Why Invest in an Incentive Program when Times are Tough? (cont.)

Leveraging Your Incentive Program in a Down Market

Managers currently using customer-facing incentive or loyalty programs may already be seeing new potential for maximizing results during a business slowdown (and subsequent recovery) - and we'll elaborate on how to tap into that potential in the following sections. For those of you not currently employing customer or partner incentives, consider the following recommendations as examples of the versatility an incentive or loyalty program can lend to managing your business.

Your incentive program should be one of the most visible connections that you have with your customers and a powerful marketing tool. In fact, for many of our clients it is their tool of choice for driving sales and building customer relationships. That said, the customer communication and marketing capabilities that are characteristic of your program can be applied in a wide range of recession-fighting strategies.

Balance is the key
To survive and thrive in this environment you'll need to maintain a delicate balance between efforts to improve efficiency in your business and investments in enhancing customer value. With that in mind we offer the following tips on using your incentive program to:

1. Get Leaner
2. Do More with Less
3. Nurture Customer Relationships

1. Get leaner - but not at the sacrifice of customer value
In the face of falling revenues, most companies will realistically have to make the cutbacks and changes needed to keep the business profitable. But, as we've discussed, be wary of categorical reductions in marketing and customer communications since these are some of your best tools to mitigate the negative impact of a downturn. We recommend that you consider the following as you weigh the options for cutting back and getting "leaner and meaner":

• Avoid moves that will erode your customer value proposition.
  Just like you, your customers are paying closer attention to their spending and are hyper-sensitive to the value that they feel they are getting from their vendors. If they sense that you are cutting back on the value you deliver to them they will begin to seriously consider alternatives. Maintaining good value is vital and moves that diminish value in the eyes of your customers must be avoided. Examples include reductions in product quality or quantity, increased pricing, scaling back of customer service/support or eliminating/reducing any existing buying incentives.

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