Unsurprisingly, the first thing people want to know about starting up an incentive program is this: how much does it cost? The short answer is, “it all depends.” The long answer? Well, consider this article the long answer. We can’t tell you exactly what to spend on incentives until we spend a little time researching your business needs, but we can lead you to having a better idea of how you should budget for your incentive program by providing this six-step, pre-game plan.
Incentives are all about goals, and different goals have different costs. Would you expect to give your toddler a $500 reward for eating his peas? No, but you might offer a reward of that value to your teenager for working hard to make the honor roll at the end of the year. But even if you have a big, ambitious goal in mind, you can save yourself from overspending by being very specific about those goals. Know exactly what you want to accomplish in advance, so you know exactly where to invest your money.
Your participant audience can have a big influence over how you should budget for your incentive program. After all, incentive rewards won’t work if you don’t offer participants something that lights a fire under them. Is your participant base large and diverse? Then you should probably considering offering rewards—online merchandise rewards or debit or gift cards, for example—that can please everyone without losing their novelty. Do you have a young, trendy participant base who’d be dazzled by merchandise or travel rewards, or would they prefer to receive something more pragmatic, like debit and gift card rewards? The type of performers or customers in your participant audience is important. Today’s online reward program technology allows you to segment your participant groups so you can invest more in top performers and your most loyal customers, while still keeping your middle-majority performers motivated with different rewards and incentive plans.If you have a specific idea of who you’re rewarding and how, you’ll develop a better understanding of how to budget for your incentive program.
The incentive program’s purpose will play a large role in your program budget. Here are three examples of common incentive program types:
Incentive program costs include three things:
Don’t forget incentive programs are often, essentially, marketing tools. If you’re in a sales channel, you have a great opportunity to work with your vendors who might help sponsor your incentive program. Ultimately, you all have the same goal of selling more products. Offer vendors special promotions for joining the program—for example, customers earn 2XS the online reward points if they purchase a select brand or product.Think about others who could stand to benefit from your incentive program’s success, not just your customers, sales employees or channel sales partners. Think outside the box! You could join or develop a coalition, partner with non-competing and/or complementary companies or brands, for example. Don’t be afraid of inviting them to buy in. This could shrink your incentive program costs even while the program gains higher ROI due to greater participation!
You’ll learn something new about your business and its goals every time you run an incentive program of any kind. Maybe the people you thought were your worst performers have a lot of potential and room to grow if you just invest in them with a few training incentives. Or maybe your top distributors work with you much more closely and cooperatively after you attend a group travel incentive trip to an Ireland golf resort together.Keep your goals specific so you can track them easily and accurately. By setting aside time to study analytics and reports from your incentive program, you can better understand your KPIs so that, over time, you’ll invest only in the incentive ideas and strategies that work best for your business. That means that your program will be more lucrative, but your spending on it will decrease.
At the end of the day, incentive programs are like most business endeavors: you get out of them what you put in. And that’s doesn’t just mean budget-wise—if you spend time and effort researching and planning for your program, you’ll spend less because you’ll waste less time and resources investing your money where it doesn’t need to be.
Still have some questions about how to budget for your incentive program? Fill out our contact form or call us at 866.567.7432 and let us know how we can help!
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