The history of online incentive program management is not a long one. In the mid-1990s, pioneers began hammering together Web sites that allowed participants to read contest rules, view their qualification progress, search online merchandise catalogs, or click links to the resorts and destinations hosting an incentive travel reward. In the past few years, enhancements have rolled out rapidly, with online registration becoming commonplace and first adopters breaking ground with customized e-communications, interactive Web site elements, and new sales data management tools.

Michael Hadlow is in the thick of the online revolution as president of USMotivation, the Atlanta-based incentive house. “Every program we have sold to a client in the last year and a half has been online. Completely online. That doesn't mean we're not sending communications out [by mail], but it means that all the information for the participant is online.” And for those planning sales and distributor incentives, concerns over Web access have practically vanished, Hadlow says. “I don't know when it happened, but it was almost overnight. We had been hearing from clients a concern that ‘gee, not everyone has access,’ but it just doesn't seem to be an issue anymore.”

Data Management Revolution

A good incentive Web site can free up planners' time (frequently asked questions are addressed online), shrink mailing and printing costs, give participants 24/7 access to their standings and reward options, and, of course, with online registration, avoid the need to re-key registration data. But as welcome as those elements are, many observers see data management as the most revolutionary aspect of Web-based incentives.

In the past, managers who wanted to post online standings rather than mail paper status reports had to load monthly sales data into the online system manually. Now, sales systems can be integrated with the incentive system. Besides saving time, “the more significant implication,” says Hadlow, “is that incentive programs are being designed that never would have been run before because of the complexity of administering the program.”

Today, an incentive system can check the SKUs (stock keeping units, the numbers given to products for inventory purposes) on the invoices entered into the sales system and use any kind of algorithm against them. “One SKU might qualify for a certain number of points,” Hadlow says, “while another, sold between January and March, might qualify for triple points, and so on. The system can process information on a very, very detailed level. Without a computer, you'd need a small army.”

Graybar, the giant St. Louis-based distributor of electrical and communication/data products, has an online incentive program that could hardly have been imagined pre-Web. As a distributor, the company serves multiple manufacturers as well as the resellers and contractors who buy their products.

Working with USMotivation, Graybar designed the Graybar epoint Program, which provides value in both directions: Customers earn points for buying certain products; when they have enough points, they can redeem them for items from an online catalog. An epoint Web site allows customers to click on any of 51 participating manufacturers to see what products earn points and to check their point totals and view the reward catalog. Manufacturers can target and promote certain products in their lines (and change their targeted products on the fly) and receive reports on whom exactly is buying from them and what they're buying.

On top of that, Graybar gets value from increased customer loyalty, says Karl Griffith, Graybar director of reseller markets. “It's difficult for a distributor to build an incentive around service,” he says, but this one is working. “Customers are buying from Graybar because they know they're earning points on the products they buy.”

Griffith has grown the program over three years, starting with a single customer market: contractors who install phone systems. The first year, 2,000 people signed up for epoint; now, with two other customer markets on the system, more than 12,000 people are earning points. Just think: 12, 000 customers, 51 manufacturers, and a changing list of products targeted to earn points out of the hundreds of thousands of products and components that Graybar distributes. The Web makes it possible, say Griffith. “It would be too cumbersome and too complicated without a Web-based program. Can you imagine what it would take in terms of resources and bodies?”

Interactive Elements

Among the challenges for an incentive Web site are keeping producers coming back and developing elements that keep an incentive program and its rewards at the top of producers' minds. Interactivity is key, say the experts.

Eugene De Villiers, managing director for The Extra Mile Co. in Auckland, New Zealand, has earned top awards from the Society of Incentive & Travel Executives for his creative programs, including an Internet-based reseller incentive for Compaq Computer NZ Ltd. His company has used a variety of games to keep producers clicking on an incentive site. In one case, participants can gamble points on an online roulette game. “Some win points and many lose them, but it all adds up to keeping people visiting the reward site,” he says. The company has also built a system that allows corporate branches or team members to challenge others to short-term competitions in which they wager points earned, and winner takes all. “Salespeople are very competitive, and this certainly adds to the competitive edge,” he says.

Roni Swift, director of meetings and travel for Ameris Life Insurance Group in Des Moines, Iowa, hopes to improve the interactivity of her company's incentive Web site. Given the resources, the first item on her list would be to add streaming video of the reward destination. “Traditionally we've mailed a video to promote the destination. However, the video goes only to the top 5 percent of our producers, because of the cost,” she says. An online version would allow every agent — and their families — to see the video and feel its motivational pull.

To add interactivity, a “wish list” is a popular feature on the Web sites created by Chicago-based Hinda Incentives, which specializes in programs with merchandise rewards. Incentive participants can tag prizes from an online catalog, and when they are close to having enough points, an e-mail arrives urging them on, explains Michael Arkes, Hinda president and current head of the Online Incentive Council (see box). “We're coming out with a new feature,” adds Arkes, “that allows us to e-mail participants when we've added new reward merchandise.”

More importantly, Arkes says that his company is building systems that link small incentive programs. For instance, he says, companies often have a years-of-service program, a suggestion system program, and an employee referral program — all run independently, with separate budgets. “With the umbrella systems available now, an employee can potentially earn points in all of those areas and be able to combine those points for a larger reward, and in essence make the employee feel more motivated,” he explains.

Custom Communications

Another promise of the e-incentive surge is being able to communicate to the field with more robust and frequent communications: online newsletters, polling, and customized e-mails. Does the top 20 percent of producers need to get the same motivational messages as the bottom 20 percent? Is the same message appropriate for all parts of the country?

Swift is beginning to ask these kinds of questions now that her first-generation online incentive system is in place. The company has an agent extranet to communicate company business, and a portion is dedicated to incentives. Agents can check their qualification status, read the incentive program guidelines, and get information on the trip and the destination. When agents log on to the extranet, they identify themselves with their agent code. Those who have qualified for the incentive trip see online registration information; those who have not qualified do not. The Web site and registration system, built in-house by the Ameris IT department, connect with the Microsoft Access databases that the meeting department uses on the back end to manage programs.

While other departments at Ameris have used the agent codes to disseminate information to specific states or locations, the incentive team hasn't pushed information out in this way. But that may be next. “We haven't yet tapped into the marketing potential,” she says, “but as we go forward, we'll be looking for opportunities.”

Hadlow imagines a time when customization can be applied not only to the motivational messages that a company sends but also to the rewards it offers. “If you look at traditional incentive programs, everything is one-size-fits-all. Everybody got the same mailings, irrespective of what they might or might not respond to. Everyone was offered the same selection of awards and incentive travel programs. But what the research shows is that people are motivated as individuals. Eventually where I think this is going is to one-to-one communications and one-to-one understanding. When you log on, the awards selection that you see could be based on your individual profile. Why make you look at 3,000 [potential rewards] if we can know there are 20 that matter to you?”

Not Going Back

With the proliferation of broadband access, organizers see nothing but promise for online incentives. “The Web becomes the communication tool; it becomes the management tool; it becomes the reward tool. The Web has become a holistic management tool for incentives and recognition programs,” De Villiers says.

The question to ask now, says Hadlow, is what can we do with this technology that we never thought of before? “How do we use it to really enhance communications? How do we take advantage of the features that are only available on the Internet: the ability to do things in real time, the flexibility to change a program on the fly? How can we use it to respond to economic and business situations?

“This stuff has evolved so fast,” continues Hadlow, “that I don't think we've exploited what's possible even with today's technology.” Never mind the advances that are just around the corner.

Online Research

• If you're eager to learn more about online incentives or would like to find suppliers who specialize in this area, one place to do research is the Web site of the Online Incentive Council, http://oic.galacticmarketing.com. The OIC is a subgroup of the Incentive Marketing Council (www.incentivemarketing.org), and its site features white papers and case studies on online incentives and a database of its 18 supplier members.