The message from this year's e-mail survey of 410 CMI Readers is clear: If your incentives are not innovative, individualized, and customized, they're not going to measure up. Today's competitive and talent-hungry marketplace demands a new breed of incentive program. Examples: Verizon's educational group trip; the Frequent Builders Program at Garco Building Systems, which offers travel awards to individuals; and the unconventional travel incentives for corporate recruiters at Keane, Inc., an IT company.
These and other companies have learned that the standard sales incentives of years ago just don't cut it with the workers of the new economy.
Meetings Motivate Elizabeth Porterfield, CMP, manager of events at Verizon in New York, is among the 72 percent of our respondents who include meetings in their incentive programs. While Verizon has a total of six group incentive trips, the company's educational one has been instrumental at keeping commissioned salespeople stay loyal to the telecommunications giant when it merged with GTE and changed its name from Bell Atlantic. Called the Sales Excellence Club, the program brings about 500 qualifiers to a four-day conference that is less about recreation than it is about learning. It includes a high-tech industry, meetings with the company's senior management, and guest presentations from economic experts on industry trends (this year's program brought in a top Wall Street analyst).
"The program is tailored to corporate goals and is a very effective communications vehicle to talk about change in the company," says Porterfield. "It's not about training, but rather about corporate policies, trends, and issues."
Verizon's top-echelon sales staff - those who service Fortune 500 customers - compete fiercely to qualify for the Sales Excellence Club, even though they do not bring guests and are required to share a room. "People fight tooth and nail to achieve their objectives and qualify for this trip year after year," says Porterfield. "They know that it is considered a valuable, critical event by our chairman and president, who attend. The networking with colleagues and senior management is a real motivator. People talk, bond, and get very energized."
This year's survey found that even the ad hoc, informal meetings that happen during incentive trips can be enormously productive. "We tried formal meetings once, and it didn't work," notes Libby Thacker Koenig, director of marketing development for Dynasound, Inc., a Norcross, Ga. manufacturer of sound-masking and audio security systems. Incentive trips, observes Koenig, can do without the formality. "Attendees are meeting informally during the entire trip. They learn from each other, and we listen. These informal interactions, whether sitting around the pool, at the golf course, or in the spa, are a productive way to do business."
Koenig introduced Dynasound's first incentive program (a trip to Jamaica) when she came on board in 1997. It was so successful that the one program has grown to four in 2001: one "bonding" trip (like hiking in the Colorado mountains) for qualifiers only, one eight-day travel incentive for qualifiers and guests, and two weekend programs for qualifiers and guests that "give a quick goal and a shot in the arm to the guy just starting out." Dynasound also plans to launch a merchandise incentive program next year. And Koenig is among the 37 percent of our readers who plan to hold more incentive trips in 2001; 60 percent expect to hold the same number.
Travel Tops the List Survey respondents consider travel to be the most effective reward: 58 percent say it is more effective than cash or merchandise. However, only 52 percent of respondents said that travel is the award they use most, compared to 71 percent last year. Cash gained ground this year, both as the most commonly used award (24 percent in 2000;19 percent in 1999) and as the most effective motivator (29 percent in 2000;19 percent in 1999).
Still, readers say that nothing beats travel for long-term results. "Cash bonuses are necessary, but travel is a higher reward," says Verizon's Porterfield. "When people spend their money, it's gone. But the recognition that comes from our travel incentives lives on."
Similarly, travel incentives at Mitsubishi Fusco Truck of America, Inc., in Bridgeport, N.J., are "layered on after cash," says director of corporate communications Joe Devlin. "Cash goes straight into people's pockets, and they need it to supplement their salary, but our trips give us the competitive edge. They're a big part of how we motivate the salesperson at the dealership who has the opportunity to sell more than one product."
Even small companies are using travel to attract employees and keep them from bolting to the competition. Such is the case with Target Appliance, a retail store in Baltimore, Md. "We introduced our first travel incentive for sales employees five years ago," says president Daryl Gamerman, "and since then we've only lost staff due to retirement. I don't ever have a problem with our salespeople not working hard or volunteering for extra work, because they know it will help qualify them for a great trip."
How can incentive travel motivate people whose business already takes them out of the office a great deal of the time? That's one of the questions faced by Pamela Wilson, supervisor of meetings and special events for Keane, Inc., a $1 billion Boston-based business technology company with 50 branch offices in the U.S., the U.K., and Canada. Keane has two yearly group travel incentives, one for sales employees and one for recruiting employees. She's expanding the company's programs in 2001 "beyond just an annual trip, to perks like airline and hotel room upgrades that people can use throughout the year. Most of them are on the road an enormous amount of time, so they're going to love anything that makes their travel easier, from upgraded cell phones to the latest laptop computers."
Not for Sales Only The past few years have seen a steady uptick of companies using non-sales incentives: from 41 percent of survey respondents in 1997, to 46 percent in 1998, to 49 percent in 1999, to 51 percent in 2000. And 32 percent of this year's respondents who don't use nonsales incentives say they plan to in the future.
Keane's "Leadership Circle" program for the corporation's in-house recruiters is a good example. "This is a different target audience than most for a corporate incentive program, but recruiting talent is very important in the IT business," says Wilson. Qualifiers for the three-night trip are young - between 25 and 35 years old - so Wilson looks for a warm-weather, urban location with nightlife and a lot of activities. (Last year, the group went to South Beach in Miami, Fla.) "We've seen a steady increase in the number of qualifiers, which is a key gauge of success," Wilson comments.
More Solo Trips A big trend this year is the number of respondents who use travel awards for individual incentives: 53 percent, compared to 37 percent in 1999. And 60 percent of those who did not offer individual incentives in 2000 plan to do so in the future.
Weekend getaways of two or three nights are popular choices for individual qualifiers and guests - and used by many CMI readers. Mitsubishi Fusco Truck, for example, awarded about 60 getaway weekends in 2000. "Individual weekend getaways are great for the salesperson who can't be away from the marketplace for too long," says Devlin.
In 1995, Joseph Loomis, vice president of business development and project management for Garco Building Systems in Spokane, Wash., introduced an unusual individual incentive that he custom-tailored for the company's contractors. Called the Frequent Builders Program, it is modeled after the airlines' frequent flyer programs. When contractors specify Garco's steel building systems, they accrue points for every dollar spent. The points, which never expire, can be redeemed for about 20 different travel awards that range from a weekend in New Orleans to 10 days in Tahiti. There are family excursions to Disneyland; cruises to the Caribbean and Alaska; ski trips to Aspen, Colo., and Whistler, British Columbia; and golf excursions to Palm Springs, Calif., and Scottsdale, Ariz.
Since launching the program five years ago, Garco has experienced a 15 to 25 percent growth rate, compared to an industry standard of 2 to 3 percent. In 2000, the company grew a robust 37 percent. While it's impossible to measure precisely the role that the Frequent Builders Program played, "there is no doubt in my mind that it helps to build customer loyalty," says Loomis. The customers, he says, first consider the the quality and value of the product. After that, "our incentive program has been the tie-breaker."
Over the past five years, the number of the participants in the program has doubled. "We have worked hard to make the program easy, and about 80 percent of all points are redeemed," says Loomis.
Another part of the success of the program, he says, is that it's geared to the psychographics of his audience. "The contractors we work with are primarily very busy family men who don't have time to plan ahead or save for travel," Loomis explains. "But their wives love to take vacations. So this program was designed to appeal to the spouses, who influence their husbands to get those 10 additional points that will earn them the vacation of a lifetime."
Viva Las Vegas Las Vegas was the most popular domestic destination for our 2000 survey respondents, followed closely by Orlando and Hawaii. Phoenix/Scottsdale, San Diego, and San Francisco were also popular choices.
More readers took incentive programs outside of the U.S. in 2000: 59 percent compared with 55 percent last year. The most popular international destination was Cancun. London and the Bahamas tied for second place and Paris was a close third. "Although we have great resort destinations in the U.S., sometimes it can actually be cheaper to take a group to the Caribbean," says Koenig.
Mitsubishi Fusco Truck chartered the Sea Goddess for an 11-day Venice to Athens cruise that "gave our dealer-principals something to talk about," says Devlin. "The 45 couples who went came back and told their colleagues they should have been there. And everyone is asking me where we are going to go next time."
Lead times for planning travel incentives both domestically and abroad continue to shrink: 60 percent of respondents said they plan less than a year out, up from 55 percent last year. For Libby Thacker Koenig, a five-month lead time means working closely with tourist boards for help with site inspections, promotional materials, and pre- and post-trips. "On such a tight timeline, you need to work with an efficient tourism board or CVB that shows you not only properties, but what activities the destination has to offer." She cites the Jamaican Tourism Board as an example of helping her to achieve a great program with a short lead time. "They know their product inside-out; all the pros and cons. There's no way I could come up to speed so fast without their expertise."
Other Findings More highlights from this year's survey: - Incentive travel budgets remained stable in 2000 for 43 percent of our respondents and increased for 39 percent. A total of 55 percent expect budgets to remain the same in 2001, and 37 percent expect budget increases.
- The average amount that companies spent per person on their incentive trips in 2000 was $3,256, up from $2,466 in 1999.
- The use of team incentives was exactly the same as last year: 42 percent.
- A total of 58 percent of respondents use tiered incentive awards of cash, merchandise, and travel.
- A total of 41 percent use cruises that average five days.
- Incentive trips averaged a length of 4.89 days, and 74 percent of respondents held trips of four days or more.
- 58 percent plan their own incentive trips, up from 44 percent in our last survey.
This year's incentive trends survey was conducted by the Orbit Survey Center at the University of New Hampshire in Durham, N.H. (http://orbit.unh.edu).
The more you customize an incentive program to the company's culture and goals, the more successful the program. Here are some customized programs that are reaping bottom-line benefits for our readers:
- Keane, Inc.'s Leadership Circle Program for the Boston-based company's recruiters, who are employees at the $1 billion business technology company. In addition to a trip, the program is expanding in 2001 to include rewards such as air and hotel upgrades.
- Dynasound, Inc.'s group travel incentive for distributors, which began with a trip for six couples to Jamaica in 1997 and grew to four trips in 2001. The Norcross, Ga.-based company also plans to offer a merchandise incentive program in 2001.
- New York-based Verizon's Sales Excellence Club conference for about 500 commissioned salespeople, which includes strategic meetings and a high-tech industry trade show. Employees compete fiercely to qualify for this program, even though they do not bring guests and share hotel rooms.
- Garco Building Systems' Frequent Builders Program for contractors, which works like a frequent flyer program and has 20 travel choices. The Spokane, Wash.-based company has enjoyed a growth rate an average of 20 percent higher than its competitors since implementing this program five years ago.