Contests can rev up employees: additional incentives for salespeople and other workers can generate excitement and boost profits

Nation's Business, July, 1996 by Howard Scott

Additional incentives for salespeople and other workers can generate excitement and boost profits.

Paul Abraham, sales manager of Bernardi Bernardi Honda-Audi-Volkswagen, in Natick, Mass., swears by contests. "People are much more motivated with an extra reward at stake," says Abraham, whose dealership has 100 employees and sells 3,000 cars a year. Bernardi spends $25,000 annually on contest awards for its 18-person sales team. There's an extra $150 commission for every car sold during periodic sales held on Saturdays; a weekend get-away for two to Cape Cod for the top salesperson of the week; extra commission for selected cars; and a $500 bonus for the top salesperson each month.

Why does the auto dealer need incentives when the salespeople earn their salaries through commissions? In a word--excitement. Contests motivate the sales staff to go the extra mile for the sale, says Abraham. "We know contests work for us because I see the staffers rev up for contests and I see the improved sales fig1ires."

Dinners For Winners

Contests are by no means new to business. But these days, business owners must be creative in their approaches. According to Alan Weiss, a consultant and principal of Summit Consulting Group, in East Greenwich, R.I., effective contests reward what he calls "incremental business"-- that is, extra sales.

The standard cost of a successful contest is 7 to 15 percent of the total additional sales resulting from the competition, according to experts.

LaVigne Press, a $10 million, 85-employee commercial printer in Worcester, Mass., runs a contest that fits Weiss' model of effectiveness. The contest awards a sales staffer one point for each appointment and two points for each new customer. Monthly point winners get a dinner for two at an upscale restaurant. Quarterly, the top staffer wins $100.

Sales manager Ralph Kimball says, "One benefit of this contest is that it keeps the salespeople aware of what the others are doing." This sets up a competitive atmosphere, which helps stimulate sales.

Contests can also be used to motivate employees to set their own sales goals. At Swan Pools, in Rancho Cucamonga, Calif., each of the 10 salespeople declares a monthly target for sales. Owner John Garasich adds up the total, sets a minimum sales quota for the company based on that total, and determines the size of the bonus that will be divided among the salespeople if the company meets its goal.

What I like about the contest is it gets the salespeople to set their own goals," says Garasich. The bonus money is parceled out lottery-style. Garasich divides the money, typically around $3,000 a month, into sealed envelopes, each representing a pool sale.

The largest sum in an envelope is $500; the smallest, $5. With each sale, the staffer puts his initials on an envelope. At the end of the month, if the company reaches the quota, the salespeople receive the envelopes bearing their initials. That way, the amount of the bonus is a surprise.

Contests can be focused on areas other than sales. John Spomar Jr., president of Norco Cleaners, a Dolton, Ill., dry cleaner with $1 million in annual sales, had a problem with his 23 employees being tardy or absent. He came up with the idea of playing "poker."

Each staffer who arrives on time each day gets to select a card. Those who are late or who don't show up get no card. By Saturday, all those who have been on time for the week have five cards from which to assemble a poker hand. The winner takes horne the pot of $20 to $25 supplied by the company.

Says Spomar: "Tardiness has dropped 30 percent, so I guess the possibility of winning at poker jogs them into getting up on time in the morning."

Jeff Thompson, president of Peripheral Outlet, a $50 million, 45-employee merchandiser of computer memory upgrades, believes in frequent and varied contests at his Ada, Okla., company. His offerings include company-set goals of selling a specified amount of product; whoever hits the target first wins $50.

A Sudsy Premise

Thompson also establishes a weekly goal for his team of 14 sales staffers that, if achieved, results in a company-sponsored weekend party.

In addition, contests are conducted in which the employee who contributes the most to gross profit for a particular day wins anywhere from $100 to $500.

Thompson gets into the spirit of the contests. The prize for a recent one was to have him come to each of the sales staffers' houses to wash the evening dishes. "Fortunately, they didn't make the goal," he says. "But all these contests lighten up the mood around here."

Howard Scott is a free-lance writer in Pembroke, Mass.