3 Signs It’s Time to Consider Outsourcing Your Incentive Program

by | August 5, 2022 | Blog

When it comes to running an incentive program, there’s a primary question that comes before almost anything else: do you run it in-house or go to an external incentive marketing agency?

It’s easy to see why the in-house option is tempting. It may seem cheaper and more efficient, and plus, the people who will be working on it will already have a solid understanding of their target audience.

In-house incentive programs work well in many cases, but sometimes you need to outsource. It’s not that internal teams aren’t able to run the program well, but very often we see them reach the point where it’s just become too complex an undertaking for them to handle on their own.

It can be difficult to recognize that point, however – so let’s talk about it. If your business is running a channel incentive program operated by an in-house team, here are a few telltale signs it might be time to consider partnering with an external incentive agency.

1: Things Are a Little Too Siloed

It’s easy to approach an incentive program with a single goal in mind for a specific target audience. But the best incentive programs are able to go beyond those silos and create a sense of alignment of goals within your business and throughout your channel.

Let’s say you’re a large wholesale distributor DIYing a basic points program for your channel partners that encourages them to purchase more of a certain product or products. Your internal incentives team may be doing a great job pushing a particular product line, but they also may end up limiting the program by focusing too much on one goal or the other. Or you may have multiple divisions each running their own incentive strategy without either communicating with each other.

Either way, the program isn’t going to live up to its full potential if those efforts aren’t considered holistically. To really help a program soar, it’s vital to consider how it fits within the context of your business ecosystem as a whole.

This is where an external agency is really helpful. As experts in incentive strategy, they’re able to look at a business’s structure from the outside and identify places where the internal teams’ efforts can be bridged and realigned in order to help things operate smoother and more efficiently.

2:  It’s Getting Too Big to Manage

As the sales magazine Selling Power has noted, if your program has a basic rules structure and a small and homogeneous participant base, then staying in-house may work just fine. But most businesses look at incentive programs as opportunities for growth, and so the programs themselves are usually expected to grow as well.

Let’s go back to that wholesale distributor program. For every dollar amount they spend with your business, they’re awarded a number of points which they can redeem for prizes from a rewards catalog. That’s about as simple as it can get, and it may work well to strengthen your channel relationships.

But things often change over the years, especially when your business starts to scale:

  • What if you take on new customers who aren’t motivated by the rewards you currently have in your catalog?
  • What if you have global channel partners you want to invite to participate?
  • What if you want your basic rewards system to achieve more KPIs?

In short, you want your incentive program to be able to grow on par with your business, but as it does it becomes more of a job in and of itself. Which brings us to our third sign…

3: You’re Not Doing Your Day Job

Unless you’re a huge company with a dedicated in-house incentive team, your DIY incentives program is most likely being run by people who have another job, whether it’s marketing, sales, operations, etc. While that may seem more cost-effective at first, it’s probably going to end up disrupting your business in the long run. You may find you’re focusing more on running the incentive program and less on managing the business the program is supposed to help grow.

This, again, is often a problem of scale. One of our clients, a wholesale distributor, came to us specifically for this reason. They’d been running a highly successful group incentive travel program in-house that had seen consistent participant growth for the last several years.

However, as they continued to grow to the point of sending hundreds of top earners on trips every year, they realized they’d effectively become travel agents because of the amount of time and energy managing the program required. Rather than focusing on how the program was helping their business grow, they were bogged down with issues of flights and hotels. Eventually, they turned to HMI to help manage the program and trips in order to get back to being an effective distributor.

Conclusion

Ultimately, an incentive program is supposed to help you grow your business. Sometimes an in-house, DIY program is able to accomplish that for a time, but there often comes a point where it’s not living up to its full potential.

Maybe your team isn’t effectively incorporating the program into the rest of your business strategy. Maybe it’s become too big and intricate to manage internally. Or maybe your expertise lies elsewhere and trying to implement complex incentive strategy is taking up time that could be better spent elsewhere. In any case, it may be time to outsource.

No matter how many balls you’re able to juggle with your own two hands, there’s a point at which you’re not going to be able to add more in. That’s where we come in.

Need more incentive insights? Check out these related articles.

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