There was a time, not so long ago, when justifying a corporate expenditure for a long-standing sales incentive program was as simple as saying, “Well, that’s just the way we’ve always done it.” Like it or not, those days are over. Nowadays nearly every item in a company’s budget comes under extraordinary scrutiny, and if you can’t demonstrate your pet program’s tangible return on investment, you should expect to see its funding dry up in a hurry.
Some managers argue that the benefits of many incentive programs can’t be shoehorned into standard ROI measurements because they involve issues like improved morale and teambuilding that do not show up on a corporate balance sheet. So, is your sales incentive program doomed to fall victim to the next round of budget cuts? Not to worry, say the folks at Potentials Magazine. They offer the following five fundamental steps for making sure your next sales incentive program generates a positive return even the most extreme penny-pinching corporate bean counter can see.
1. Know What You Want
Admittedly, measuring sales incentive program ROI can prove difficult, given the myriad factors involved, which also tend to vary from one company to another. Generally speaking, the program’s objective is probably going to be to increase sales. But look to define that objective more specifically. First, make sure you know where current sales levels stand, and then decide what percentage increase you expect to see and whether you plan to measure this percentage increase in dollar sales volume, units sold, market share, profitability or some other metric unique to your organization. The point is to quantify your goal as specifically as possible.
2. Who’s On Board?
Salespeople will naturally be the main participants in a sales incentive program, but they’re not the only interested parties. Other stakeholders may include customer service, sales support and other administrative personnel. Include these folks in your plans so that everyone knows what will be expected of them during the upcoming push.
3. Look For Trouble
Try to anticipate any potential stumbling blocks that might undermine a program’s ROI. How will this program affect customers? What about individual sales – what happens if a sale is recorded but the customer returns the product? Another concern is discounting – discounts may erode profit margins in ways that have a detrimental effect on the bottom line, even in the case of increased overall sales figures.
4. Check Your Progress
You should definitely be monitoring all pertinent program data throughout the course of the incentive. One easy way to accomplish this is through an online incentive solutions provider. But even if you’re committed to remaining entrenched in twentieth-century technology by using a good old reliable Excel spreadsheet, be sure to focus on the key indicators you identified during the program’s development.
5. Be A Great Communicator
Post ongoing results to let everyone involved know how much progress they’ve made and what remains to be accomplished. This should help keep all stakeholders engaged while exposing any problems as they arise.