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A Low-Cost Miles Program Brings a Big Boost to Sales

June 6, 2001
Lincoln Contractors takes a creative approach to incentives thatdistinguishes the company from its competition, and nets big returns. Thefamily-owned Milwaukee firm gives points -- what it calls miles -- as salesincentives both to generate excitement and to reward outstanding jobperformance. The miles, available to any of its 115 employees, can be exchangedfor merchandise, travel, or sporting event tickets.

Small Company

Name:

Lincoln Contractors Supply, Inc.

Location:

Milwaukee, Wisconsin

Type of business:

rents/sells construction equipment, tools, supplies

Number of Employees:

115

    Lincoln sells and rents construction equipment, tools, and supplies in sevenstores throughout Wisconsin, and is one of the largest independent distributorsof its kind in the United States. Its products range from a 20-cent concreteanchor to a $100,000 rough-terrain forklift.

    Its incentive miles program works like this: If a Lincoln employee wants anew backyard grill, for example, he or she can "buy" either a charcoalmodel for 5,500 miles or a more upscale gas-powered version for 25,000 miles.One employee recently redeemed his miles for an all-terrain vehicle, another gota John Deere garden tractor, and another plans to take his wife to Spain nextyear with airline tickets "purchased" with miles, says Dale Guenther,company vice president.

    Here are some features of Lincoln's incentives program:

  • For every 10 customers an employee signs up, he or she earns 1,000 miles per customer, for a total of 10,000 miles.

  • To help get rid of old stock, employees receive miles equal to the dollar amount of an item sold.

  • Exemplary service nets extra miles. One employee attended a trade show, generating numerous leads, and received 25,000 miles for a job well done.

  • As a sales promotion, for every foot on a stepladder or inch on a diamond blade sold, employees earned 20 miles.

  • Employees earn 1,000 miles for each year they are with the company.

    Employee response to the program has been enthusiastic, Guenther says.Participation doesn't cost employees anything, and the system generates salesand creates employee loyalty. Before the miles program, Lincoln relied solely oncash bonuses as incentives. But it's the newer program that nets big results, henotes. In the first year of the little more than two-year-old plan, business wasup almost 40 percent. In the second year, there was a 17 percent increase.

    The program also is flexible, and can be adjusted yearly to account foreconomic or product changes. Though he won't say what the program costs Lincoln,Guenther insists it's cost-effective, especially because it's stepping out ofthe box, doing something different from the competition. Product manufacturersalso help defray the cost of some bonus promotions.

    Once a month, Lincoln buys miles -- perhaps one to two million -- fromprogram originators MMS Incentives, the Norcross, Georgia-based company thatserves as project administrator. MMS operates about 3,200 incentive/rewardsprograms a year for tens of thousands of customers and employees. Clients rangefrom Fortune 100 companies to the "Joe's Beer Dealership" down thestreet, CEO Mylle Mangum says.

    Mangum won't talk about specific pricing, except to say it varies by companyand objective. But she will say that MMS usually can provide an incentiveprogram for one-half to two-thirds less than the amount companies spend in cash.A travel reward, for example, can cost a lot less through MMS because of itsbuying power in the marketplace. The company also has its own travel agency."We can send anyone to the Ritz Carlton anywhere in the world a lot morecost effectively than if an employer were just going out and buying atrip," Mangum says.

    This kind of rewards program is also a lot more effective from an employer'sstandpoint than cash. A travel reward may cost a company $350 to $500, but thetrophy value to an employee can be much greater -- as much as $1,000 to $1,500,Mangum adds. An employee rewarded with cash ends up pocketing it and paying anenergy bill with it, for example. It's not a "company currency" -- theemployee doesn't think of it necessarily in conjunction with a reward for workperformance at Lincoln. The miles or points program, on the other hand, isprivate labeled Lincoln Contractors points, and the reward is associateddirectly with the company. It optimizes what Mangum calls the share of"mind value."

    Guenther stresses, however, that every employee -- whether a phone operatoror a sales manager -- should have an opportunity to participate. If they areleft out, non-sales employees can get frustrated. "Our bookkeeper just hadher 31st anniversary, and she got 31,000 miles."

    Rewards or recognition programs like Lincoln's don't put ready cash in anemployee's pocket. And, Eisen adds, people like cash. "It's right there,right in their face. They can take it home in their paycheck or put it in theirpocket. It's something they feel."

    She says these types of rewards still can serve as extraordinarypsychological and emotional incentives.

Workforce, June 2001, pp. 109-110 --  SubscribeNow!