July 24, 2014
Incentive Travel That Pays
by Anne Hamilton
Photo above (center): Distributor Denise M. has daughter Samantha work to earn a spot on an incentive trip with her mother.
Learning what motivates performers—and non-performers—is key to maximizing ROI.
Incentives have been at the heart of direct sales since before the days of the pink Cadillac. And much like the exhilaration of earning a car bonus, incentive travel brings with it endless bragging rights and a lifetime of memories.
While the program design is the frame of the car, the award is the sizzle, the chassis. The trip—by definition, an experience they could not create on their own, regardless of how much money they have—is what they’re buying into.
“With independent or direct sales reps, you don’t have the same levers for motivation as you do with an internal employee,” says Melissa Van Dyke, President of the Incentive Research Foundation. “The trip serves a dual function because often it’s the only time the reps get to meet face-to-face with the people they work with all year. They don’t have the opportunity to create that relationship like you would if you were in an office.”
Yet few companies consult with their most important stakeholders—their salesforce—about their program design or destination decisions. The exceptions tend to be an obligatory end-of-program survey, which only offers feedback from participants, not from the people who didn’t qualify for the trip.
In a four-part study by the Site International Foundation and the Incentive Travel Council of the Incentive Marketing Association, researchers explored 1,000 participants’ (as well as non-earners’) views on incentive travel. What they found was that the length of the trip and variations in the destination appeared to be as important to some participants as the destination itself. In fact, 85 percent said they would be more motivated by longer trips (despite the trend over the past few years of shortening trip lengths by up to a full day), and 70 percent said they’re motivated by having more choices of destinations.
Economic times have forced many companies to shift from international to domestic destinations, with little negative response from the qualifiers. The big winners have been the warm weather destinations, such as Florida and California, which consistently top the lists of incentive destinations. Hawaii’s appeal is timeless; in the financial services industry, there are companies that have been using it as a biennial destination for years. Orlando is also a popular repeat choice. With always-evolving attractions and venue options, it has been used by many direct sales companies.
Whatever the destination choice, highly driven salespeople who have been living the 24/7 lifestyle are looking to be whisked away for a few days spent at a more relaxed pace. The vast majority of respondents to the site survey (75 percent) said they would be motivated by having more leisure time and fewer mandatory functions (70 percent). The good news is that those two strategies can cut trip costs—and increase ROI.
Incentive design is all about gathering insights on what matters most to potential qualifiers. This includes things like the length of the trip, type of hotel, whether or not to invite families, and what side trips and activities to offer. Drilling down to demographics—such as age and gender—helps further determine what types of trips will have the greatest ROI.
For example, do younger, single attendees dream of a sun-and-fun location? Do working parents prefer to travel with their children to family-friendly places, where they can carve out a family vacation at the same time as the company trip? What motivates a 50-year-old single woman could be very different from what motivates a father of three with a working spouse.
The youngest generation of workers, Gen Y (ages 18–33), will compose half the workforce by 2020 and 75 percent of the workforce by 2025. So it’s impossible to talk about incentive travel without considering this group.
The average job tenure of millennials is only 1.8 years, and 76 percent of them plan to leave their jobs as the economy improves, according to Dr. Bob Nelson, one of the world’s leading experts on employee recognition and rewards. “Companies need to hold onto this group, and one way to do that is through incentive travel,” he says. “But what appeals to them is not their father’s incentive trip, where they go to Hawaii and play golf half the time. They’re looking for the REI trip to Peru, where they are with other people of their own age and truly have an adventure, then go home and brag about it on Facebook to their friends.” Instead of sitting around a bar, he says, “Take them bungee jumping.”
This is also a socially conscious generation, but they’re not interested in CSR trips that just scratch the surface for an afternoon; they want to do something aligned with their values—to address a real-world need, such as global warming, or the lack of clean water. “Physical labor for a day would just be the opening ante for this age group,” Nelson adds. “Meaningful incentives geared toward their work, such as visiting their colleagues at their plant in Germany—perhaps with some fun thrown in, like cycling along the Rhine—would be more on target.”
Just as it is essential to tailor your travel program to what motivates your direct sellers, it’s equally important to design objectives that are harmonious with your company’s culture, that motivate the middle and not just top performers, and that don’t end up creating unwanted behaviors among salespeople.
For example, in “Direct Sales Case Study: ROI of Incentives,” the Incentive Research Foundation explored the program structure at one company where some of the top performers were holding back on booking sales until the start of each year’s contest. This, in turn, was discouraging other reps. By adding additional awards, the company created an additional incentive for them to sell throughout the program period.
The key here is that the company realized the design was not working. Sometimes, incentive programs create unintended consequences and behaviors—that’s why they must be continuously monitored and adjusted.
One of the three tenets of a successful incentive structure is that the goals are attainable. Programs often fail when they are designed around what the organization wants, rather than around what is actually achievable and realistic for the sales team in the current economy and competitive landscape. Equally detrimental are programs that are too complicated or include or introduce exceptions that create frustration among participants.
A second tenet is that people need to understand what is expected of them. At the same time, if the communications about the program lack clarity, this will have the same consequences.
“When you’re designing incentive programs for direct salespeople, the key is to make the plan very simple and straightforward,” Van Dyke says. “People need to be incented at every level of success, and there’s always that next level to reach for, with the top being travel.”
Programs with the greatest ROI engage participants on many fronts: a web portal with all the program details, emailed progress reports, social media and e-newsletter updates, pep rallies at live meetings, destination promotional pieces mailed to the home.
Timing is a third tenet. It is very important. It has been proven that the sooner after a success you offer reinforcement, the more engaged people will be in the program. That is why many companies are adding gamification elements to engage, inform and reward participants throughout the cycle.
Does Incentive Travel Pay for Itself?
Since incentive trips are paid for by the incremental revenue they create, program cost is a portion of profit.
Ask these questions: What is the incremental profit you will gain from the program? What is the trip cost if 20 percent of participants make the trip?
Don’t leave out the intangible benefits in your analysis. In the site survey, 86 percent of respondents stated that earning motivational travel “makes me feel recognized by my company and peers.” Feelings of increased loyalty and trust toward the company and a sense of appreciation are quite real for the participants—regardless of their generation.
It’s not just the incentive industry touting the ROI of incentive travel: According to an Oxford Economics study based on interviews with 300 executives, more than 70 percent of respondents indicated that incentive travel has a significant impact on employee performance, and the study estimates that it can increase individual performance by 22 percent and group performance by 44 percent. To achieve the same return as incentive travel, it concluded, employee base compensation would need to be increased by 8.5 percent.
Numbers like these—combined with the intangible benefits—reflect the significant ROI that incentive travel brings to companies that use it thoughtfully and consultatively.
The Biggest Payoff
Denise M. of Orland Park, Illinois, has spent the past 11 years earning incentive trips at one direct selling company. A team mentor, she and her husband have traveled to Mexico, Arizona, California—all over. She always qualifies for one trip a year, but this past year, she qualified for four. “I’m a total carrot chaser,” she admits. “The biggest perk of direct sales is that you can win these trips and go on vacations you might not normally have gone on.”
So it’s no surprise that, growing up around this, her 11-year-old daughter Samantha would want to go on an incentive trip, too. What was surprising was what she decided to do to qualify.
One afternoon, when Samantha expressed that she felt she does even more to help her mom than her dad does (“So why does he get to go on all the trips?”), Denise decided to make it a teachable moment. “I explained what was expected of me to qualify for a trip, how I earn points, how many parties a week I have to have and how many sales. We sat there together and did the math.”
Denise told her to devise a plan of how she might earn a spot on the next trip, a cruise. Samantha came down the stairs a couple of hours later with a complete presentation on poster board, with charts listing the grades that she needed to earn in different subjects, which would give her a certain number of points.
She will continue working toward the trip when she enters sixth grade in the fall. Says Denise, “For my family, this opportunity has been such a blessing. My children have learned to set goals because they’ve watched me with my boards and stars, and moving my ladder up as I achieve my own goals.”
With attainable goals, good communication and the setting of expectations, and proper attention to timing, planning an incentive trip can encourage a company’s sales field to repeat desired behaviors and provide a lasting and motivational experience.
Where will you go next?
Anne Hamilton is Vice President, Resort Sales and Services, Disney Destinations.