• August 21, 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

Cashing In Without the Cash

Xactly, the San Jose, Calif.-based provider of sales performance management, this week made its formerly stand-alone incentive program Xactly Rewards available on Salesforce.com's AppExchange platform. The Rewards module had been packaged with the company’s flagship product Xactly Incent, but, according to Karen Steele, Xactly's vice president of marketing, a spot on the AppExchange not only provides the power to innovate using Salesforce.com’s infrastructure, but also immediate exposure to Salesforce.com’s million-plus user base. Reward programs are commonly used to motivate sales teams, but with Steele says that this partnership aims to extend the business value to other departments -- specifically those related to CRM (i.e., marketing and customer service).

Loyalty and reward programs historically have fallen short, either because employers are too busy to reward, or employees are too busy to redeem. “The way they're managed,” Steele says, “is very ad hoc…managed in spreadsheets or some database. Communication is spotty to say the least.” The rewards themselves often lack the necessary appeal and are usually fixed-prize giveaways (an Apple iPhone to the top salesperson, for example) or a gift card. The problem, Steele says, is that gift cards comes with the added hassle of having to be redeemed, and following whatever necessary steps thereafter. 
Integrated with a CRM solution, however, Steele says she believes reward programs are really “closing the loop” of the CRM business process. “I can now trigger an incentive based on points,” she says, before describing a possible scenario: “So I have a lead, I move to an opportunity -- [that] triggers reward points for that action.... As I'm moving it to 10 percent, to 20 percent [of the way to] 'close,' I'm triggering rewards points, based on a program, to be given at [each of] those times.” Ultimately, the goal is to have a strong motivating effect on performance which will translate into business results.

The actual item being redeemed isn’t the sole factor in determining what makes an effective reward. The goal is to produce “immediate gratification,” Steele says -- because immediacy has been shown to have a motivating effect on behavior. In other words, watching the points accumulate as you’re working in your CRM system is only the start; being able, with one click, to go to Xactly Rewards and shop is where the real incentive kicks in. Successful incentives often lead to successful pipeline management: Xactly's own sales team switched from cash rewards to Xactly Rewards, and the conversion rate of leads to opportunities has doubled, according to the company.

Web and email security solutions provider IronPort Systems, which is currently in the process of implementing the Rewards offering, learned that keeping your eye on the prize is easier when you know what that prize is -- and that it's a prize you want. The process only works if what's in the pot at the end of the rainbow is something desirable, emphasizes Jeff Williams, IronPort's vice president of North America. “We pat people on the back all the time, but to incent somebody, you’ve really got to have a meaningful reward.” Williams explains that IronPort wanted to apply rewards:

  • across nontraditional sales functions (e.g., sales operations, lead generation, and customer support); and
  • across channel partners, which is particularly difficult when it comes to managing and measuring the impact of incentives.

“The biggest burden to rolling our rewards programs is measuring the success and [managing] the actual data,” Williams says. Therefore, he adds, “if you're a Salesforce.com user, this is a no brainer. It's all set up, all you have to do is roll it out and manage it.” IronPort is in the midst of that stage now, but has set goals to increase sales by between 12 percent and 18 percent. The company also hope to see its customer satisfaction score -- measured on a scale of one to five -- rise by one- or two-tenths of a point.

Xactly Rewards is made of a five-way mashup:

  • catalogue providers such as Amazon.com;
  • PayPal to buy the points;
  • Xactly;
  • Salesforce.com; and
  • Google Gadget, which provides a link to Xactly Rewards on your Google Desktop.

When it comes to rewards, however, there’s the concern that you’ll be training your employees to expect something extra simply for doing their jobs. One way of avoiding this, Steele says, is to provide rewards for a set initiative. Rewards programs are typically time-based -- designed to motivate specific behavior for a specific business objective or series of objectives (e.g., "push an obsolete product through the channel" or "increase attach rate of new products based on a new-product introduction"). Steele suggests, therefore, that programs like this have clear start and end dates.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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