A good deal of business travel is related to incentive travel. Incentive travel is business-related travel that is designed to provide motivation or incentives to help business people become more successful.
To find out more about incentive travel, About.com Business Travel Guide David A. Kelly interviewed Melissa Van Dyke, president of The Incentive Research Foundation, a not-for-profit organization that funds research studies and develops products for the incentive industry, as well as helping organizations develop effective motivational and performance improvement strategies.
What are business travel/employee incentive programs?
For many decades, managers and business owners have used the promise of travel to appealing or exotic destinations as a motivational tool with both their internal staff and channel partners. What many people do not realize, however, is that over the last half century there have been a great deal of research-based methodologies and best practices developed around incentive travel. Likewise, an entire industry of professionals now exists with the expertise in when and how to use incentive travel as a motivational tool within organizations.
As part of its study, "The Anatomy of an Incentive Travel Program," the Incentive Research Foundation provided the following concrete definition for Incentive Travel Programs:
"Incentive Travel Programs are a motivational tool to enhance productivity or achieve business objectives in which participants earn the reward based on a specific level of achievement set forth by management. Earners are rewarded with a trip and the program is designed to recognize earners for their achievements."
Who should have them and why?
In virtually every industry, incentive travel programs are often used as a motivational tool with internal or external sales teams, but any organization or work group can use them effectively where there is a gap in productivity or unrealized work goals.
Previous research conducted by Stolovitch, Clark and Condly offered an eight-step process which helps potential program owners determine where incentives would be effective and provides guidelines for implementation. The first event of this Performance Improvement by Incentives (PIBI) model is assessment. During the assessment phase management details where gaps exist between desired organizational goals and company performance and where motivation is an underlying cause. Key to this assessment is ensuring the target audience already has the skills and tools needed to close the desired gap. If these exist, then an incentive travel program may be a strong option.
What are some examples of incentive programs and the value they provide?
In "The Long Term Impact of Incentive Travel on an Insurance Company" research found that the total cost of the travel incentive program per qualifying person (and their guests) was approximately $2,600. Using the monthly sales average of $2,181 for those who qualified and an average monthly sales level of $859 per agent who does not qualify, the cost payout for the program was over two months.
In The Anatomy of an Incentive Travel Program (ITP) researchers were able to show that well-rewarded employees tend to perform better and stay with their company longer than their peers. Net operating income and tenure of participants in the ITP was significantly higher than for those who did not participate. Of the 105 employees who attended the Corporation's incentive trip, 55% had top performance ratings and tenure of four years or more (significantly higher than the average employee), and 88.5 percent had top performance ratings. But the benefits of incentive travel programs are not only monetary and numeric. This study also detailed a number of organizational benefits, including positive organizational culture and climate and outlined the benefits to the communities the travel program served.
Additional case studies:
What are the challenges associated with putting together a program?
The primary challenges with programs tend to be staying within tight budgets and executing an effective program that demonstrates some level of return.
The Anatomy of an ITP study provided five recommended elements for Incentive Travel efforts to be successful.Additionally, to maximize the benefit of an incentive travel program the research concluded the incentive travel event should include:
- The earning and selection criteria for the reward must be clearly tied to business objectives
- Communication about the program and the participants progress toward goals must be clear and consistent.
- The design of the travel program, including desirable destinations, interactive sessions and leisure time for the earners, should add to the overall excitement
- Executives and key managers should act as hosts to reinforce the company’s commitment to the reward program and recognition
- The company should keep detailed records that prove the productivity of the earners and their contributions to the company’s financial performance.
- recognition of earners
- networking opportunities for top performers to build relationships with other top performers and key management
- collaboration among top performers and management about best practices and ideas
- motivation of earners to continue to achieve high performance.
How much meeting content to include in an incentive travel program also tends to be a challenge with planners currently allowing participants to spend about 30% of their experience in meetings.
What’s the ROI on these types of programs?
In its research study, “Does Incentive Travel Improve Productivity?” the IRF found that Incentive travel is a sales promotion tool works well in raising sales productivity. In the case of the studied company productivity increased by 18% on average.
In the study "Measuring the ROI of Sales Incentive Programs" the sample ROI on a Dealer Sales Program using Post-Hoc data as control group was 112%.
The success of these programs naturally, however, depends on how well the program is designed and executed. In the study, "Assessing the Impact of Sales Incentive Programs" the study found that if the organization did not factor in changes that needed to occur in upstream and downstream processes, the Incentive Travel Program would have yielded a -92% ROI. However, when these changes were considered and implemented, the program realized an actual ROI of 84%.
What are the current trends?
The primary trends in Incentive Travel Programs (and the corresponding number of planners currently using these options) are:
- Social Media to promote (40%)
- Virtual (33%)
- Corporate social responsibility (33%)
- Wellness (33%)
- Game mechanics or gamification (12%)