Determine the Budget – Once you have identified the estimated ROI metrics, you’ll have a good idea of what to budget for the program, including incentive compensation, value of rewards, communications budget, training, etc. Maybe the 1% of sales mentioned above is the right number, but maybe you’ll need 2% of sales or only ½% to move your needle. Without the ROI analysis, you are really just guessing.
Performance Goals – Once you have established your sales metrics and goals, as part of your normal sales forecasting and performance management process, you can break those goals down to the appropriate level for the applicable sales channel stakeholders, which may include company salespeople, rep groups, contractors, VARs, distributors, DSRs, etc.
There can be entire chapters written about each of the above steps, but the important takeaway is to view planning as a serious business exercise that will provide financial rewards in good and bad business times. For more information, check out the book The Secret to Incentive Program Success by Bob Dawson with Roger Peterson and Measuring the ROI of Incentive Programs, a research paper available on the web site of the Incentive Research Foundation at www.theirf.org.
Next blog, we’ll take a look at how to create a communications campaign to power your incentive program to success.
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