Incentive FAQs

The middle 60, or middle 60%, is your middle of the pack performers. While many programs focus on rewarding the top 20% (as they are usually responsible for 80% of revenue), the middle 60 has the highest potential for growth.

Within a sales team, this group is often ignored, despite their high potential to perform. Customers in this group are often lumped together, where segmenting these folks based on their specific needs would help move them closer to the top.

Boiled down, a loyalty program rewards a group of people for doing what they’re already doing. An incentive program tries to entice a group of people to do something they’re not already doing. 

For instance, if your top 20% of customers are already giving you 80% of your revenue, it’s safe to say these folks won’t be growing much more with you. Best to recognize them for that business (loyalty). 

On the contrary, your Middle 60% (see above) might just need some encouragement to grow with you. Provide them with a reason to come back (incentive), and you’ll see them shifting business to you. 

Emphatically, yes. The reason stems back to segmentation. Narrowing your scope to the highest opportunity audiences allows you to be personal with your go-to-market strategy. When all else is equal, research has shown that an incentive can drive business 72% of the time.

For example, a personalized goal targeted toward key accounts can act as an aspirational achievement and lead to a 29% increase in sales from the previous year.

Marketing is vital. Imagine trying to plan a birthday party and not inviting anyone. The real question is how much should you spend on marketing.

 What we typically recommend is that marketing makes up at least 10% of your overall budget for the program. What Does a Reward Program Cost? Your Best Billing Models (hmiaward.com)

Best practice says yes. Think of your sales people as the front line of your program’s marketing. They have the relationship with the customer and so can use that relationship to encourage enrollment and engagement in the program.

Including your salespeople can lead to ROIs of over 750%.

Research shows that the average contractor buys from 3 distributors. 

Only 8.3% of contractors shop from only 1 distributor, and 19.5% shop from 6+.

A solid goal to shoot for is 40% for year 1, 50% for year 2, and 60% over year 2.

This depends on the size and scope of your segmentation. Your top 20% of customers are more likely to enroll since they’re already engaged. Your lower 20% will be more difficult, in contrast. 

A DMC is a great partner to have while traveling. They handle a wide variety of different services at any given destination, including planning out events, coordinating between travelers and experiences, and more. 

That depends on what you’re trying to achieve. ROI for a reward program is dependent on rule and earning structure, payout rate, your own market position, and the margin on the products you’re trying to push. 

Check out some case studies with positive ROI to get an idea. 

Financing your incentive / loyalty program can come from many avenues. Some rule structures that include goals can be self-funding. For instance, a group travel programs can set certain growth goals like 2% over last year. Another example is a point program that only deals out points after they’ve hit their goal for the year. 

That incremental growth can pay for the program on its own. 

Other options include Manufacturer/Marketing Development Funds and Co-Op funds. These vendor-supplied funds can help offset costs and, in some well-organized cases, even pay for the whole program. 

Breakage refers to the outstanding libability of an reward. That could be unused points or dollars. Usually this is money that you’ll have to eventually account for on your budget sheets, but hasn’t been spent yet. 

There are a lot of different ways to handle breakage, so check out more on breakage here. 

These are your typical billing options for paying for your points in a points program.

Being billed on redemption means that you don’t pay for the point until the point is spent, which means you might have a higher amount of breakage (see above). The upside here is that if the points aren’t spent, you won’t get billed.

Being billed on issuance means that you pay for the point when it is earned or issued. This can make for a cleaner budget sheet, but can often be costly, especially if the points go unused.

There are always hybrid models as well. For instance, 50% issuance / 50% redemption can lead to a cleaner budget sheet, while still ensuring the people you want to reward are being rewarded.

Learn more about billing models here.