The buzz in the performance-improvement arena these days is all about the Demand Chain, where companies begin their product or service development by first consulting consumers or end users to evaluate their needs. Only then do they call in research and development, sales, marketing, and other departments.

Along with this focus on customer needs is a growing understanding that the employees who work directly with those customers can play a pivotal role in branding and even product development — and that incentives can be used not only to develop brand loyalty among customers but also to create a stronger understanding of the brand among employees.

“There's a new recognition by a lot of companies that they need to do a better job engaging and rewarding these employees,” says Frank Mulhern, associate professor and department chairman, integrated marketing communications, Medill School of Journalism at Northwestern University, Evanston, Ill. Mulhern is a driving force behind Northwestern's Forum for People Performance Management and Measurement, which has become a leading source of research linking long-term financial success to motivated customers and employees.

The way the demand chain works is that “employees who deliver outstanding brand experiences become the primary customer-satisfying variables. The products themselves and pricing become support,” explained Mulhern's colleague, Don E. Schultz, professor emeritus-in-service at Northwestern, in a recent issue of the Forum's newsletter. “If you start at the top of the pyramid, the employee base, you must motivate and reward employees to provide better brand experiences, which will result in bottom-line success.”

Mulhern qualifies that nonsales incentives can serve an important role “only if they're professionally managed. In a lot of cases, companies don't bring in professional companies to create [incentives] but run them on their own. They need to be run by companies that can also measure the results [in order] for them to be efficient.”

For more information on the Forum for People Performance Management and Measurement at Northwestern University, visit www.performanceforum.org.