When it comes to employee incentive theories there are two schools of thoughts:
The managers and corporate hierarchies who believe that generous discounting of product to employees hurts revenues, and those who believe in the power and return achieved by having workers who are active consumers of the products and services of the organization they work for. These are there stories.
These two ideologies, we’ll call them the “Lost Revenues Perspective” and the “Money Making Perspective” apply to all fields of business, but they’ve been adapted to the motorcycle kingdom just for you readers:
The Lost Revenue Perspective
Quote: Holy @#$%! Giving my employees discounts is like giving away free money, $%&#!
Common Practice: MSRP less X%.
Reality: This Lost Revenues Perspective looks at employees as if they were customers. When employees are treated as customers their purchase decisions and actions will reflect it. Employees will buy wherever is cheapest and most convenient for them. Product and service knowledge and familiarity won’t grow as quickly among staff. The resulting lack of familiarity and firsthand experience shared with customers can drastically effect their sales convergence.
End Result: Lost sales revenues. Employees shopping elsewhere costs business more than just the cost of the discounted sale revenue. An employee who saves money at a competitor is still disgruntled at his or her employer. The effects will be felt in the employee’s work performance and in their interactions with customers.
The Money-Making Perspective
Quote: Holy @#$%! The more incentive I give my employees to spend the more free money I get!
Common Practice: Cost plus X%.
Reality: This Money-Making Perspective looks at employees as a means of creating quick profits through impulse purchases. It allows employees to test the products and it helps the business to develop its brand image both inside and outside of the workplace. An employee who’s the employee interacts with customers and sells the business’ image and values through his or her own experiences.
End Result: Increase in sales revenues come two-fold. Employees are prone to impulse purchases they otherwise may not have been interested in due to the low pricepoint they receive. Employees will be joining in the corporate culture and sampling the business’ product. In sharing their experiences with friends, family members, and other consumers, employees spread direct word of mouth and build credibility to their company’s goods and services.