Will Cash Kill Incentive? (Why Money Isn't a Motivator)

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Incentive based marketing can be rewarding and cost effective. We've all taken advantage of a cash-back offer at some point which is one of simplest incentive strategies used in retail.

But what about cash incentives for B2B referrals?  It should be a surefire strategy. Ask your client base to refer someone to your business, if a sale is closed then a cheque is in the mail.  It also seems like a great way of pre-qaulifying leads because who wants to go to the effort of giving a referral that doesn't convert to a sale?

The question is will anyone make the effort at all? 

I was talking with a company who wanted to increase their number of leads by giving away $300 cash for every referral they received that resulted in a sale.  The idea seems plausible.

The problem is the perceived value of $300 cash.

From the company's perspective $300 is a substantial investment, especially if the strategy delivers many new customers.

However from the customers perspective, cash in the hand is open ended. It's nice, but there's no specific value or outcome that you've focused them on.  If we're honest it would probably be put in the pocket and used for coffee, beer or groceries and incidentals - not very exciting, so it doesn't instill any sense of urgency to follow through.  It's also a wasted opportunity to build brand positioning.

To increase the perceived value you need to focus them on a tangible outcome.

The perceived value of $300 cash is lower than say, two premium seats at an event worth $250.  This works on two fronts, one is that there's a specific outcome attached to going to an event (enjoyment, socializing, networking etc) and the second is that people can be busy and may not have considered booking such an event, so it would be a welcome surprise.

The strategy is not limited to events, you could offer vouchers for liquor, travel, even office supplies.  The trick is to choose something that is aligned with your brand positioning and compliments your brand values. 

Just because you can get a good deal for amusement arcade vouchers, it's not necessarily going to help cement your positioning as a thought leader in supply chain management.

Increase Perceived Value

Cash has no focus. Unless you're offering thousands of dollars in an attaché case, a few hundred may not create the urgency you need.

At every point in your brand strategy you need to question whether the activity is focused on building your particular values and difference, or is it vague?  It's one or the other.

© Hamish Chadwick, Image Substation 2010

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