Promo - April 2008 - (Page S20) Bottom-Line Advice CRITERIA FOR EVALUATION OF INCENTIVES Paula Godar, Director, 80% Brand Communications, 70% Maritz Motivation: “A challenging economy makes 60% the program ROI discussion 50% 40% even more important. Com74% 30% 55% panies have to make choices, 20% 41% 32% 7% but they will support programs 10% where they can see a return. 0% People in charge of designing Used by Participants incentive programs should be Total Units or Dollars Sold talking with heir partners about Profits on Incremental Sales (ROI) Increased Market Share ways returns might be further Cost as % of Incremental Sales improved, to make sure that Percent Reaching Goal or Quota the programs are as effective Source: 2005 Incentive Federation Study of as possible.” Merchandise and Travel Incentives Doug Press, President, The Incentive Group: “If you can measure it, you can manage it. You need to carefully measure the base performance up front and then articulate the uplift experienced as a result of changed behavior precipitated by the campaign. Once you know the uplifted behavior, you can value it in terms of its contribution to cost savings, customer impressions, uplifted sales, incremental gross profits, cross-selling and so forth.” “How can companies improve ROI on their loyalty or other incentive programs?” asks Pete Mitchell, director, B-to-B sales for Samsonite and an IMA board director. “First, you have to figure out what your ROI is now.” He adds that, in his experience, “very few” firms have calculated this. It’s not always as simple as straight ROI, however. Financial evaluation formulas vary by company and even program. “Every company has different margins and, most important, different goals,” says Jimmy Beyer, national sales manager for Sony Electronics Inc. and secretary, IMA. You’ve got to be very clear and specific about your goals—what you want to accomplish and what will make the program success. You need to be able to say, ‘I’m willing to spend X to accomplish Y.’” Ryan points out that many companies now use formal “business case” criteria to make investment decisions. Knowing and playing by these game rules can greatly improve your chances of having S 20 SPECIAL ADVERTISING SUPPLEMENT
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