You're reading...

[Infographic] The 6 Steps of Savvy Incentive Program Budgeting

How Should You Budget

Savvy Incentive Program Budgeting How much should an incentive program cost? Well, the definition of an “incentive program” is broad, and they come in all shapes and sizes. So do their costs. However, there are a few universal incentive program budgeting best practices we recommend to ensure your incentive program costs make sense for your budget and goals:

  1. Set the goals of your incentive program.

    The goal (or goals) of your incentive program is its most important defining trait. The goal determines how big an undertaking and investment your program should be, who your audience should be and, largely, how you should reward your audience. Know exactly what you want in the beginning, so you know exactly where to invest your money.

  2. Determine your incentive program audience.

    It’s important to be familiar with the performers or customers in your participant audience, i.e. those whose behaviors you want to influence with incentive rewards. If necessary, you can segment participant into different groups to invest more in top performers and your most loyal customers, while still motivating middle-majority performers with different incentive plans and reward types. With a well-defined idea of who you’re rewarding and how, you’ll have the understanding you need to budget your incentive program effectively.

  3. Identify the type of incentive program you want to implement.

    The smartest way to conduct incentive program pay-out policies and investment changes depending on the type of program you operate. Take these three common incentive program types, for example:

    • Short-term sales incentives

      These types of incentive plans usually aim to spark action quickly. Using rewards like like debit and gift card rewards or “low hanging fruit” online merchandise rewards (movie tickets, Redbox, books, music, etc.) are fitting for these program types, since they can earn ROI quickly.

    • Sales employee motivation

      A sales motivation program that aims to build better company culture and engage salespeople can make big changes in your work atmosphere and employee attitudes. The results are slower than short-term sales promotion incentives, but have a big impact in the long-run. Using an accumulative rewards system, such as an online program in which sales employees earn digital “points” then redeem them in a rewards catalog, is usually the best set-up here.

    • VIP loyal customers and performers

      For your VIPs, those who have the biggest impact on your business, you should invest more time and money in top incentive rewards like group travel incentives. The initial investment may be larger, but the long-tail ROI is worth it to secure employee or customer retention of your most valuable buyers and performers.

  4. Choose the right billing model and cost plan.

    Three things make up an incentive program’s cost:

    • Rewards cost

      You can pay for online reward points as they’re issued (ie., when you issue them to participants) or redemption (ie., when participants spend them). The benefit of issuance billing is that you pay the rewards cost up front. With redemption billing, though, you don’t have to worry about the liability of points participants don’t spend.

    • Incentive technology setup

      There are typically two types of costs for incentive technology platforms: fixed cost or variable. Fixed means you pay for all technology up-front. Variable means you pay programmers or technology companies to custom code your program, will result in a platform with all you need, but it can get costly. Pre-programmed, “out of the box” incentive software is another option, but you could end up with just the basics and not enough personalized or unique features to really take your program to the next level. Some companies, like Incentive Solutions, offer their own unique costing options. You pay a basic package fixed cost, for example, which includes everything you need to reward, communicate with, and market to participants. Then you can add on program-enhancing modules with specialized, pre-programmed features as needed.

    • Monthly program maintenance and services

      Monthly incentive program services costs include services like reward fulfillment, creative/marketing services and customer support. The more people participate in your incentive program, the more these services cost. That’s why many incentive companies, like Incentive Solutions, offer you a subscription-based monthly cost plan. This keeps your incentive program cost more relative to the size of your program.

  5. Look into channel incentive program buy-in.

    At the end of the day, incentive programs are marketing tools. In sales channel environments, you have a great opportunity to work with your vendors who may want to help sponsor your program. Offer them special promotions for joining the program. You could also develop a coalition, partnering with businesses to co-sponsor the program. This could shrink incentive program costs while gaining higher ROI with greater participation!

  6. Go over incentive program analytics and reports.

    Setting time aside to study analytics and reports from your incentive program. You’ll understand your KPIs better so that, over time, you’ll invest more in the incentive ideas and strategies that you know are most effective. Your program will end up earning you more money, but its cost will decrease!

About Steve Damerow

Steve Damerow is the CEO at Incentive Solutions, an incentive program provider in Atlanta specializing in helping B2B companies increase distribution channel sales, establish customer loyalty and retention, and develop long-lasting channel partnerships.

One thought on "[Infographic] The 6 Steps of Savvy Incentive Program Budgeting"

Leave a Reply

Your email address will not be published. Required fields are marked *


We've Done This Before


Low Cost


Launch in 6-8 Weeks


Millions of Rewards


Plug-in Modules


95% Recommed Us

Not to brag, but we've worked with some pretty great clients...