Dear CMO:

It’s counter-intuitive, I know, but money rarely changes anything. Certainly not behavior. Look at lottery winners. Or Scarface. Martina Navratilova has the best quote about money, summing it up thusly: “Money can’t buy happiness, but it does make misery much more tolerable.” There you go. Money changes very little in the way of behavior.

Which is why using straight financial incentives as sales rewards often fail. Much like my last post on up cards and down cards, the use of financial incentives is a prototypical up card ploy. It lacks imagination, but it happens because we’re too busy to do it right. The sales team will tell you they just want money, but oddly they won’t sell any more because you’ve offered it to them.

There are probably many ways to process this, but here are a few to consider:

Loss-based framing: much like Thucydides’ commentary on the Athenians, when it comes to money, “we possess a thing as soon as we conceive of it, so soon does action follow thought.” Look at Who Wants to be a Millionaire: people are willing to risk more money than they’ve ever held in their lives – until the banker drops the amount. Then they start settling pretty quickly. We feel losses more than we do gains. Once we offer money, it’s assumed that the money is already paid. Behavior doesn’t change – only the intended target’s psychological set point.

Rewards are bribes, but gifts are welcome: we all look askance at “rewards,” no matter who offers them. There’s a very openly acknowledged social contract being sealed when you accept these kinds of bribes. Reciprocity says that you must give back when you receive, and when we see it coming we resist it.  Even when it involves money.

Conversions happen privately: We all have egos. We don’t want a sales guy in our face telling us we’re too dumb to know what’s best for us. Even if the sales guy is right, we don’t want to hear it. We want to be consistent with our previous actions, even if circumstances have materially changed. Why? Tell me what you call someone who changes their mind. They’re flaky. Wishy washy. Or, worst of all in this immediate post-political season, they’re a flip-flopper. Gasp! We’re willing to make up our own minds, though, and this only happens when we’re convinced that the idea itself came from us – either through our own reflections or through a consistent logic that runs, however tenuously, through our previous actions. “I was for it before I was against it,” indeed.

We had this problem a few years ago working through a fairly stodgy B2B broadline distributor. They were bored, which was a common occurrence, so they demanded a spiff. This request hit my desk with a sickly wet thud. Having recently been introduced to the social psychology of persuasion based on Dr. Robert Cialdini’s research, I worked with my team to recast the idea away from “give me the money” to “let’s teach you something first and then we’ll reward you for putting it to good use.” Said another way, “let’s get you to publicly commit to a new course of action, far from memorizing ‘speeds and feeds,’ then tell your boss that you’ve publicly committed to this new course of action – thus resetting the bosses expectations as to what you are now going to sell, and then give you a short term incentive (the nod to the spiff) that sets you off on a long term voyage.”

To them, the spiff was a “go,” but they needed to take a quiz first. To us, the spiff was dead, because we got the chance to brainwash them — with their boss’s approval, too!

We launched a web-based portal with knowledge, competitive facts, and a quiz. We gave them a behind the scenes look at our largest competitor, even translating their Danish chairman’s message to shareholders that explicitly said his intermediate term vision was to cut out channel partners (like our quiz takers) and go direct. Then we strayed into the area of commitment. “Congratulations on completing your quiz! How many presentations do you think you can give this month? Of those, how many do you think will be successful? How many units do you think you will successfully sell as a result?” All volunteered, all public, and all communicated to their management.

A typical spiff might net you a few points followed by a return to normalcy when it ends. In our case, we saw an ROI of 500% out of the gate. Followed by no drop off whatsoever after the program ended. They just… kept… selling… and selling. Their behavior had changed. They knew more than they had before. They cared more about it. And they knew their management not only supported the program, but was watching them.

This is what we call the consistency principle in the language of persuasion. We have a strong need to be consistent with our previously stated positions: how many I said I was going to sell, how confident I was when I made the statement, how completely I will stand behind my assumption when my boss asks me about it, etc. And the more public they are, the better.

The best news of all is that we re-launched the program two more times after this first outing. In our next iteration, we saw a 1,000% ROI. In our third, we saw a 1,500% return. And we never saw our channel partners return to pre-program sales volume numbers. They hit new plateaus and stayed there.

Changing behavior isn’t a question of money. It’s a question of internal changes, of conversions that happen privately. Are your budgets where they were six months ago? Didn’t think so. No worries. You don’t need more money – you just need to change the right behaviors.