|Designing an Incentive Program
By David M. Gentry
President, BTE Performance Group
In order for an incentive program to be effective, it must be designed with the end result in mind. Programs structured to meet a specific business objective and provide a desired award to your target audience are almost always successful.
The following questions will assist you in evaluating whether an incentive program is justified, and will help you foresee and avoid any potential problems in the future.
What is your business objective?
All properly designed incentive programs must have a quantifiable and
What is the value ("worth") to your company for
attaining this objective?
If your objective is a revenue increase, determining "worth" is fairly easy. Other objectives such as increased market share or non-sales related objectives could be more complicated. Regardless of the difficulty, defining "worth" is necessary, as it is the basis for establishing your program investment parameter.
During what period of time do you want to
accomplish your objective?
If your objective is to increase sales over budget by 10% for the year, your qualifying period is twelve calendar or fiscal months. If your objective were to stimulate sales
during a soft part of the sales year, a shorter qualifying period (3-6 months)
would be appropriate.
How much of your objective's value are you
willing to share in order to reach it?
For example, if your objective is an increase in sales of $1.5 million dollars and you
are willing to share 15% to see that your goal is met, your incentive investment
would be $225,000.00.
What activities must be performed for your
organization to attain its objective?
People perform activities, not objectives. Once your objective is established, the activities required to reach it need to be clearly defined. This process identifies your target audience and is the basis for your rules structure.
Should you operate an incentive program or a contest?
Open-ended incentive programs allow any top performer or valued customer the opportunity to earn an award based on his or her individual performance. During closed-ended incentive programs, participants compete against one another for a fixed number of awards. Depending on your objective(s), a combination of these programs may be appropriate. For example, a company may use an open-ended program for its top performers, allowing those unable to reach the qualification level an opportunity to participate in a close-ended sweepstakes. There are a variety of ways to structure
Successful incentive programs include a comprehensive
campaign communications package.
Incentive campaign communication includes "promotion" and "administration."
Your target audience must know specifically what activities you want them to perform,
and the benefit they receive (promotion). Tracking and providing performance updates tells your target audience how they are performing and how close they are to reaching their goal (administration). In order for you to attain maximum incentive program
success, participant interest must be sustained over the entire qualifying period.
This is accomplished with an exciting and informative campaign promotion reinforcing
the benefit for your target audience, and timely administrative results of their
What type of award best fits your participants,
investment parameter and company?
Once your objective, investment parameter and target audience is defined, you should decide which type of incentive award is most appropriate for your needs. If your investment can support it, group incentive travel has proven to be the best motivator, and it provides the greatest lasting value. Individual incentive travel, merchandise and stored value cards are also excellent choices.