PrincePerelson & Associates

What Are the Positive and Negative Impacts of Offering Incentives in Customer Service Staffing?

Providing employee incentives in customer service roles is not new. However, as more businesses compete for limited market share in specific industries, employers have had to adjust their thinking to recognize that relying mainly on financial inducements can have its downsides. As you read on, you’ll see how business experts make a good case that employee incentives should only represent part of your overall customer service game plan.
Lisa Rehurek

Lisa Rehurek

Founder & CEO of .

Skill Development, Competitive Advantage; Employee Burnout, Customer Distrust

Positive Impacts:

Skill Development
Implementing well-structured incentive programs can catalyze employees to proactively acquire new skills and broaden their knowledge base. These initiatives contribute to individual career growth and elevate the overall caliber of customer service offered. Businesses can stay at the forefront of industry trends, ensuring they remain competitive and relevant in their market.

Competitive Advantage
By fostering a motivated and incentivized customer service team, your organization gains a distinct competitive edge. This motivated workforce is driven to deliver outstanding service, setting your company apart from rivals. The exceptional service provided becomes a hallmark of your brand, attracting and retaining customers who seek unparalleled experiences.

Increased Sales
Strategic incentives that link customer service performance to sales outcomes can lead to substantial revenue growth. Employees motivated by these incentives are more inclined to identify upselling and cross-selling opportunities, effectively boosting the organization’s income. This relationship between exceptional service and increased sales underscores the pivotal role of incentives in driving financial success.

Negative Impacts:

Employee Burnout
Caution must be exercised when implementing incentive programs to avoid inadvertently pushing employees into a state of burnout. Overly aggressive targets and pressure to consistently meet them can have detrimental effects. In the long run, this could lead to high turnover rates, undermining the stability and expertise of your customer service team.

Customer Distrust
There’s a delicate balance to strike between employee incentives and maintaining customer trust. When customers perceive that employees are solely motivated by incentives, it may erode the trust they place in your brand. It’s crucial to ensure that incentives align with genuine, customer-centric practices to preserve and enhance customer relationships.

Complexity and Administration
The design, implementation, and ongoing administration of incentive programs can pose significant challenges. These initiatives demand meticulous planning, allocation of resources, and monitoring to ensure they remain effective. The complexity of managing such programs may divert valuable time and resources from other critical business activities.

Diminished Intrinsic Motivation
Excessive reliance on external rewards can inadvertently diminish employees’ intrinsic motivation. When the primary driver becomes financial gain rather than a genuine desire to provide excellent service, the quality of customer interactions may suffer. Striking a balance that nurtures both intrinsic and extrinsic motivation is essential for sustained customer service excellence.

Increased Morale; Focus on Metrics Instead of Broad Service Role

Incentives in customer service staffing have their merits and drawbacks. On the positive side, incentives boost team morale and performance, leading to increased customer satisfaction.

However, it’s crucial to strike a balance, as I’ve observed instances where employees became overly focused on incentives, potentially neglecting the broader aspects of their roles and long-term career development.

Nikita Sherbina

Nikita Sherbina

HR at .
David Zhang

David Zhang

CEO of .

Balance Financial and Non-Financial Incentives

Here are some of the positive impacts we have seen from offering incentives:

    ● Increased productivity since staff are more motivated to get things done faster and better.
    ● Higher quality customer service, as staff are incentivized to go above and beyond for their customers.
    ● Lower employee turnover rate, as employees feel their efforts are respected and rewarded.

But most importantly, incentives can also have a negative impact on customer service staff. It’s important to remember that performance should always be based on quality and not quantity — when employees are incentivized for the number of customers they help, they may start cutting corners or sacrificing quality to meet their targets faster.

It’s important to balance financial incentives with non-financial rewards. Recognizing great work, offering flexibility, and encouraging collaboration can go a long way in rewarding staff for their efforts and showing them that they’re an integral part of the team.

Motivators for Better Service; More Competition and Less Collaboration

On the positive side, incentives can be powerful motivators. They drive employees to perform at their best, often resulting in improved customer service. Agents are more likely to go the extra mile when they know there’s a reward for exceptional performance. This can increase customer satisfaction, positive reviews, and loyalty.

However, there’s a downside to this approach. Incentives can sometimes lead to short-term thinking. Agents might focus on achieving the metrics that earn them rewards, potentially neglecting other important aspects of customer service. This tunnel vision can harm the overall customer experience.

Another drawback is the potential for competition among agents. While healthy competition can be beneficial, it can also create a cutthroat environment where colleagues are more interested in outperforming each other than collaborating and sharing knowledge.

Balancing the use of incentives is key. They can be a valuable tool for motivating and rewarding exceptional customer service. Still, they should be complemented by a broader focus on training, support, and a customer-centric culture to ensure a consistently positive customer experience.

Melissa Terry

Digital Marketing Manager at .

This is a crowdsourced article. Contributors' statements do not necessarily reflect the opinion of this website, other people, businesses, or other contributors.