Evaluating Incentive Programs Options

by Mark Weirich on May 31, 2016

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Being in Sales and Marketing as long as I have been, the topic of incentives (AKA…Spiffs) occasionally comes up. If you are leading a Sales or Marketing team, you invariably realize that incentives are quite effective in lifting your product sales. The problem is…how can you do this efficiently and affordably? If you are starting out in the wonderful world of incentives, Excel spreadsheets are where you begin as your program is likely to be small and manageable to this point. The complication kicks in when your program participation, and channel rates start to grow.

When your program attains a certain growth threshold you are going to have to take some variables into account…

  • How big do I want to grow my channel?
  • How many participants are going to be included?
  • What are the rules governing participation moving forward?
  • Whom, and how am I going to incentivize?
  • What is resonating with the participants with regards to motivation?
  • What are my competitors offering in terms of incentives?
  • What are the organizational rules governing my channel partners with regards to incentives?
  • How long will my current incentives be relevant, and how can I keep interest in my program?
  • Where are my sales coming from?
  • Who, and which organizations are generating my sales?
  • What metrics do I need to track as to evaluate the true effectiveness of the program?
  • How do I market my program for further growth?
  • How do I recruit a bigger pool of participants?
  • What kind of incentives are my participants interested in?
  • How much do I want to spend on incentives…monthly, quarterly, or annually?
  • What kind of technology do I need to run this, and how much is this going to cost?

Once you have gotten to this point in the process, you have to decide if you are going to build your own incentive site, or outsource a service from the myriad number of providers out in the market place.

Outsource costs to keep in mind

  • Launch Cost (one-time fee)
  • Monthly Cost (recurring)
  • Percentage of the total actual incentive allotment the provider will take annually

Pros of Outsourcing

  • Outsourcing is the way to go if you do not have the financial resources, man power, or experience in incentives
  • Let’s be honest more incentive programs fail than succeed as an overall whole, outsourcing reduces risk and responsibility
  • With an outsourced provider you will have an average contract length of 1-3 years, small providers may not hold you to a contract
  • If you need to abort the program quickly, or if you have an abbreviated run time duration planned, this would justify this expense

Pros of Internal Development

  • A solid web development platform where you can add sites and microsites, would likely be a solid investment for keeping costs reduced over the long term
  • Metrics and customizations can generally be added for a nominal fee from your site platform provider
  • The only issue then would be sourcing a product catalog, or debit cards to pay out your incentives
  • If you do source debit cards or a product catalog, you can cut out the middle man
  • The bright side is you keep the IP, and have control over real time site changes, and customizations without having to pay a third party

Dealing with incentives can be a mystifying, and complex endeavor so it is important to take all aspects or your planning and budget seriously. Analyzing your own corporate needs and goals will provide the answers you seek in making the right decision on determining whether internal development or outsourcing will be most beneficial.  

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