To organize business incentive programs, you need to start with a solid budget. But not just any budget will do. There are right ways and wrong ways to budget, especially when it involves something as complex as business incentive programs. First, you need to understand your organization’s needs and goals.
“More Money” Doesn’t Always Mean Better Business Incentive Programs
As with most corporate programs, the goal is to use your resources as effectively as possible. Don’t throw money at the problem. Instead, look at your program from the ground up to identify the areas in which resources are most lacking.
What are the goals of your business incentive program? Common goals include improving employee satisfaction, productivity, and retention. Isolating your most critical goals will give your incentive program more direction. The fewer goals you have, the more likely your organization will be to focus on them and achieve them.
How has your program performed in the past? If your program isn’t performing up to par, it’s time to ask why. Don’t assume you can solve this problem with money. Is it that the incentives aren’t good enough? Or is the issue more in the application of the program itself? If this is a new incentive program, now may be the best time to get expert advice. An expert will be able to compare your situation with other similar organizations and pinpoint any problems.
Does your program have the support and infrastructure it needs? More than money, a business incentive program requires a robust framework. Further, the company culture has to support this framework. If it doesn’t have this support, more money isn’t going to help. For an incentive program, support needs to come from the top down. Make sure your executives and management are already on board.
When trying to determine your budget, money isn’t the most important aspect. Instead, identify the most critical components of your incentive program first. The money will then follow.
Too often, companies get this backward. They set an amount of money that they are willing to pay, and then figure out how they can best use it. This is a surefire way to end up spending more than you need to without getting the results you want.
Critical Tips for Developing Your Business Incentive Program’s Budget
Don’t rely on your prior year’s expenses. Prior year expenses can change depending on your current needs, resources, and growth. Remember, 20% more invested in a sales incentive program doesn’t mean 20% more in profits. Instead, drill down to the actual costs of your organization: what is it paying for and what is it getting in return? This will give you a far clearer picture of what you need.
Get creative when it comes to incentives. Many incentives don’t need to cost a lot of money. Exploring these alternatives will give you an opportunity to expand without investing more. Successful channel incentive programs focus on culture building rather than cash transactions.
Always think about the employees first. The goal of incentives is to provide something your employees want. Though some incentives may be more cost-effective, that doesn’t mean employees want them. Focus on providing thoughtful incentives that will motivate your employees to perform better. You never want to save money at the cost of effectiveness. That will waste money over time.
Negotiate, negotiate, negotiate. There are very few things in life that have a set cost. Don’t assume that because you paid a certain amount for something last year that it will be the same this year. Get new quotes when you can and negotiate with your vendors. You may be able to save a surprising amount of money. Many vendors will give you discounts for loyalty.
Optimizing Your Incentive Program’s Budget for Better Business Outcomes
Budgeting isn’t something you do only once. Analyze and optimize your incentive program’s budget often. You need to know that you’re still getting the most out of your investment as time passes. A company’s situation rarely stays static for long.
When analyzing your program, start with your organization’s metrics. Are you meeting your goals? Why or why not? As you’ve increased spending, how has performance increased? If it hasn’t, are there reasons why? Are the metrics you’re currently tracking ideal to detect success?
An incentive program’s budget and its results aren’t always going to scale on a 1:1 ratio. You’ll sometimes find diminishing returns as you continue scaling your budget upward. In this situation, you may need to change the structure of your incentive program. Investing more money won’t help because it will be going to the wrong things. But the only way you’ll be able to tell is through careful and consistent analysis.
Don’t jump into your next business incentive program without consideration. Careful planning means the difference between a productive program and a potential failure. Our team at Incentive Solutions has the information you need to create successful business incentive programs. Contact us today to find out more.