With the right tools and the right approach, an incentive strategy can be so much more than just a simple, reward-for-behavior exchange. Incentive programs can be powerful marketing tools that fasten to your company goals like rocket boosters of productivity. One of the essential techniques for getting maximum thrust out of an incentive plan is pairing online incentive technology with a data-driven implementation and measurement strategy. How do you do that? By knowing what data to look at, where to find it and how to interpret it as key performance indicators (KPIs).
Here are the best practices we recommend for improving your incentive strategy using data.
I. Set strategic goals for your incentive plan.
Data-driven goals are the lynchpin of a data-driven incentive strategy. If you work with specific goals in the very beginning and those goals are informed by specific data, you’ll have a much clearer picture of the impact your incentive plan is making on your business.
Let’s say you’re trying to increase sales. That ambition is far from unique. All companies who make money from products or services want to increase sales. To establish a more strategic incentive program goal, find out what your business’ unique pain points are. Let’s say you suspect you need to increase inspection and aftermarket services to both increase margin and head off issues with clogged coils in your brand’s air conditioners. You confirm this by looking at sales data to determine fewer customers have been signing up for inspection and aftermarket services over the last few sales quarters. From this data-driven approach, you may decide on a sales incentive program goal such as “increase inspection sign-ups by 20% in six months.”
Strategic incentives goals should have some context backing them up. What incentive program results do companies similar to your experience? What’s the average return on investment (ROI) for incentive programs with similar goals? You should gather enough benchmark data for an ROI projection. The best source of incentive program benchmark and ROI data is the incentive company you partner with.
II. Track enrollment and participation in your incentive program.
Once your incentive program is underway, you’ll want to get very familiar with the activity levels of who sign up to the program, i.e. the participants. Pay close attention to how many participants fall into each of these four groups:
- Invited but not signed up
- Registered but inactive
- Registered and active/engaged
These are the first and most important metrics you should track. If no one’s participating, no one’s motivated to reach goals and the program won’t reach ROI. Numbers in the registered groups will, of course, grow over time, but you may notice persistent issues shifting them into more engaged statuses. If the data shows a high percentage of participants in the “invited but not signed up” group long after the program’s launch, it’s time to kick off a marketing campaign to remind those participants to register.
Your incentive program should be building a database of participants as they sign up. You should be able to access information on registered users’ engagement directly from the online incentive program’s activity reports.
III. Track rewards redemption rates.
Participants of online incentive programs earn digital points that they can spend in the program’s online rewards catalog. It’s important to track redemption rate data because it tells you two things:
- How much you’ll be spending on rewards cost if you’re using a billing model that lets you pay for reward points as they’re redeemed.
- How much value your participants see in your incentive program.
Redemption rates won’t skyrocket right off the bat. It takes time for participants to get familiar with the program, bankroll points and spend them. Jeff Cagle, Director of Sales at Incentive Solutions, says, “In the first year, it’s not uncommon for redemption rate to be around 15%. The second year it typically jumps up to, say, 30-40%. Around the third year, redemption rate should begin to reach the 60% range and plateau there until the program ends…at which time the rate will spike to the 90% range.”
If your redemption rate falls below these benchmarks, it could signal a few potential issues. Either participants aren’t acting out the behaviors that earn them points or your payout is too low to tempt them with the rewards in the catalog. You might consider adjusting your payout structure or enacting points expiration rules to encourage redemption. Looking at redemption rate data regularly will help you when and where you need to tweak your incentive strategy.
IV. Research strategic incentives communication and measure its effectiveness.
Clear, compelling communication is essential to strategic incentives that earn ROI. Unfortunately, communication is where many companies may be tempted to veer away from a data-driven strategy. People often communicate in ways they find preferable, without realizing their target audience doesn’t share that preference. Especially today, with more communication options than ever, it’s an easy mistake to make.
To get the right calls to action to your participants in the right way, do a little digging into what makes your particular participant audience tick. What influence does their demographic have over their communication habits? For example, research shows 60% of Millennials prefer to communicate with companies through two-way texting.
What’s even better than grouping your participants into broad generational categories? Treating them as individuals and letting them tell you directly how they want to be reached. The best way to capture this information is to include a field for it on your incentive program enrollment form.
Study activity and behavior data from your incentive program reports to determine what kind of messages you should be sending out. Most incentive program participants are the gift-giving types, for example, and many companies see high reward points redemption rate during the holidays. If your reward redemption reflects this trend, you might want to consider a redemption stimulation campaign during other gift-giving occasions, like Valentine’s Day.
Not only should you use data to plan your incentive program communication, you should measure interactions with those communications to maximize their effectiveness. Use communication tools (ideally, a function or service that comes with your incentive program) to study your messages’ delivery, open and click rates. If messages about online point balances get higher open rates than messages about program updates, for example, you may want to place important updates on the incentive program website when you send point balance reminders, as participants are more likely to visit the site at that time.
V. Track sales performances and results.
You should closely monitor all results and performances within your incentive program. When you’re running a sales incentive or B2B loyalty programs, for instance, you should have a reliable sales tracking system in place. Take advantage of online incentive sales tracking technology to enable capabilities such as scheduling multiple sales promotions at the same time, invoice uploading for faster sales claim authentication, and the ability to segment regions, distributors, sales teams or departments into different groups to target them with specialized promotions.
When you track results, make sure you’re tracking not just one-time frame vs. another (i.e. one quarter with the incentive program vs. one quarter without it), but comparing participants’ performance vs. non-participants’ performances. Comparing both sets of data could reveal that the incentive program still boosted performance, even if overall sales or revenue was down.
VI. Gain more customer data and utilize it effectively.
Customer data is crucial to thriving in today’s markets, in which even B2B customers expect solutions that are personalized and relevant to their needs. Customer and sales incentive programs lead to larger or more diversified purchases, and adding this information to your customer database can greatly improve your sales and marketing strategies.
Compile customer data from incentive program enrollment forms and profiles participants fill out and update, as well as invoices and other sales claims documentation submitted to the program. You can use incentive technology to integrate your incentive program with your CRM system to facilitate back-and-forth customer data exchange, streamlining information and creating a more rounded and detailed picture of your customer base.
With today’s online incentive technology and tools, businesses can power their incentive strategies with ample sources of data. You can use this data to tell the story of your incentive strategy, how and why it works and how this story aligns with your overarching company, business, marketing or sales goals.