The Science of Motivation

Author: 
Tim Houlihan

Why we don’t know what motivates us best

Sales manager:
I’d like to know what rewards the reps would like for our next incentive.

Sales rep:
Cash! I’ve got bills to pay!

Sales manager:
Sounds good. Thanks for the input.

You may be a seasoned sales manager, fatigued by trying to come up with innovative ways to motivate your reps. Or you might be new to sales management and you want to be the cool leader by collaborating with your new reports. Or maybe you think that incentives have run their course and it’s time to drop them altogether. Whatever your situation, like most sales managers, you’ll likely end up asking your reps what would motivate them for the next sales contest.

Don’t do it.

If you’re thinking of asking your reps what will make the best prize in the incentive program, stop. They can’t tell you because they don’t know. Here’s why and what you can do about it.

Are incentives obsolete?

A recent Harvard Business Review article1 noted that it’s time to move past incentives for sales reps because the way sales are made has changed. This is more pronounced in some industries, such as pharmaceuticals, where regulations impact how much influence a rep has over the writing of prescriptions. However, even with change, most sales jobs still rely on a relationship with the customer to influence the outcome. It’s unlikely that the job of selling will go away anytime soon and neither will incentives.

In the years since Dan Pink released his book “Drive,” some have struggled to apply Pink’s formula of autonomy, mastery and purpose to their sales reps. As much as many wanted to believe in it, that model offered a thin promise ill-fitted for the grind of making sales calls to people who didn’t want to see or hear from a sales rep. The reality is that sales reps and their employers alike benefit from incentives — short-term initiatives coupled with unique awards to drive incremental results.

This leads to a common question: if incentives for sales reps are still a viable way to impact your business, wouldn’t the best incentive be the one that the reps conceive of themselves? Why not just ask the reps to tell sales management what reward would motivate them the most?

It’s not a good idea because they can’t.

We don’t know what we don’t know

Imagine you’re living in Seattle in 1971 and you’re asked to join a focus group. A facilitator stands in front of you and lays out the design for a new business and asks for your opinion. You’re told the new business will sell coffee in retail stores that you have to drive to. Once you’ve parked your car, you’ll need to stand in line for a few minutes because it will be so busy. And you’ll notice the coffee is extraordinarily expensive. Brewing your coffee at home, which was the norm in 1971, costs (in 2017 dollars) about $0.08/cup2 and this new coffee will cost a minimum of $2.10/cup. (If you’re quick with math, you’ll see that over 30 years of drinking one cup per day, you’ll spend $23,000 on this coffee.) What do you think — will this new business be a success?

Starbucks now has nearly 25,000 stores worldwide and they’re still growing. There’s nothing rational about our love affair with Starbucks coffee, but people all around the globe have fallen, and fallen hard. Why? Because from the beginning, Starbucks has offered an experience worth valuing. It’s unlikely that anyone in that imaginary focus group in 1971 would have endorsed such an idea — because it just wasn’t rational and therefore nearly impossible to consider the happiness that it could bring to hundreds of millions of coffee drinkers.

To put a finer point on not knowing what will make us happy, college freshman at the University of Virginia were randomly assigned3 into two dormitories. The first group would occupy a charming, clean and new building with lots of amenities. The second group was assigned to a dilapidated, tired dorm with virtually no amenities. After receiving their assignment, students in both situations were asked to anticipate their level of happiness with their living conditions. As expected, those assigned to the crappy old dorm were unhappy and expected they’d have a terrible time. Those assigned to the posh space expected to have a great time during college. Three years later, these same students were asked about their experience and both groups responded with the same level of satisfaction: a lot better than expected for the students in the shoddy dorm and a little worse for the students in the new, cool dorm. If they’d all had a choice, it’s likely they all would have chosen the nicer surroundings, but as it turned out, their happiness was about equal.

It’s difficult for us to forecast what will make us happy in the future — and yet we mistakenly believe we can identify it.

When we’re given a choice between something we think we’ll love and something that seems like the rational option, we tend to go with the rational option — because we think we ought to be rational. For instance, when shown two types of chocolates —  beautiful heart-shaped chocolates priced at 50 cents and cockroach-shaped chocolates priced at $2 — people said they would enjoy the heart-shaped chocolates more. A lot more. But when told they could take one with them as they left the room, most of them picked up the cockroach-shaped chocolate4. Once given the choice, their rational brain kicked in thinking the cockroach must be better because it costs more, even though they said they would enjoy eating the pretty heart-shaped chocolate more. It’s human nature to choose something that doesn’t align with our desires.

But what about real sales reps?

Scott Jeffrey, PhD, was in graduate school at the University of Chicago when he decided to figure out how academic studies applied to real sales reps in the field. He began a lifelong journey of studying reps’ behaviors in real working conditions.

In 2011, he studied inside sales reps at a North American financial institution and found that they thought more about non-monetary rewards (prizes that didn’t have explicit cash values, such as experiences) than cash rewards. Further, he found that reps who earned non-monetary rewards performed better than those who earned cash. What seems like a small thing at first is an important aspect of motivation. Academics call it salience, or something that is particularly noticeable. We spend time daydreaming about things that are important to us — like upcoming vacations with friends and family.

While we may sometimes get pre-occupied with paying bills, we never frame paying the bills as a reward. The salience of the reward is critical to motivation and because we think about non-monetary prizes more, they have the greater motivational effect.

In another study, Jeffrey asked sales reps what rewards or incentives they preferred5. He offered two rewards for consideration: (A) $5,000 in cash or (B) a trip to Hawaii (of equal value to the cash). Then he asked two different questions of them:

Which reward would you prefer: the cash or the trip to Hawaii?

How much effort would you put into earning each award?

Not surprisingly, all the reps indicated their preference for cash. And the logic around preference is undeniable: if you earned the cash, you could use it for anything you wanted —  even a trip to Hawaii, if that was your pleasure.

The second question revealed their true motivation: reps indicated they would exert much more effort to earn the trip to Hawaii than the cash.

So why would the reps be disconnected on their reward preference and their effort for each award? Jeffrey asked more questions to understand this apparent contradiction and it boils down to these key takeaways:

  • Justifiability: Reps won’t have to justify spending their own money on the trip to Hawaii. There will be no regrets and no family fights over what to spend the cash on.
  • Sociability: Reps can easily talk about going to Hawaii and how they earned the trip with their coworkers, family and friends for years to come, but they won’t be able to do that with the cash. Hawaii is a reward they’ll remember forever.
  • Separability: Reps can think of the trip to Hawaii as a unique experience. It won’t get mixed into the things they would do with cash earnings.

Researchers across the world have used the same approach with other groups to replicate the results. The findings are robust and indicate that this condition of not choosing the best rewards for our motivation is evident across a wide variety of income levels and job titles. In other words, part of the human condition includes the inability to identify what will make us happy and therefore what motivates us.

Application is the key

Everything you offer to reps as a prize will have a price tag associated with it, but there is a motivational difference between offering “a $5,000 trip to Hawaii” and “a trip to Hawaii.” The less you focus on the monetary aspects of the reward, the better off you’ll be. The best way to promote the trip to Hawaii, for instance, is to focus on the destination, the names of the beaches, the hotel where the winner(s) will stay, pictures of the luau and other events they might attend, etc. When you tee up the trip as “a $5,000 trip to Hawaii,” it becomes a deal which is negotiable and we tend to analyze the value of each element of the trip. That works against the ultimate value of the trip as a motivator and incentive — it reduces salience. Keep as far away from the dollar sign as you can.

Rewards themselves can vary, but the most motivational incentives are experiential. At the top of the list of what motivates is travel. If your budget doesn’t allow for travel, that’s OK: focus on local experiences such as hot air balloon rides, golf outings at exclusive courses, all-expenses-paid spa day, etc. Experiences — and the more personal the better — create delightful memories and are the seeds of great motivation.

Using merchandise as a reward can be powerful too — just keep the dollar sign out of it. Rewarding reps with a luxury watch creates a tangible connection to memories of their effort and their win when they share the story with friends and family. It also becomes a valued symbol that reminds them of their success when they glance at their watch for the time. Big screen televisions, home audio systems, fancy coffee makers... all of these “non-monetary” incentives can be highly motivational if promoted properly.

The key to promoting non-monetary awards is keeping the dollar sign out of the discussion. Why? Again, because as soon as money enters the picture, it changes the conversation and dilutes the motivational power of the reward.

Don’t ask, don’t tell

Our preferences don’t always line up with our decisions to act. This is difficult to see in our own lives because our brains so quickly rationalize behaviors that are out of sync with our preferences, and usually change the way we understand our preferences. We see this with the fox in Aesop’s fable. His initial instinct was to pursue the sweet grapes as a delicious treat, but when he found them unobtainable he quickly decided they were sour and undesirable. Sales reps are no different.

While the nature of selling may be changing, there is still a healthy need for sales reps to build relationships with customers and to focus on corporate revenue targets. Regulated industries may be seeing a change in the effect sales reps have on the sale, but most industries are still in need of good sales reps who achieve their numbers.

If you’re caught up in the cycle of constantly using cash as an incentive, because “that’s what my reps want,” then it’s time to take a break. Try something different. Change it up and measure the effects. You’ll be glad you did.

Tim Houlihan is an evangelist of applied behavioral economics with more than 25 years of experience in product development, training, sales leadership and marketing strategy. His consultancy is based on authentic, empathetic and insightful business partnership to help clients ask the next question. Tim can be reached at tim@timhoulihan.com.

You can register for a free webinar by Tim in which he will expand on the science of workplace motivation. The webinar is scheduled for 2 p.m. on Dec. 5. Register here.


1. Zoltners, A., Sinha, PK., & Lorimer, S., “Are Sales Incentives Becoming Obsolete?” Harvard Business Review, August 3, 2017.
2. https://www.usatoday.com/story/news/nation-now/2014/07/22/coffee-prices-...
3. Wilson, T. & Gilbert, D., “Affective Forecasting,” Current Directions in Psychological Science, Vol. 14 No. 3, 2005.
4. Hsee, C., & Hastie, R., “Decision and experience: why don’t we choose what makes us happy?” Center for Decision Research, University of Chicago, 2008.
5. Jeffrey, S. “Non-Monetary Incentives and Cash: When is Hawaii Better Than Cash?” Center for Decision Research, University of Chicago, 2003.