Melissa Van Dyke
Melissa Van Dyke of the Incentive Research Foundation

Incentive Insights: Measuring Return on Investment

How to get a complete picture of the impact incentive trips have on a client’s bottom line. Hint: include your money-saving expertise.

In the IRF research paper published in May on Establishing the Intangible, Non-Financial Value of Awards Programs, one-third of all managers said they believed that the intangible benefits of incentive programs include increased employee collaboration, learning, innovation, and engagement in training and in organizational culture and values. That’s great as far as it goes, but it is likely that many clients are interested in the type of data that can be translated into numbers that impact the bottom line.

Although companies often collect data that shows the impact of incentives, they may not be parsing it with that goal in mind. Kathy Nugent Delidow, vice president of client solutions development at ONE10, says, “Incentive professionals find it challenging to measure ROI because we don’t have full visibility to all the data.” She suggests approaching the client with specific questions and setting a timeframe for the data collection, as there is often an impact after the incentive program is finished, as well as before. She says, “To calculate the ROI, we need margins; we need to know the sales objective and how many more incremental sales were accomplished because employees were trying to win the incentive.” ONE10 uses a proprietary tool called Relationship Strength X to assess the impact of the incentive event on the attendees and its impact on their relationship with the client.

Sales data should include both deals closed up to six months after the incentive trip, as often those sales were initiated as part of an attempt to win the incentive, and average sales when there is no incentive trip on offer.

As well as sales information, planners can use data collected on employee retention and absenteeism over a period of years, and any survey results tracking employee satisfaction or brand reputation. If the company stopped incentives for a period of time and then began again, it is important to get a “before and after” picture to show the impact incentive programs may have had.

According to Melissa Van Dyke, president of the IRF, in 1996, 26 percent of U.S. businesses recognized employee performance with noncash rewards. In 2016, that figure had risen to 84 percent and top performing businesses were more likely to use noncash rewards to recognize employees than average-performing businesses. More than 90 percent of corporate program planners surveyed by the IRF said that this is because executives believe noncash rewards give them a competitive advantage as a retention, engagement, and recruitment tool. It is important to provide those executives with hard data to help them justify the programs, and it’s also important to make clear the planner’s contribution to this competitive advantage.  Nugent Delidow recommends providing examples of a planner’s expertise in negotiating hotel rates and group discounts as dollar amounts so clients can include them in their own ROI calculations. 



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