He talked about 2, 3 or 4 day drive away weekend family vacation packages that we could reward our customers with for doing business with us and increase sales and margins at the same time. He threw some research based statistics out that 93% of Americans prefer travel over other incentives, that 87% of travelers drive, and that 91% of Americans drive 1,250 miles round trip and vacation an average of 4.1 days at a time. Those numbers helped me realize that these short “drive-aways” really made allot of sense. We could push different product lines, incentify rentals, or get extremely creative on how we could go to market. He talked about a wonderful 4 letter word he knew would also help us and that is “co-op”. By using manufacturers co-op funds we could halve our costs on these incentive packages, which cost between $100 and $295 each, and get a cost to perceived value ratio up to about 7 or 8 to 1. In essence we could offer a vacation that after co-op cost as low as maybe $75 to our customers who valued it as high as maybe $500. WOW, that really got my attention. Nobody had ever done anything like this in our market in the 20 years I had been with the company ….so why not? I always loved being the first one to try something new and thinking out of the box was always fun.

So we gave it a shot. On our next quarterly flyer that we sent out there were a number of different products that included a free drive away vacation on it…..and you know what? It worked and it was very easy to administer. As time went on we added more and more products with those incentives and began to differentiate ourselves from our competition. We also rewarded our own salespeople with these “drive- aways” for different types of performance and they loved it just as much as our customers did.

We ran with that program successfully for about 3 years when a new loyalty/incentive program came out known as a points program... or what we ended up calling it….our “miles” program. Quite simply, we rewarded our customers with points or miles for buying or renting anything from our company. Then when they accumulated enough miles they could chose from hundreds of different types of merchandise, travel or sporting event awards out of a very extensive catalog.
We began the program in 1999 and after 9 months had 643 customers signed on. We then ran the numbers on those companies and found that their purchases were up an incredible 40% over the previous year. With those results in hand we incentified all of our salespeople, with miles of course, to sign up new customers to the program and within a year we had about 2500 companies on board.

Not only did our “external” customers love it, but so did our “internal” customers…our salespeople and staff. For a program like this to be successful it is critical for your own people to buy into it first. Every one of our employees was on the program and earned miles for selling or renting those products that we would incentify. We would run product specific sales programs with our vendors and they would co-op our people’s miles, we put miles on dead inventory and we empowered our staff to use miles as a bargaining tool to close sales or take care of unhappy customers. We also rewarded loyalty to the company by giving everyone 1000 miles for every year that they were there on the anniversary of their employment. The different ways that we would use these loyalty and incentive miles, which cost us only $.02 per mile, were numerous and fun. It was the ultimate way of stepping out of the box and marketing our company like no one had ever done in our industry before.

As time went on I read different articles and studies on how non-cash incentives typically do a much better job of driving performance than does cash or discounts. In an article entitled “The Benefits of Tangible Non-Monetary Incentives” written by Scott Jeffrey, an assistant professor in the Department of Management Sciences at Canada’s University of Waterloo, he offers four specific reasons why cash doesn’t measure up to merchandise and travel incentives:


1. Visualization. Participants can visualize a non-cash reward, which in turn generates emotional anticipation and creates a value that outstrips the cash equivalent

2. Separation. Non-cash rewards are viewed as above and beyond salespeople’s compensation, whereas cash is frequently just lumped in with existing compensation.

3. Justification. Winners receiving a free DVD player or a vacation will feel no guilt about enjoying and using the product, but they may be reluctant to spend a cash reward on an equivalent purchase that they might view as frivolous.

4. Social reinforcement. This is another term for trophy value- the sense of accomplishment winners feel when receiving something tangible, as well as the link that reward represents between the award and the company.


Earlier this year after 30 years in the distribution business I started my own consulting company that specializes in working with distributors in the construction equipment and rental industry. As I meet with my clients now to look at their businesses the one thing that always seems to come up first is how they go to market and how they differentiate themselves from their competition. Needless to say these loyalty and incentive programs is the next thing that we talk about. The one thing that I learned over the years is never to say never about anything, and this is one of those instances. The nice thing about these programs is that they will work in any type of industry that you could think of. As long as there are customers and salespeople who need to be motivated and incentified the sky is the limit. The impact on sales that we experienced, the fun we had with it, and the way we were able to set ourselves apart from our competition was phenomenal. It totally changed the way we went to market and we never looked back. Give me a call to see how I can help you get started using loyalty programs in your company.