Imagine your CEO puts you in charge of running an incentive program. Three months into the program’s implementation, the CEO asks you how the program’s doing. You say, “It seems to be going pretty well,” since nothing disastrous has happened so far, and participants seem incentivized. Then the CEO asks, “What does ‘pretty well’ mean? How much more money is it making me? What’s our incentive program ROI?”
In order to answer that question, you need data to show what the program’s accomplishing, and you either don’t have that data or you don’t know where to get it. Time to start doing breathing exercises to head off the looming anxiety attack, right?
You wouldn’t be alone if you found yourself in this pickle. An FMI Net survey reported that nearly 60% of those with incentive programs find it challenging to measure the program’s results and achievements.
How you measure matters. And it’s not always an easy process, which is why so many companies fail to do so consistently or frequently, if at all. Here are some incentives program ROI measurement strategies we recommend in order to avoid becoming one of those companies:
1. Establish clear incentive program ownership and accountability.
Many incentive plans and rewards programs fail for a pretty silly reason: no one knows who’s in charge. Sales? Marketing? Someone on the leadership team? With no one to take clear accountability for the program, it’s doomed to fail. As Rodger Stotz, Chief Research Officer at the Incentive Research Foundation (IRF), puts it,
Once the program is implemented, the tendency can be to put it on ‘autopilot.’ This is especially prevalent when a program is designed by a team and once it is launched, the team disperses and no one is assigned to or accountable for the program’s operation and ultimate success.
Clearly identify a person, team or committee in charge of overseeing the program, gathering information and following up with both leadership and incentive program account managers on the program’s progress.
2. Analyze the pre-incentives
You won’t know how far you’ve traveled if you don’t know where you started from, right? So make sure you have an accurate picture of your current situation before you kick off your rewards strategy or incentive plan. If you’re trying to increase revenue, for example, record what your existing revenue is.
Make sure that, when you analyze incentive program ROI, you compare it to a group or time frame not impacted by the program. For instance, your revenue may be -7% the quarter after you implement a sales incentive program, initially making it seem like the program isn’t working. However, when you compare participating salespeople’s performance to non-participants, you find that participants brought in a -2% average sales revenue and non-participants averaged -12% sales. That means the sales incentives still increased sales revenue by 10%, even if you didn’t increase sales overall for the quarter.
3. Set incentive strategies up with smart goals.
Don’t set yourself up for failure with incentive program goals that aren’t SMART (specific, measurable, attainable, realistic, timely). Know from the start that your goals are and how you can measure them. Examples:
Know when to expect to reach goals. The IRF recommends running the program for a year or more to reach full impact. So if you’re running monthly or quarterly promotions or contests, continue implementing those incentives for at least a year to see the true potential impact.
4. Ask your incentive provider for an incentive program ROI
Run an incentive program ROI projection before you get the program underway. The incentive company you work with should be the go-to source for an ROI calculation. They should be able to tell you how much money to invest in incentives and what your ROI will likely be, along with providing benchmarks and case studies from companies with similar situations and objectives.
5. Use incentive technology that provides reports, analytics, and tracking.
Tracking these three important metrics will tell you a lot about the progress of your incentive program:
Purchases or sales performance
Use accurate performance tracking technology to track all sales and purchases involved in your incentive program. For a sales or customer loyalty program, you can use an incentive platform with documentation uploading capabilities so sales reps and customers can upload invoices, receipts, and other sales documents. This makes auditing sales claims and distributing incentive rewards a faster and more accurate process.
Collect activity reports to track when and how often participants are using the program. The best source of information on program activity will come directly from real-time, exportable reports within the program itself.
Track participants’ engagement in your program. Are they opening their emails from your program? Reading other communications you send them? Make sure you’re trying to reach them through multiple communication methods and have a way to measure delivery and open rates, responses to the message, collect and analyze feedback, etc.
6. Conduct regular program reviews with your incentive company.
Don’t try to figure out all the metrics and analytics on your own. The incentive company you work with should be more than a software provider, but a full incentive, sales and marketing support system. Conduct regular program reviews with your account managers, who should have the incentive and ROI expertise to help you locate incentive ROI data you need and interpret it. This will ensure you’re identifying pain points and growth opportunities early on.
7. Look for signs of incentive program success beyond just revenue or sales growth.
To identify more areas of potential growth for your incentive program, look at metrics besides just revenue growth or performance. Here are a few examples of questions to ask yourself to see the bigger picture of your program’s impact:
You could uncover some unanticipated benefits to the program and expand on them in future incentive marketing endeavors.
Let’s revisit your imaginary CEO at the beginning of this article. Let’s say, when s/he asks you for the results of the current incentive program, you’re able to deliver precise program analytics, showing performance differences not only between participating vs. non-participating groups, but identifying sales promotions that were more successful in specific regions. You’re able to identify who’s engaged in the program vs. who’s not, that those engaged in the program are performing better than those not engaged. And you already have a plan in place to engage participants with low activity.
Now, not only have you proven your incentive program is doing its job, you’re on top of your game because you’re tracking your marketing endeavors and working on ways to make them even better.
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