More companies are rewarding high-performers with travel experiences — and for good reason group of two dozen salespeople who were gathered for a conference in Minneapolis last June were enjoying a pre-conference dinner together when the subject of incentive travel trips came up. Picture the table full of comedians swapping stories in “Broadway Danny Rose,” only more diverse in terms of age and gender.
“Whatever happened to those incentive trips we used to go on?” asked one rep fondly. The tone in his voice and faraway look in his eyes revealed his desire to have his company revive the more generous incentive budgets of yesteryear.
That single question ignited tales of incentive trip memories from around the table (and around the world), most more than a few years old. If there was ever a question as to the staying power of incentive travel experiences, it was quashed that night.
Even more impressive was the fact that this group of old-school road warriors — men and women who spend 150 nights or more on the road — were talking fondly about their companies taking them away from their homes yet again.
But these trips were different. These trips were to exotic locations and designed solely to recognize their stellar accomplishments. They were spending time with high-performing colleagues as well as top-level executives. There was gourmet food, grand galas and perhaps a cocktail or two to be had.
The concept behind incentive travel in sales departments is as timeless as giving workers a holiday turkey or a gold watch at retirement. Through the years, the format has hardly changed: Bring your significant other, get a pat on the back and have your picture taken with the CEO, and then go back and earn another trip again the following year.
Only the following year’s program disappeared for a number of companies. For some, they disappeared as many as 10 years ago; for most, however, it was after the economic collapse of 2008 and the media mashing of American International Group and other corporate giants that spent hundreds of thousands of dollars on extravagant trips while simultaneously laying off thousands of employees.
Don’t look now, but incentive travel programs are slowly but steadily finding their way back into corporate budgets.
“It’s not the heyday of 2005-07, but studies over the past two years show that budgets are stable,” says Melissa Van Dyke, President of the Incentive Research Foundation (IRF), a nonprofit group that funds research and develops products that serve the global incentive industry. The IRF sent questionnaires to 2,461 incentive providers for its 2012 Pulse Survey and received 246 responses (nearly a 10 percent return rate). While most respondents indicated they would remain conservative with their incentive travel spending (see box on page 42), there were positive signs.
Almost 32 percent of respondents planned to increase their incentive travel budget. Looking at it from the other end, less than 20 percent of companies expected to decrease their incentive travel spend. “That’s a far cry from where we were five years ago when everyone was decreasing their budget,” Van Dyke says.
Does it motivate?
As with everything in the tightly controlled, post-recession business environment, the bottom line rules the day. If you can prove return on investment, they’ll find money for your program.
“Pervasively, the thing that we get questioned from a research standpoint is, ‘What is the evidence that this stuff works?’ People always need fresh data on building a case for incentive travel. That never goes away,” says Van Dyke.
She is confident that some of the latest research, compiled in conjunction with Aberdeen Group, is more compelling than ever. In 2012, top-performing organizations averaged 88 percent customer retention, had a 12 percent year-over-year increase in the sales team’s attainment of quota (versus 1 percent for average companies), and an 8 percent increase in average deal size (versus less than 1 percent for all other companies).
What other characteristics did the top companies of 2012 share? All of them — that’s 100 percent — used group incentive travel and company-sponsored events. Among those businesses that fell into the “average” category, 81 percent used group incentive travel and 57 percent used company-sponsored events.
Those numbers ought to impress even the biggest of non-believers. But despite all of the talk about corporate incentive travel use falling off a cliff, a number of companies have remained avid believers of the motivational capabilities of travel even during the down economy.
CooperVision Inc., one of the world’s largest manufacturers of contact lenses, has regularly sponsored an annual incentive travel trip for its inside sales team — about 104 field reps and 20 telephone salespeople along with 12 regional directors.
Mary Rothermel, Vice President of Sales, says CooperVision’s U.S. division has sponsored the spring trip for all of her 20 years at the company except for 2008, when executives canceled a planned excursion and distributed cash bonuses to top performers instead because it felt “it wasn’t in the company’s best interest.” The fact that the trip was back the very next year is all you need to know about CooperVision’s belief in incentive travel, she says.
The top 20 percent of CooperVision’s field reps in terms of hitting annual quota and percent increase to quota earn the trip along with their significant other. About two dozen make the trip each year (usually less than half are repeat winners, Rothermel says) along with a single regional director. They have been to Italy and the Dominican Republic in recent years; this year’s trip (which will actually occur in spring 2014) is to Costa Rica.
“We know it’s a huge driver of sales performance,” Rothermel says. “We don’t have metrics that I can formally tell you it drives sales by 10 percent. It’s just knowing that people want to win this trip. If (management) took it away, I’d have a meltdown. It would do a lot more damage if we did not have this kind of incentive for our overall morale and performance.”
Research conducted jointly by the Site International Foundation (the research arm of the Society of Incentive Travel Executives) and the Incentive Travel Council (a strategic industry group within the Incentive Marketing Association) supports Rothermill’s instinct.
Interestingly, the difference between earners’ and non-earners’ view of the motivational impact of an incentive travel program did not differ greatly. A survey of program participants showed that 95.5 percent of those who earned the reward said they were “a little motivated, motivated or extremely motivated” to earn the reward while 90.7 percent of non-earners were similarly motivated.
Asked how their level of motivation will change when working toward the next travel award, 54.1 percent of earners said it would “increase or increase significantly” for the same destination, while 47.5 percent of non-earners agreed. Nearly 69 percent of earners expressed that opinion for a different destination, as did 47.4 percent of non-earners. This supports the concept that a significant number of program participants who don’t earn a spot on an incentive trip one year will work harder to be included the next. It also validates the strategy of changing destinations from year to year, as CooperVision does.
Structuring sales incentive travel programs so that every participant feels it’s within grasp is critical to the overall success. Respondents to the Site/Incentive Travel Council survey gave management high marks for their fairness and clarity in setting goals.
When asked if the performance goal required to earn a travel reward was clear, 72.6 percent agreed or strongly agreed that it was. Only 8.9 percent had a negative view of the goal. Similarly, 77.7 percent of respondents agreed or strongly agreed that the goal was achievable, and almost 70 percent agreed or strongly agreed that it was fairly determined.
Mercury Insurance Group, a California-based provider of home, auto and business insurance policies, brings 100 of its top independent agents in selected states on a four-night trip each year. Winners are selected based on sales growth and other metrics. Last year’s group went to Hawaii. Min Choi, Mercury’s Director of Sales and Marketing Operations, says there are repeat winners, but fewer than some might suspect.
In fact, Choi, CooperVision’s Rothermill and other incentive travel sponsors are encouraged to see different faces from year to year on the award trips.
Clearly, creating an incentive travel program that is rewarding for the participants and sponsor alike is a daunting task. Rothermel, Choi and others advise against tackling it without professional assistance. Both CooperVision and Mercury Insurance Group use BI Worldwide to structure their annual incentive travel programs, which includes everything from program launch and promotion, to communications before and after the trip, and even selecting and sourcing room gifts.
Rothermel says it wasn’t always such. CooperVision used to put everything together in-house with leadership provided by the company’s conventions manager. When the company doubled the size of its sales force, the incentive trip became too large of a project to handle alone.
“You really need to understand the travel industry,” Rothermel says. “There is so much coordination of effort that needs to be put into these programs to make it rewarding and memorable. We want people to come back, share stories and drive sales behavior.”
Choi says if there are any cost savings to be had from handling planning internally, they are not significant enough to counteract the increased risks of leaving professional planners out of the picture.
For organizations, it is basically a set of financial outcomes that exceed all related costs and result in positive return on investment (ROI). It is crucial to get agreement in advance on not only the primary objective of the program, but also on how performance will be measured. Otherwise, business stakeholders from one organizational area to another may disagree on value.
Continued evaluation is essential to improving results and creating win/win events. As the Site report states, “When organizations connect participant insights along with past program experience and design team instincts, that is when the program’s effectively defined meaningfulness can make the difference between good and great outcomes.”