Effective and profitable incentive programs are designed with the participants in mind, matched up with the appropriate incentive rewards.
What works well with another company does not automatically plug in successfully to another. The incentive program designer must first understand the nature of the program by knowing the participants. Among the most common usages, incentive programs are targeted for employee, customers, sales and reseller channels.
There are many kinds of incentive rewards available, including cash, non cash / merchandise, gift certificate / prepaid cards, experiential and travel. While the program designer must carefully choose an incentive reward that matches the interest and feelings of the participants, it is a good practice to use an incentive reward with the most lasting effect and wider acceptance base.
Incentive Travel as a Business Tool
Travel is considered to be the most effective incentive reward. It also has a universal appeal, high perceived value and is the most memorable.
Companies of all types can benefit from incentive travel programs, including manufacturing services, insurance, wholesale, retail, real estate and financial services.
According to the Incentive Federation Inc., incentive travel is a management tool that uses an exceptional travel experience to motivate and/or recognize participants for superior performance in support of organizational goals. The purpose of the trip is for participants' enjoyment and not for business.
In a survey prepared by the Center for Concept Development, Ltd. in 2003, over half of the respondents perceive that a travel incentive is remembered longest (57% agree), better than merchandise incentive rewards, and most also agree that a cash reward is of the least trophy value.
In particular, incentive travel is most commonly applied on sales incentives, and the average annual budget assigned to incentive travel was $164,000 in 2006, according to a report published by the Incentive Federation Inc. In the same report, 85% of the respondents (for companies with revenue over $100K) viewed incentive travel as an investment, instead of cost.
Return of Investment
Like any other business decisions, return on investment (ROI) is an important consideration for travel incentives.
Travel incentives provide a lucrative return on investment. In the report "The Return on Investment of U.S. Business Travel” published by Oxford Economics, 80% of executives indicated incentive travel has a significant impact on employee morale. Among all the non-cash rewards, travel incentives are viewed as luxury items, and thus are more sought after and memorable.
The surveyed executives also reported a $4+ return on $1 of investment, which is significant enough that their companies have assigned an average of 5% in budget for incentive travels out of all business travel expenses.
Trends for Incentive Travel
The Incentive Research Foundation (IRF), with goal to advance the science of incentives, surveyed incentive professionals and published a report called "The Incentive Industry Trends 2011” in October 2010, providing the outlook of incentive trends for 2011.
Among those surveyed are incentive providers, corporate incentive buyers and also suppliers. These are the front line professionals who get paid budgeting and implementing incentive programs for their companies.
In the report, it is indicated that incentive travel programs continue to be highly favourable even in current economic conditions. Out of all the respondents, 63% indicated that they expect travel incentives would continue be implemented at either the same or an increased level in 2011.