We’re in the thick of budgeting for the coming year, and quite often we’re asked by clients, “how much should I allocate for incentives this year?”
That’s always a difficult question to answer, because the sweet spot in spend for your situation is, well, situational.
We look at it like this: if you design your incentive right, it not only pays for itself, but the more it pays, the more successful you’ve been.
Budgets can be heavily dependent on your choice of “closed-end” vs. “open-end” programs.
In “closed-end” incentives, the awards budget is limited to a specific amount ($100,000 for example). The downside of a closed-end incentive is that your top performers, who already produce for you, will likely reap the bulk of the rewards. Most participants will not be motivated by a program where they perceive they don’t have a chance of earning.
“Open-end” incentives are those in which everyone who achieves their sales or purchase threshold earns an award. While the costs can’t be predicted with high confidence, properly set quotas guarantee that the incremental revenue will more than pay for the awards.
We recently created a unique incentive approach that helped our insurance client deliver a 65% Return on Investment.
With 45 years of experience, we can deliver on your specific growth needs too. Contact us today.
Mike McWilliams, the Vice President of Marketing and Strategy, has been in the incentive and events business for more than 25 years. He started his career as an ad copywriter and he’s an award-winning creative director, loyalty strategist and marketer. Mike leads Next Level’s strategy, marketing and communications efforts and is responsible for creating motivational programs that take your team members to the next level. He grew up near Detroit, Michigan and now lives outside Denver, Colorado.