Unpacking Incentives
Introduction
The concept of incentivisation is so intuitive that, on the face of it, it needs no explanation. It seems obvious to us that if there's a carrot dangling in front of us, we're going to work harder to get that carrot… But not all carrots are made equal and it's not a simple case of "the bigger the carrot, the greater the returns".
In this article, we're going to take a look at some of the behavioural science behind incentivisation and how best to optimise a reward program to deliver the results you're looking for.
History of Incentivisation
The modern sales incentive really took shape in the 1920s as mass production took off in a big way. The post-war boom in America catalysed capitalism and the "sales person" became a mainstay of commercial operation and the big players began rewarding their sales teams for good performance in a bid to get the edge on their competition. By the 1940s, the workplace incentive was nearly fully matured as companies began placing more nuanced conditions on sales tied to certain rewards, for example selling a certain number of units within a given period.
The introduction of new tax laws in the 1950s led to the final transformation of workplace incentives. Since pure monetary reward was made more complicated and expensive, companies began introducing "work perks" in the form of golfclub memberships, performance cars, luxury holidays, etc.. Sound familiar?
So for the last 70 years, the overall format of workplace incentives has remained largely unchanged, but that's not to say it hasn't evolved…
Our knowledge of human behaviour has deepened significantly in the last 7 decades. Advances in the fields of neuroscience and psychology have given us a window in to the mechanisms of "action and reward" and indeed how the principle is core to our survival.
Psychological Mechanisms
From childhood you'll no doubt remember what felt like straight up bribery from your parents/guardians:
"Do all your chores and you can watch TV"
"If you're really good today you can stay up late!"
"Do well in your maths test and we'll go to the cinema"
The concept of "action & reward" is therefore baked into us from a very early age so it's little wonder that we carry it into our adult lives as we balance effort and potential reward in all our prioritisation and decision making.
Dopamine, also known as the "feel-good neurotransmitter", is the heavyweight happy chemical that gives us that nice feeling of reward and satisfaction at having accomplished something. Our brains release it when we eat food we're craving, or when we have sex. In very basic terms, do something good and your brain rewards you with a little hit of dopamine so you're more likely to want to do it over again.
So far so simple…
It should seem simple then to apply this to an incentive environment, right? Keep those dopamine hits coming and Hey Presto: we've hacked their brains! Fortunately for all of us, it's not that easy thanks to the law of diminishing returns.
If something is readily available all the time, it becomes less special. The same is true of reward in the brain, we need more to reach the same level of satisfaction, and the incentive has less sway over us.
At the same time, contrary to what we might think, increasing the perceived value of the potential reward can detract from the sense of motivation and indeed have the opposite effect. Rather than viewing the potential boon of a bountiful win, our brains, ever the great protector, start to perceive not winning as a greater risk to our safety. This results in a lack of engagement and motivation will fall as participants withdraw from the risk of "losing big".
Therefore, the key aspect of a successful incentive must be proportionality of reward set against the perceived effort of participation.
Outbound's Approach
It's easy to get lost in the excitement of the programme, and the potential reward that might be on offer. We tend to imagine ourselves in a given situation and project our own responses onto others. "I'd love to win a year's gym membership…what a great prize that would be!" "Everyone loves [insert thing that not everyone loves here]." etc.. But that's setting off on the wrong foot and will take you down a path that leads nowhere fun. You are not (usually) the audience.
A successful incentive program starts with the understanding the individuals whose behaviour we'd like to influence:
what motivates them in everyday life (altruism, material gain, career, relationships, food…)
what factors they consider in their decision making (sustainability, timescales, opportunity cost, impact to others, etc.)
what interests them (technology, culture, politics, travel, charity, etc.)
Starting from this position, we can be assured that any incentive we design will be targeted towards the right people, and will therefore have a better chance of hitting that sweet spot between motivation and detraction.
An incentive for every occasion
We've spent the last two decades evolving our approach to incentives, and we keep learning new things every time. As we've deepened our understanding about motivating channel-based individuals we've diversified our incentives to suit their audiences and vendor objectives.
From long-running incentive programs that focus on delivering sustained pipeline opportunities through to high-impact, fast-paced incentives that burn bright for a few hours and then disappear, we've done (and are still doing) it all.
Is that it?
Get the audience nailed and that's all it takes?! Oh no, dear reader…there's far more to unpack here…
How does gamification factor in?
What about tribalism?
How do you keep fatigue at bay?
Do people even know about and understand the program?
We'll be looking at these questions in detail over the coming months, so sign up to our newsletter to find out first when they're available.
Have you got a problem that could be solved by incentivising? Want to find out more about our approach to understanding audiences? Or perhaps you have a different take entirely… We'd love to hear from you!
Drop us a line, and let's chat incentives!
