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Is Cash King?

Webinar On Demand

With more ways to reward sales performance than ever, which reigns supreme? Are merchandise incentives effective motivators or will cash always remain king?

In this webinar, Professor George John, Ph.D breaks down an applied academic study that compared the effectiveness of cash compensation versus non-cash incentives in a $700 million business segment. Watch to learn more.

While our instincts lean toward offering money to reward behaviour, human psychology may prove otherwise. In this webinar, George John, Ph.D, General Mills/Paul S. Gerot Chair and Professor of Marketing at the University of Minnesota’s Carlson School of Management, outlines the benefits of offering more than just cash rewards in your sales incentive programs.

By catering to the nuanced desires of your salesforce, you will unlock their inner potential and inspire them to perform over time. A new controlled study involves a $700M (USD) division of a large frozen foods manufacturer that traditionally used non-cash but introduced cash into their sales incentive schemes to test effectiveness.

Key Findings

• 4.5% revenue decline when cash was the sole reward.
• Sales drop with cash incentive was most pronounced for typically highest performing segments (i.e., tangible rewards are even more attractive to A players).
• People don’t look at income/benefits as a single construct—we partition them into buckets and assign value. We think about our gains and losses relative to each bucket. Points are private to the participant thus seen as a “right to indulge” themselves (more motivational). Cash belongs to “public/family” buckets and thus is viewed differently.
• The “right to indulge” in wants vs. needs is a predominant factor in the incentive design construct and subsequent outperformance of tangible rewards over cash.

About The Speaker

Professor John received his bachelor’s degree in Aeronautical Engineering from the Indian Institute of Technology, Madras, India in 1974 and his MBA from the University of Illinois in 1976. After earning his Ph.D in Marketing from Northwestern in 1981, he joined the faculty at the University of Wisconsin. 

In 1987, he moved to the University of Minnesota. He is the General Mills/Paul S. Gerot Chair in Marketing at the Carlson School of Management, University of Minnesota. His interests center around distribution channels and high tech marketing. Specifically, he is interested in the strategic and efficiency aspects of governance choices in these settings. 

His academic honors include an American Marketing Association award for his Ph.D dissertation in 1981, and his selection in 2003 as a “Highly Cited Researcher” in the Business/Economics category by Thomson Reuters Web of Science.