CEOs Question ROI of Incentives
Marketers who pitch incentive programs to the top brass better have their arguments in order: Nearly 18% of CEOs surveyed in 2006 feel the ROI generated by these types of activities was “far less than expected” or “less than expected”, up from the 11.3% in 2005.
The news isn’t all bad for incentive programs: According to the survey, nearly 14% of CEOs felt their incentive program results were “more than expected” or “much more than expected”, up from 7.3% in 2005, according to the Premiums & Incentive Study from Promo magazine, a sister publication to Marketing ROI. Promo evaluates incentive programs aimed at customers and prospects, as well as those targeting employees.
What measurement are they using to judge success? Sales, above all else: nearly three-fourths base ROI calculations on incentive programs on incremental sales. Another quarter use consumer surveys, and a like percentage evaluate incremental productivity. Twenty-four percent measure employee retention, and 21% look at employee surveys.
The promotions industry is recognizing this trend. According to Promo, the Incentive Marketing Association has revamped its Principles of Results Based Incentive Program course to include a more-concentrated focus on ROI measurement.
The survey also found:
* Three in 10 respondents feel premiums deliver better ROI
* More than one-third boosted their spending on premiums during the past year
* Spending on premiums dipped to a median $25,000 in 2006, down from $30,000 a year ago
* Incentive programs are most often signed off on by CEOs (36%); followed by vice presidents (26%); directors (21%) and managers (15%)
