The Coaching Effect Blog

The Coaching Effect Blog

    How Customer Loyalty Programs and Sales Rep Incentives Aid Sales

    by Jaime Davis-Thomas / August 6, 2010

    How Customer Loyalty Programs and Sales Rep Incentives Aid Sales Organizations

    An article featured on The Wizard Chronicle recently pointed out that "...68% of customers who leave your company and start doing business with another company do so because they feel taken for granted by employees who display an attitude of indifference." This startling fact is shocking considering that there are tools to help sales organizations not only improve customer and employee retention but help to motivate and engage these groups of people to work with the company, not against it.

    On one hand, customer retention has become a major concern for sales organizations considering the high cost of acquiring new customers. Market research has proven that loyal customers or repeat customers contribute about 80% of business for most organizations. In addition, these customers are valued as they help the growth of a company due to the amount of money spent over time and the word of mouth advertising or referrals provided by these core customers. Rewarding customers through an incentive program when they spend certain amounts of money and/or refer new customers is becoming common practice for organizations in competitive markets.

    For example, after purchasing a car many customers are told that a referral leading to a purchase from one's friend or family member could help them earn rewards for name brand merchandise. Car dealerships-new and used alike, benefit tremendously from word of mouth advertising and have found that rewarding loyal customers for spreading the word of excellent customer service can provide extra motivation and therefore additional sales. This extra income more than justifies the cost of the gift that is given and lets dealerships know that they have a definite competitive advantage as more and more people are referred.

    incentiveOn the other hand, sales rep incentive programs are also contributing to the overall competitive advantage of many leading companies. Designing sales rep incentive and sales rep compensation programs can be a difficult task, but with the help of a well-designed award program performance improvement can be achieved in both the short term (6 months) and long term. Customers feel more comfortable spending money when approached by knowledgeable, helpful employees. Great customer service will result in customer retention and higher profitability.

    Flexible sale rep incentives and award programs can be targeted to both customers and employees, utilizing lifestyle merchandise to reward people who reach certain goals of the program. Steve Banker, in an article from Modern Materials Handling, reported that over 63% of companies that used incentive programs saw gains between 10-30% over a two year period. Providing incentives can motivate customers and sales reps to reach goals established by the organization and aligned to the business plan.

    With the capabilities of an online incentive program, both customers and sales reps can be rewarded and referred to one website. Administrative reporting will allow an organization to see the bottom line impact that the award program is having and provide accurate ways to measure new referrals from current customers and overall employee performance improvement. Finding a sustainable competitive advantage is nearly impossible in the ever evolving world of modern business. Mobilizing the people that interact with an organization the most can help to have everyone working together and progressing in the right direction towards sustainable growth and profits.

    More about EcSELL Institute Pillar Partners 

    Download this complimentary best practice document from EcSELL Institute's Resource Library titled "Sample Sales Rep Compensation Plan"

    Learn even more about the Sales Compensation, Sales Recognition, and Rewards Pillar.

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