Incentive travel programs work. If there is one overriding conclusion of our Annual Incentive Trends Survey, that's it. Nearly one quarter of our readers (23 percent) will increase their use of incentive programs in 1997, with 62 percent planning the same number of trips as they held in 1996. The trend continues from last year, when the majority of respondents said they held the same number of trips (68 percent) or more (15 percent) than in 1995.
The same applies to incentive budgets. Thirty-six percent of readers will spend more on incentives in 1997 than in 1996, and just under half (43 percent) said they will have the same budget for incentives in 1997 as they did in 1996. Again, the trend continues from last year, when 72 percent of respondents said their budgets were either the same or more than in 1995.
Who are the respondents to our survey? The largest group (46 percent) had the title of president or vice president, with the next-largest group consisting of general managers or managers in sales and marketing divisions (20 percent). Their companies span many industries (Fortune 500 companies such as AT&T; manufacturers ranging from Ore-Ida Foods to automakers; insurance firms; a small candy company in Salt Lake City called C. Kay Cummings Candies). Respondents included people like Mark D. Kidwell, marketing program manager for Cummins Engine Co., Columbus, IN. Cummins uses incentive programs to spur on sales of specific horsepower lines of diesel engines. In what Kidwell calls "a very competitive industry," Cummins' dealers and distributors are regularly offered other incentive trips from other manufacturers, and Kidwell has recently seen a surge in cash incentives as well. "Incentives are a tool that we regularly must use, but it's becoming increasingly more difficult because we've already offered some pretty nice week-long trips-to Mexico, Hawaii, cruises," he says. His challenge: to motivate this group year after year.
Like Kidwell, who plans two programs each year, most of our respondents plan one or two incentive trips a year. The average per-person expenditure is $2,720, with about half spending between $1,000 and $3,000.
Who do companies target with their incentive programs? Primarily internal salespeople (70 percent), followed by dealers and distributors. One respondent, Surfa-Shield Corp., Fairfax, VA, has been running its incentive program since the 1960s, according to President J.A. Davis. The company, which is the oldest chain of home improvement contractors in the country, puts on an annual program in which contractors qualify based on the number ofthey sell to homeowners. According to Davis, "Once someone qualifies for this program, they want to qualify every year. If their sales lag, they pick them up to make the trip." The high-quality trip is a big part of the incentive (recent destinations have included a cruise, Jamaica, and the Turks & Caicos Islands), as well as what Davis called "peer significance." Qualifiers become "Surfa-Shield knights" in a formal ceremony and, as he puts it, "they don't want to fall off that pedestal." Some of the contractors have been knights for as long as 20 years.
People directly involved in sales are not the only group companies are targeting with their programs: 28 percent said they also plan incentive programs for nonsales employees. Mike Mitternight, president of Factory Service Agency, Inc., an air-conditioning service company in Metairie, LA, offers his service technicians travel incentives based on additional sales during service calls. "While they're out in the field performing service calls, there's no one the customer trusts more. If they can sell the customers something they need, they don't receive a commission for that. It's a way of rewarding them." Mitternight sees travel as "an extra perk" he can offer nonsales employees, but not necessarily as a more effective incentive than cash bonuses. "It depends on the employee. If they're younger with kids, they might need the cash, while for an older, more established couple, travel would be more of an incentive."
Trip Trends Trip lengths remain short enough to get people back to the office as soon as possible. Seventy-three percent of the respondents keep their trips between three and five days, and only 13 percent run week-long programs. Companions (spouses or significant others) are always included in 61 percent of the respondents' programs, and sometimes included in 36 percent of the respondents' programs. It's still the rare company that welcomes families on incentive trips: The majority (52 percent) said they never include children in incentive programs, and only nine percent said that kids are always welcome.
Warm weather locations topped the list of popular domestic destinations. When we asked readers where they had traveled with their past three incentive programs, Florida, Las Vegas, Hawaii, Arizona, and Palm Springs, CA were the locations that came up most often.
The majority of readers (65 percent) have held international incentive trips. The most popular destinations? The Caribbean, Mexico, Great Britain, Italy, the Bahamas, Bermuda, and Hong Kong. Some of the more exotic locations mentioned included Egypt, Kenya, and Fiji.
Many of our readers plan meetings that also serve as incentives because of the destination. At venture capital firm Hampshire Capital Corp. in New Castle, NH, President Philip Baker brings together executives who are considering becoming directors of small companies, a role that can involve low compensation and a certain element of risk. "It's hard to get good people as directors of small companies," but, he quips, "people seem to subordinate their fear of the risk involved for a good trip." He always uses destinations he has previously traveled to, many of them international (most recently Nevis, British West Indies; Vancouver, British Columbia; and Bermuda).
Companies that have used a cruise for their programs are still in the minority (41 percent), and only 36 percent indicated that they plan to do so in the future (though 41 percent of respondents said they were undecided). Many of the companies that said they will cruise in the future are repeat users.
Individual incentives are gaining the attention of our readers, with 57 percent saying they have used them in the past five years, and 56 percent saying they plan to use them in the future. Take Tom Hood, director of mutual funds and insurance for stock brokerage Crowell, Weedon & Co., Los Angeles, who says he is "kicking around the idea of awarding a trip on a monthly basis to the top producer, to go away for the weekend to a local resort." He sees individual incentives as "an addition, not a replacement," for his group trip.
Who Does the Planning? Among the companies that responded to our survey, 32 percent have an in-house planner who handles the logistics of their incentive trips. Almost one third of the respondents take care of the hands-on planning themselves. Others enlist the services of incentive firms (20 percent), and a small number use travel agents.
More than half the companies plan their incentive programs one year out or less, with 31 percent of the readers saying they plan their programs between one and one-and-a-half years in advance. There were few last-minute planners in the group: Only four percent make their plans three months out.