How To Plan INCENTIVE PROGRAMS (Part III) 1

To sell -- or even to administer -- an incentive program you must be prepared to: 2  Demonstrate your expertise  Know what goes into the program  Know how to put it together…… SUCCESSFULLY! Here’s How…..

REVIEW THE AVAILABLE INFORMATION 3  Ask questions. Then SHUT UP and LISTEN  Current market situation?  What are competitors doing?  How is product/service doing in the market?  Product’s strengths and weaknesses?

DEFINE THE ROLE OF THE PROGRAM 4  Know/understand target audience  Prioritize! Not Just Sales Not Just People Performance  Incentive cannot compensate for poor product quality, poor delivery, or high prices

DETERMINE THE OBJECTIVES 5 What Do You Want to Accomplish? Must be:  Realistic – Worth the effort. Tie to specific performance. Realistic for each territory.  Attainable – Challenging, but fair opportunity to achieve. Goals too ambitious? Could be turnoff right at the start!  Measurable – Too difficult to measure? Specific goals provide guidelines for measuring success. Need: fact-based method of measuring past performance fairly and objectively -- accounts opened, production achieved, number of customers serviced, etc.

SET THE STRATEGY  Synergistic – Fit in with: Budget Participants’ Jobs, Incomes Management Goals Company Policies and Philosophy  Win-Win Structure  Get Management’s blessing  Determine Extent of Program Delivery via the Internet 6

SELECT THE TACTICS Closed-Ended vs. Open-Ended 7

SELECT THE TACTICS Closed-Ended – Fixed Budget. Number of winners pre-determined. Limited in appeal.  Contests  Sweepstakes  Instant Winner Games 8

SELECT THE TACTICS 8 Open-Ended -- No limit to points/dollars you could earn. Feel they have more control over potential to win. Broad appeal. More difficult and costly to administer.  Continuity – On-going. The more you sell, the more awards/points you earn  Plateau – Tiered program. Increasing levels of awards based on specific sales increments. Encourage participants to really “reach”. Good when participants’ earning potential is limited.  Combination - Overlay of more than one tactic.

ESTIMATE THE BUDGET A well-designed program will pay for itself out of the profits or cost-savings it generates. Components:  Administration % -- Smaller program, administration cost proportionately higher  Awards % -- 2% to 5% of participants’ income  Communications - 20% -- Don’t skimp!  Research/Training -- Incentive is perfect opportunity 9

ESTIMATE THE BUDGET 10 Common Mistakes  Trying to do too much with too little money  Choosing this award before determining the budget  Ignoring the HIDDEN COSTS of running a program in house: TimeTrackingHandling CreativePostageFulfillment  Under-allocating funds for program communications and promotion

PLAN THE PROGRAM  Timing/Duration – Adequate, appropriate. Shorter can be better.  Participants – Who? Everyone, or just super achievers? Forget anyone?  Rules – Clear, simple. Avoid numerous qualifiers. Legal considerations. Get feedback. Consider surprises.  Internet – Online Catalog, Updates, Redemptions, Communications 11

OPPORTUNITY FOR DJA The Client: Overworked, understaffed, cost-conscious, yet interested in quality. Needs someone to provide value-added benefits at no extra cost. DJA can provide: 1.Professional Expertise – knowledge of how to custom-design and structure a program just for this client. 2.Unique ability to add creative/overlays, like sweepstakes, contests and games. 3.The tools to sell management, make them more receptive to incentive concept. 4.Help with creating program materials 5.Help administering the program 6.Help with tracking and reporting 7.Arrange for timely prize procurement and fulfillment 8.Information on mitigating liability and legal concerns 9.Information on measuring costs, benefits, and Return-On-Investment In good times and bad, people are people. They will always reach for the carrot or the brass ring. 12