The HOW and WHY of Incentive ROI Bill Boyd, CMP, CMM, CITE Sunbelt Motivation & Travel Inc.

Preliminary Reasoning Why is ROI Important? Different Methods Case Study Case Study Results Brief Conclusion

Preliminary Reasoning Necessary to Understand Incentive Travel What Is ROI? Important to Learn Why Calculating ROI Is Important How Do We Calculate ROI?

What is Incentive Travel? Incentive travel is a GLOBAL MANAGEMENT TOOL that uses an EXCEPTIONAL TRAVEL EXPERIENCE to MOTIVATE AND/OR RECOGNIZE participants for INCREASED LEVELS OF PERFORMANCE in support of ORGANIZATIONAL GOALS.

“ Imagine ” and There is a Performance Improvement Program That “ Fits ” Stimulate sales force Introduce a product Extend a distribution area Move slow items Open new accounts Revive inactive accounts Aid sales training Recruit salespeople Extend peak season Reduce selling costs Qualify prospects Improve morale Obtain customer referrals Reduce absenteeism Introduce a new model Improve working habits Enlist spouses’ help Eliminate overstock

What is ROI? Return on Investment is the measurement process of what is gained as a result of an enticement. Example: You calculated before you attended this conference. Is it worth my time? Is it worth the expense? You developed an internal ROI before you ever signed up to attend. Example: You take a long weekend off. You left your computer at work. Was the time off worth it? How long did it take you to catch up?

What is ROI? Incremental Profit = ROI Total Cost

Why is ROI Important Incentives represent a $130 billion annual expenditure Incentive programs increase work performance an average of 22% 92% of workers surveyed achieved their goals because of incentives Calculating a return for money spent quantifies the success of incentive programs

ROI for Sales Incentive Programs

Determine what sales would be without the program Estimate what sales will be with the program Reduce estimate by 15% to match an 85% success rate (national average) The difference between “with the program” and “without the program” is called Incremental Sales Take incremental sales and calculate the incremental profit—most companies spend between 5% to 30% of incremental profits on incentive

ROI for Non-Sales Incentive Programs

Determine level of current costs Determine level of costs with the incentive program For example: Improvement in production Reduction in absenteeism Productivity increases Calculate the difference and decide what percent of the savings the company is willing to spend

Different Methods Define program goals and objectives to determine where emphasis should be: % increase $ increase Products sold Revenue Profits Retention

Different Methods Identify “alligators in the swamp:” Discounting Returned merchandise Cost of sale Sandbagging Lost interest

Case Study #1 XYZ Computer Company Want to offer a travel incentive Take 20 minutes to figure out the case study Work as a group at your table Report findings and determine what is missing from the provided information

Case Study #2 ABC Software Want to offer a travel incentive Can they afford a 5 day/4 night program to Cancún? Take 20 minutes to figure out the case study Work as a group at your table Report findings