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Why sales incentives won't always drive customer acquisition..

In the wake of the recent decisions by a number of high street banks to do away with all sales-related reward for its frontline staff it is a question I think many marketers should ask themselves.

In the case of the banks, the move to ditch their sales incentives came after waking up to the fact that although extremely effective in delivering revenues, sales were coming at the expense of what was right for the customer.

Banks may be the ones in the limelight at the moment, but looking around at other industries – notably car insurance where referrals are inflicting huge costs on consumers – I am sure is only a matter of time before other organisations come unstuck for putting profit before customer interests.

Your B2B organisation may operate away from the glare of the mainstream media but I think there are two powerful reasons to look at how reward and incentives are working for your business.

The first of these is to make a check on whether how you deploy reward and incentives in customer acquisition is really playing a role in supporting your business objectives.

If there is one thing that we learn from the banks, it is that chasing sales isn’t the only way to a profitable business. Of course we all need to find new customers but also we need to look after our existing ones, listen to them and put things right when things go wrong.

Marketers should take the opportunity to look at how reward and incentives can support and extend the customer lifecycle. This means placing a premium on the recurring revenues which come through great customer service as much as new revenue from the sales team and channel partners. It also means understanding how loyalty drives advocacy and referrals – a product of great customer service and a far smarter way of growing.

Then there is the issue of behaviour. The second lesson from the banks is that when deployed effectively, incentives and reward can have in incredibly powerful role in dictating how our people prioritise their work.  Many B2B organisations will find their reputation in the market comes as much from the way their people behave as the products and services they deliver.

When incentives and reward drive behaviours which conflict with what is good for the customer it has a damaging impact on your reputation and consequently your ability to retain and win new business.

It may be late in the day for the banks but they are now showing they have learnt these lessons -  I am sure many other organisations who would benefit from following their lead.

Colin Hodgson is director of sales for incentives and motivation at Edenred -