Working with incentive houses has historically been a red flag for insurance and financial services planners, many of whom complained of being undermined or of unreasonably high fee structures. However, it is often unavoidable in today's business climate, in which in-house departments are stretched to the max. Those planners who have developed successful outsourcing relationships say that the critical first step is to find the right company.
Referrals are key for Scott Skeabeck, director of fixed annuity marketing for ING-USA Annuity and Life Insurance Co., West Chester, Pa. And once he has identified an incentive house he's comfortable with, and that he knows will perform exactly to his specifications, he will try to stay with that company. “An incentive could be 90 percent successful,” Skeabeck points out, “but the qualifier isn't going to remember that — he's going to remember the 10 percent that didn't work.”
Let's say you are ready to work with a particular company. The first meeting is typically exploratory and done by phone, according to Ira Almeas, president, Impact Meetings-Incentives, East Hanover, N.J. “It's very similar to a doctor taking notes while listening to a patient.”
Kathi Winter, president, Global Incentives, Huntington Beach, Calif., likes to set a time for a preliminary 15-minute phone interview “to get a better grasp of what the client is looking for and to lay out the groundwork very quickly.” Face-to-face meetings usually follow.
Lynn Schueler, assistant director, meeting planning services, Principal Financial Group, Des Moines, Iowa, uses incentive houses for online registration and travel, and in making her choice she will consider six to eight companies. She looks at how well her company's culture fits in with the vendor, its reputation, references, and, of course, price.
When it comes to fees, Schueler wants to make sure the agreement is as precise as possible. “I want to know exactly what I'm getting, with no hidden fees,” she says. “Although we get very detailed and specific, things can still be taken out of context or be misinterpreted.”
The question of fees usually comes up early, and pricing can vary widely. At MotivAction, a full-service incentive company in Minneapolis, the client pricing structure runs the gamut, depending on the clients' needs, says Mary MacGregor, vice president, travel division, and could include cost-plus structures, net cost, management fees, by the hour, or a combination. “I think, in general, in our industry, there are no standards [on how incentive firms charge] — we all have margin goals we strive to achieve in a variety of ways,” she says.
MacGregor notes that as procurement departments become more involved in the process, they have specific guidelines they want vendors to follow. This is changing the way that companies such as hers do business and requiring them to provide line-item pricing.
At Impact Meetings-Incentives, Almeas sets a package price per-person for the trip, typically 12 percent to 22 percent of the net land package cost. According to Almeas, the fee will vary depending on the complexity of the program and the number of attendees. In an incentive program with fewer than 1,000 potential participants, the design and communication fees would probably run less than $5,000, he says. The online recognition component could be set up with various costs, depending on the sophistication of the Web site. An established “canned” site that adds a company logo and makes some minor changes on the site's home page could cost less than $1,000. And, says Almeas, it could cost from $100 to more than $1,000 monthly to maintain a custom online recognition site.
After a destination has been determined, incentive houses may assist with property selection, which is often part of the overall fee. “We have relationships with individual resorts and national sales organizations for all the major hotels and cruise lines,” says MacGregor. “We make it our business to be in constant communication with those people, to be aware of what's new and what's hot.”
MacGregor says any fees associated with site inspections are usually charged to the client, although “our position as an incentive partner means we do everything we can to mitigate the costs of site inspections — [but] even that's not guaranteed in this seller's market.”
In a seller's market, it can be difficult for hotels to schedule a site inspection, notes Mark Bondy, partner/president, VIKTOR Incentives and Meetings, Traverse City, Mich. As far as the costs of these trips, he says, “Standards in the industry still prevail as to what is a reasonable offer from hotels.”
As procurement departments become increasingly involved in purchasing decisions, some incentive houses have found that price has supplanted relationships in determining whether they get the account — even with established clients. “They're narrowing everything down [based on price],” says Bondy. “There's not a lot of loyalty there, and I think it's short-sighted because there is a lot to be gained by developing relationships and investing time and effort in getting to know each other.”
Others, such as MacGregor, believe that relationships will prevail. “This is still a relationship business. We are dealing with people… and the relationship and trust factor is what I feel will continue to drive buying decisions — rather than who has the lowest price.”
One source for anyone interested in hiring an incentive company is the Society of Incentive & Travel Executives' (www.site-intl.org) annual resource directory, which is available in print and online. SITE members select the category head under which they will be listed in the directory, including full-service incentive house, full-service incentive marketing company, incentive travel fulfillment company, travel agency/incentive division, and others.
But the category differences may not be so black and white. Although the SITE directory is a good place to start your search for an incentive house, the next step needs to be a thorough search on the Web and a telephone conversation to see what the company really can do.