In this economic crisis, Corporate America has missed a crucial point: You can't cut forever. Not without doing some damage to sales, morale, and retention.

And when it comes to cutting group travel incentives, we now have the numbers to prove it. In the survey we conducted in conjunction with the Incentive Research Foundation of corporate meeting and incentive professionals (page 10), we found that the cutbacks of 2009 have had a negative effect on sales (according to 20 percent of respondents), sales staff morale (32 percent), and sales staff retention (26 percent). Those cuts have been deep: 28 percent of respondents, for example, said they shied away from five-star properties in '09 and 38 percent said they chose destinations within driving distance or a short flight. Respondents slashed the length of the trips, the number of qualifiers, and amenities across the board, from golf and spa to room gifts. And the average per-person spending for their trips dropped about 20 percent, from $3,846 in 2008 to $3,100 in 2009.

When we asked respondents what their attendees said about the cuts, 9 percent reported that attendees were disappointed in the choice of destination and 12 percent said they were disappointed in the program exclusions. Overall, the survey found, our respondents' companies have disappointed between 10 percent and 30 percent of their top sellers, dealers/distributors, or clients.

I have a few suggestions to those companies:

  • First, rather than your deciding where to cut, ask the qualifiers what matters most. As Boris Groysberg, an associate professor at the Harvard Business School and co-author of the new book, Employee Motivation: A Powerful New Model, suggests, "Find the levers where the value to the individual is greater than the cost to the company."
  • Over-communicate. This is not the time to cut back on your incentive marketing. Instead, step up communications to the sales force about their value to the company and the efforts being made to reward them despite fewer resources.
  • Consider individual incentive travel. It's a way of giving your winners the trips they want and keeping it off the radar.
  • See our story on individual incentives in our new Financial & Insurance Meetings section, which we will now publish every other month. There's a lot to learn from the financial services sector, which has its own unique set of regulatory challenges.

And be sure to check out this year's incentive survey.

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