Too Little Focus on ROI
The Society for Incentive Travel Excellence's SITE Index 2017 sheds light on incentive users' tracking of return on investment (ROI)—or their lack of tracking.
- By Jerry Laws
- Jan 01, 2017
An article in Sales & Marketing Management’s November/December 2016 issue quoted Sean Roark,1 a Certified Professional Incentive Manager and president of the Incentive Marketing Association, about the fatal flaw that brought about Wells Fargo's fake accounts scandal last year. Reward and recognition programs "should be anchored in fostering company values and delivering on the brand promise to the recipient," Roark said. Meeting sales goals alone through a flawed process won't produce the desired employee engagement, he explained.
When the scandal came to light, Wells Fargo became an object lesson in wrong-headed sales incentives. Along with the bank's employees, customers, and shareholders, we can hope 2017 doesn't bring us a repeat performance.
Incentive Travel Budgets Expected to Rise This Year
The Society for Incentive Travel Excellence released its SITE Index 2017, an annual forecast of incentive travel activity, in October 2016. The index examines incentive travel plans in light of the world economy, the political landscape, and even terrorist activity.
Index 20172 (the research was conducted by J.D. Power) found that 49 percent of buyers plan to increase their incentive travel budgets this year, up from 46 percent in the previous forecast. In addition, 60 percent said they intend to increase incentive eligibility for their programs this year—a strong increase from 47 percent who planned to do this one year earlier.
The latest index shed light on incentive users' tracking of return on investment (ROI)—or their lack of tracking. While the survey data showed that 99 percent of incentive programs are somewhat or very effective at achieving important performance goals, and about 80 percent of buyers and sellers believe incentive programs strongly motivate performance, just 23 percent of corporate buyers and 24 percent of third-party suppliers said they always or almost always track ROI, according to the SITE summary report, which stressed that "tracking and providing a credible ROI metric is a missed opportunity for Suppliers to differentiate themselves and for Buyers to prove the power of incentive travel to create business results."
A majority of both sellers and buyers said the world economy has the potential to negatively impact their travel programs, and the research showed that the threat of terrorism and increased border security as a result have had a significant negative impact on incentive travel decisions since 2015.
North American and European buyers were most inclined to use domestic travel, while Asian buyers are most inclined to use international destinations, the research showed.
"Our industry is strong. The incentive travel sector should be growing. But there are reasons to be concerned," SITE Chief Excellence Officer Kevin M. Hinton, CIS, said during a one-hour SITE webinar to release the Index 2017 results. He cited external events and "people not understanding the value of incentive travel or companies not measuring it. . . . We also need to continue to make the case every day for why incentive travel delivers results for companies around the globe," he added.
The Incentive Marketing Association's online article about the Index 2017 findings quoted Tina Weede, SITE's vice president for education and research and president of USMotivation3, speaking during a session of IMEX America, a big October 2016 incentive travel conference in Las Vegas: "We all talk about the importance of ROI, but it's not being done," she said. "This is a great opportunity to bring more meaning to the profitability and productivity that incentives drive." The online article said Weede announced that the SITE Foundation has decided to partner with Jack Phillips, Ph.D., chairman of the ROI Institute, on a book to be published in 2017 that will provide case studies and models to help companies track the ROI of their programs.
"There are still too few metrics to support the value of these programs," Weede added. "The outlook for these programs remains positive, but they are vulnerable to variable economic and political conditions."
1. PromoPros/IncentPros, Inc. (www.PromoPros.net, www.IncentPros.net), Spring, Texas
3. Atlanta, Ga., www.usmotivation.com
This article originally appeared in the January 2017 issue of Occupational Health & Safety.