ROI on rewards and events

1.    INCENTIVES NEED TO MAKE A PROFIT Individual or team incentives need to make an incremental difference to the business. Walk through the sums to ensure that the expected uplift will more than cover the costs of providing the rewards.

2.   CHOOSE REWARDS CAREFULLY Incentive travel is more expensive per winner than retail vouchers. And ‘discount vouchers’ are the least expensive of all. Most successful schemes have a tiered structure with an elite travel group at the top, merchandise for the middle band and vouchers at the bottom.

3.  REWARDS ARE TAXING All incentive rewards are taxable as ‘benefits in kind’. For an accurate ROI you need to estimate the ‘grossed-up’ tax. For a high-flyer who pays 40% income tax, you need to budget for paying 66.67% of the reward to cover the tax bill as part of the budget.

4.  IMPROVING REWARD ROI You can improve ROI by excluding marketing costs from the reward and tax calculations, offering tax-exempt vouchers, keeping group travel to a minimum and only paying for rewards redeemed.

5.   STAFF REWARD ROI IS A MUST Set up a robust measuring process for improvement in admin processes, absenteeism, less clerical errors etc so that at the end of the programme you can show that the rewards did, in fact, produce process improvement.

6.   MEASURING EVENTS ROI Annual conferences may be tricky to ROI as no direct sales are involved. But if you measure retention of the messages, better understanding of internal processes, improved product knowledge, for example, you can very quickly establish a ‘break-even’.

7.   MEASURE MEANINGFUL THINGS Measure business critical issues. Asking delegates if they ‘enjoyed the event’ or whether the car parking arrangements were satisfactory is a little naive. Ask ‘would you now sell more of product X?’ or ‘did the ops session give you new ideas on how to be more efficient?’

8.  BIG SPEAKER, SMALL ROI Famous speakers are hugely expensive and the ROI for the average event is usually minimal as a result. Keep their costs proportionate to the overall budget and don’t spend more than 10% of your entire event budget on a celebrity speaker.

9.   NOT ALL EVENTS NEED ROI There is a cost attached to measuring ROI in terms of time, resources, research and data analysis. You need to decide which events and meetings are key communication exercises for the business and which are just ‘nice-to-have’.

10. INTRODUCING A SALES ELEMENT If the ROI for a particular event is marginal, one technique to tip the balance in favour of running it is to include a supplier exhibition (additional income), a major sponsor or new product sign up session (new sales).

We recommend Dr Elling Hamso’s ROI on Events course which takes place regularly in London. The next one is on 26th September, 2012. For more details and a special FMI Group discount contact Rod Lee, FMI, Rod.Lee@fmigroup.co.uk

John Fisher

@thefmigroup