one of your customers and sales partners.

Think also how naive this approach is: ‘carrot-attraction-action’. We, humans, are more complex than this and don’t operate this way.

We all have personality traits (habitual patterns of behavior, temperament and emotion) and through an incentive program, we are wanting to engage with partners and customers and find ways for those who resell or move your product to notice our brand when dealing with many business aspects and complex situations every day.

They deal with buying and selling cycles, managing relationships and the expectations of their own customers amongst many other matters. All these influence their behaviour. Dangling a carrot is irrelevant, their minds are invested in many other things.

People are not endlessly manipulable and predictable as ‘carrot-attraction-action’ suggests. It’s also quite disrespectful to think monkey see monkey do. 

Furthermore, if dangling a carrot made someone act in a business setting, then we would have no need to understand how our partner and client’s business work; nor define a pathway to attain goals and solve pain points that need to be addressed whilst trying to achieve them. If this is the case, then most problems would be solved by simply offering a carrot.

Such a basic model implies that we could disregard everything of concern to the person that supposedly is chasing the carrot.

This is patronising and disrespectful to any business relationship we have with the people that drive your business. Let’s understand and be realistic about the vested interests of our customers or reasons of disengagement, analyse the sore points in our partnerships or the actual market status quo and how your sales channel operates.

People don’t respond to incentive rewards as you think.

There are many business aspects to address that form an engagement strategy before selecting a reward. A reward is the result, not the objective of an incentive. In other words, people don’t chase a reward, people engage with their business activities and their responsibilities.

For customers and channel partners to respond to incentives, we need to consider their demographic profile as well as their day to day business demands and the activities of the people who buy and sell your brand. It is here where companies can identify how an engagement and incentive strategy will work.

Vendors and manufacturers, and especially those managers in the field who often talk to customers, know the inside outs of how customers select and buy stock. They understand where they stand next to competitors and how things work when it comes to recommending and reselling various brands. They know their network and can identify sore points that hinder business to flow.

The carrot model misses this. In terms of B2B engagement, understanding the modus operandi of your customers’ businesses and those who work hard to move a vendor or manufacturer’s product is crucial.

The personal influences of your incentive program participant and business outcomes define the behaviours we want to achieve during the design of an incentive program. Offering the reward without this basis of program design means that the entry point doesn’t match your desired business change.

Participants would be taking actions on ‘buying’ a reward, and if that doesn’t land well with the customer group, you then have nothing else to work with and a program is likely to fail.

Here’s a framework to think strategy first, reward second.

It is, for this reason, we are always promoting a ‘strategy first and reward second’ approach:

• Start with identifying the pain points in your channel network – that involves your brand’s and your network challenges
• Define what do we need to change to achieve our business objectives. What are we asking program participants to do?
• How are we going to influence behaviour to achieve the change?
• Articulate the behaviour we want to achieve and the benefits
• Celebrating achievement with a reward.

Every business and every industry are different. They all are on a different stage of growth and have different pain points. So, recognising the complexities of human behaviour and relevancies at work, as well as the pain points in your channel and distribution network will make your incentive program succeed. 

So, don’t just dangle a carrot. Think strategy first, reward second!