From the October 1996 issue of Startups

Like your favorite game shows, some network marketing companies offer fabulous prizes and vacations. Called incentives, these fur coats, cars and trips aren't awarded according to the turn of a wheel, but rather by merit--to terrific sellers and sharp recruiters.

Although incentives are fun (who wouldn't want a free trip or a diamond ring?), think of incentives as the icing on the cake. Liking the company and its products is more important than what they award top sellers and recruiters. Of course, if you've narrowed your choice down to two or three companies, looking at their incentive programs might make your final decision a little easier.

Incentives are used by many companies as a motivational tool to increase their employees' productivity. Although all types of companies use incentives, network marketing companies are known for their extensive award programs. With its system of independent selling and recruiting, network marketing and incentives work well together. Prizes, like cars, china and jewelry, encourage top sellers and recruiters to continue their efforts, and group incentives, like discounted product, reward everyone for just being part of the company.

"Incentives show that a company is behind their employees," says Jennifer Jurgens, editor of Incentive, a trade magazine that covers the incentive industry. "Prizes, like a free vacation, encourage employees toward better performance."

The incentives companies offer vary. Some reward their top sellers only. Some offer awards every quarter; others, just annually. So if you're a go-getter and want to be rewarded for that, you'll want a company that offers incentives for sales and recruitment. If you're a small seller, you might benefit more from a company that offers more general incentives.

Prizes You Can Drive

Sometimes incentives become a trademark of the company. For instance, a pink Cadillac always conjures images of Mary Kay Cosmetics. Yet the concept of the pink Cadillac as an award for achievers came about accidentally. After Mary Kay Ash's first few years in business, she needed a new car. She purchased a Cadillac, and had the dealer paint it the shade of her Mary Kay compact.

When Mary Kay arrived at the office that day, the reaction was enormous. "Oh, Mary Kay," representatives asked again and again, "what do we have to do to get one of those?" Thus, the "trophies on wheels" prize was created. Today, although two other cars (the Grand Prix, also in pink, and the Pontiac Grand Am, in red) are also awarded to Mary Kay representatives for excellence in recruiting and sales, it is the pink Cadillac that has become synonymous with the name Mary Kay.

Cars are often awarded in network marketing companies. Natural World, which sells nontoxic and natural household, pet, personal, skin and nutrition products, adds a twist to car incentive programs by offering cash bonuses in lieu of cars. Awarded to directors for excellence in enrollment and sales, these bonuses can be used for anything--including buying or leasing a car. Individuals wanting an "official" company car opt for a Ford Explorer in green (representative of "the environment"), the vehicle that the president, as well as many other representatives, drive.

See the World

In addition to cars, some network marketing companies offer their top sellers and recruiters the opportunity to travel. "The fact is," says Jurgens, "there are so many people who haven't traveled that much. Travel is a huge draw to them." Although many companies only offer travel incentives to top wage earners, some companies, like NU-Concepts in Travel, "spread the wealth" to most of their downline. NU-Concepts, founded in March 1994 by president James Massoli, not only uses performance-based contests to award vacations to top sellers and recruiters, but also regularly offers incredible vacation discounts to all its representatives.

NU-Concepts uses a network of independent travel agents to market and promote travel at a grass-roots level. With its sister firm, Jetaway Travel, which provides ticketing, scheduling and billing capabilities, NU-Concepts allows local independent travel agents to offer a full range of services to book travel arrangements for friends, neighbors and co-workers.

"We like to reward our sales force with a once-in-a-lifetime value," says Ron Cummings, director of marketing, referring to the substantial savings NU-Concepts offers its representatives on travel. For instance, in January 1996, 1,000 people (representatives and their families) enjoyed a seven-day/six-night trip to Greece, including a stay at a four-star hotel, for about $599 each (the exact price varied depending on the point of departure for each individual). NU-Concepts can offer such bargains because of the volume of travel business they generate.

NU-Concepts representatives are also privy to information on last-minute deals. Let's say a cruise ship is leaving in two weeks and a portion of the cabins have not yet been booked; NU-Concepts will offer their representatives the unbooked cabins at a terrific savings. Such bargains are posted on their fax-on-demand and voice-mail systems, and are announced through leadership calls, in their newsletter and on their Internet Web site (www.nu-concepts.com). Whoever responds first gets the deal.

"Every company offers some kind of an incentive," says Cummings. "They give away a trip. They give away a car. The problem with this type of incentive is that only the top people receive it. With us, everyone has the opportunity to travel at bargain costs."

Natural World's management believes including everyone in the festivities actually helps the company. "We find it's better to have more people rather than fewer people included in the trips because it creates excitement and energy," says Janice K. DeLong, president and CEO. On one recent trip to Los Cabos, Mexico, representatives who didn't win the trip for free could go on the three-night, four-day trip anyway--for less than $500 (plus the airplane fare). Even throughout the trip, representatives earned prizes, such as T-shirts or hats, at a "Beach Olympics," which Natural World organized to generate team spirit, camaraderie and friendship. "Our idea is to create a bonding-together culture," says DeLong. The idea, according to DeLong, is for representatives to bond with one another, like a family does. The annual trip fosters friendships among all of Natural World's representatives, and allows top sellers to mix with newcomers and other representatives.

Specialized Prizes

Prize-giving has no set schedule. Some company representatives vie for prizes on a quarterly schedule, some monthly, and others, like Natural World, every other month. "If you have them every month, you lose momentum," says DeLong. "We envisioned a program that would reward people for bringing customers into the company. People will do things for cordless phones and fax machines that they won't do for a paycheck."

Some incentive contests are ongoing, like Mary Kay's car program. "When I started Mary Kay, I wanted to give employees what I call `Cinderella gifts,' " says Mary Kay, "things that a woman would love to have, but wouldn't buy for herself." Mary Kay representatives can also win prizes, like jewelry or furniture, on a quarterly basis. (NU-Concepts also has periodic sales contests.)

Some prizes are cumulative. Natural World offers a Gold Medallion to anyone who refers five people in one month; each subsequent month that this occurs, they'll add one diamond to the Medallion. After seven diamonds, the representative receives the top-of-the-world gift: a crystal globe placed on a granite base. From then on, as long as they maintain their status, that representative receives special seating at all company events.

Watkins Inc., founded in 1868 by Joseph R. Watkins, sells over 375 items in four product lines: specialty food, personal care, health and nutrition and household products. The company sponsors sales promotions throughout the year, reserving their big incentive, usually a trip, as an annual award. One promotional contest, for instance, which ran from March 1 through June 15, 1996, awarded a representative with the "best performance in generating sales from (sponsoring) new representatives" with a fully restored 1929 Ford Model "A" Sedan Watkins Delivery Truck, valued in excess of $10,000.

"I think incentives are something that people feel they need in order to keep them excited in the business," says Duane Evans, vice president of administration for Watkins Inc.

Even more than conventional companies, network marketing companies rely on their representatives' success. In a sense, as a representative of the company, you are in partnership with the company. Incentives benefit the company as much as the representative. For if you do well, the company does well.