:Chattanooga; :Jan 24, 2010; :Business; :27

Eye on a prize

Incentium positions itself in fast-growing incentive industry

By Ellis Smith esmith@timesfreepress.com

Online: Hear Richard Char talk about his vision for Incentium’s


    Incentium, formerly VIPGifts, isn’t resting on its laurels waiting for the economy to improve, according to CEO Richard Char.

    Instead Mr. Char says the firm has expanded and broadened its operations to the point where the company, founded by Hamid Andalib in The Loft restaurant on Cherokee Boulevard, nearly doubled in size last year.

    Mr. Andalib sold VIPGifts in October 2008 to private equity and venture capital firms Summit Partners and Bridgescale Partners, which brought in Mr. Char to head up operations at newly renamed Incentium.

    “We’re probably the only incentives company in the
U.S. with fireplaces at both ends of the production center,” said Mr. Char, whose upstairs conference room used to be the main dining room.

    Prior to the sale in October 2008, Incentium focused on providing employee rewards for companies that wanted to recognize achievement in the workplace. The company began to expand its focus soon after the sale. Clients began asking Incentium to design the system whereby employees earn prizes, in addition to prize fulfillment.

    “If you think of the prize as the cheese, what we were now doing was in addition to building the cheese, we’re also building the mousetraps that the cheese goes in,” said Mr. Char.

    Rather than sell software packages up front like other incentive companies, Incentium executives decided to give the customizable software away for free, and only charge clients for prize fulfillment.

    “I think it’s an ah-ha moment for them for sure; that’s one of the things that makes us a very different solution,” said Mr. Char.

    In expanding from a regional to a national company, the firm has quadrupled the sales force, tripled the technology development team and hired a full product marketing team in the last six months, according to Mr. Char. The company also introduced a new points system in 2008, similar to existing frequent-flyer programs, where employees can redeem points online in exchange for gift vouchers.

    As part of the program, Incentium offers portals that use company databases to offer a customized experience for each employee. Mr. Char hinted that this could be a launching board into a new type of business, as Incentium’s portals and clients’ Intranets become indistinguishable.

    “Suddenly that Web site has other applications because if you have a portal for employee incentives, that becomes the perfect place to put the company newsletter and special offers. If they’re trying to get you to sign up for a 401(k) plan, and if you sign up for it, you get some more points,” said Mr. Char.

    Randy Evans, assistant professor of management at the University of Tennessee at Chattanooga, said rewards can be helpful in modifying employee behavior, but they have to be presented appropriately.

    “These little nontraditional rewards, if they can present the reward to the employees and the employees think it was done fairly and out of respect and the boss cares, the gift could maintain its value, but I would wonder about something sort of showing up in my mailbox,” said Mr. Evans. “If it shows up in my mailbox, I would perhaps as an employee kind of view that kind of cynically, ‘Oh look, there’s my reward.’”

    Karen Renk, executive director of the Incentive Marketing Association, sees Incentium’s business model as part of a war for the $46 billion incentive rewards marketplace.

    “As we do recover economically, we are going to see a tremendous war for top talent, and a war for customers,” Mrs. Rank said. “And the incentive marketplace provides tools for organizations to fight that war in that we have proven methodology for developing programs that can help to modify an employee’s behavior.”

Staff Photo by Dan Henry Incentium’s corporate headquarters is where The Loft restaurant stood off Cherokee Boulevard.

Contributed Photos