CASE STUDY: Customized Gift Cards Prove to Be a Worthy Sales Incentive for FM Group USA
PROBLEM: FM Group USA, a direct seller of fragrances, wanted to increase revenues from its independent sales distributors.
SOLUTION: Incentivized its sales distributors with the opportunity to win customized Visa gift cards by attaining certain sales goals.
RESULTS: FM Group USA's overall sales have increased since it began offering the gift cards in the summer of last year. In addition, FM Group USA brands the gift cards with its company logo, helping keep the retailer top of mind and creating positive word-of-mouth marketing.
With a business model akin to that of Avon's or Mary Kay's — i.e., independent contractors work with the brand to directly sell its products — FM Group USA sought to increase its revenues by motivating independent sales distributors to move more product. What better way to motivate than to offer an incentive. Beginning in July of 2010, FM Group USA did just that, offering its sales reps the opportunity to win gift cards in exchange for meeting predetermined sales goals. FM Group USA also offers gift cards to new members joining its independent sales force.
Helping FM Group USA in this venture is Incentive CardLab, a provider of customized Visa gift cards. As of press time, FM Group USA had placed eight orders with Incentive CardLab, purchasing a total of 168 gift cards. It also supplied its logo to Incentive CardLab so that each gift card could be printed with it.
"They're a very powerful tool for branding," says Michael Walkowski, CEO/managing director of FM Group USA, whose customized gift cards are branded with the company's logo and select product pictures. "The second benefit is that incentives help people understand how easy it is to make money with our company."
Dual Value
The customized gift cards used by FM Group USA are attractive for a couple of reasons, says Walkowski. First, they help to incentivize the retailer's independent sales reps to sell more product and, second, the positive word-of-mouth they generate help make it easier for FM Group USA to recruit more consumers to become independent sales reps for the company.
"Typically, retailers are looking to incentivize some sort of customer activity, whether it's purchasing a particular product or returning to their stores a certain amount of times," says David Jones, CEO of Incentive CardLab. In FM Group USA's case, that activity is a little different in that it rewards independent sales reps' behavior. Jones estimates that 5 percent to 10 percent of Incentive CardLab's business comes from companies like FM Group USA.
But there's two common themes that cross over all of Incentive CardLab's customers, including FM Group USA, says Jones: 1) they're businesses where word-of-mouth is the primary marketing channel; and 2) the average value of a customer is relatively high.
That positive word-of-mouth is paying off. "We've had a tremendous increase in sales since we started to use the gift cards," says Walkowski. That increase is also due to the branding aspect of the cards, he adds. In fact, FM Group USA's primary goal with its gift card program was branding, not increasing sales.
Going forward, FM Group USA plans to increase its use of gift cards as a motivational tool for its independent sales reps. The retailer will make the gift cards available on a tiered basis dependent on sales reps reaching sales goals, and is also considering lowering the initial requirement to earn a gift card. And while the gift cards are currently sent to sales reps via snail mail, an electronic system for distribution is being looked into.
