Incentive Travel is Good for Business
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1 White Paper Incentive Travel is Good for Business Travel is a powerful motivator. It has emerged as the reward-of-choice for sales incentive programs because it inspires results for this critical revenue engine. But what makes it so effective, and what do we know about the outcomes? A well-designed incentive program connects business goals to personal drives and aspirations. Eligible program participants are inspired to achieve the goals both for the benefit of the company and for themselves. 1 Incentive Travel is Good for Business
2 Travel Inspires Engagement When eligible participants are focused on organizational goals, and inspired A well-designed incentive program connects business goals to personal drives and aspiration. by the possibility of earning the travel reward, they are engaged in the program and its outcomes. The brand becomes associated with achievement of personal and professional aspirations. This is employee or channel engagement in action, and that s good for the health of an organization. Engagement is proven to have a positive effect on profitability and productivity, among other metrics. In their article, The Relationship Between Employee Engagement at Work and Organizational Outcomes, Gallup reports that the gap between business units in the top quartile and bottom quartile of engagement is significant: 10% higher customer ratings, 22% higher in profitability, 21% higher in productivity, and 37% reduction in absenteeism. In fact, in their report Aon Hewitt Analysis Finds Managing Goals and Improving Employee Engagement is Key to Achieving Revenue Growth and Profitability Goals, researchers reported that Each incremental percentage point of employees who become engaged translated into an additional 0.6% growth in sales. A growing body of research shows a correlation between using travel as an incentive reward and engagement. Incentive Research Foundation (IRF) researchers, in partnership with Monmouth University and the Incentive Federation, surveyed incentive program managers for their study, The Use of Reward and Recognition Awards in Organizations. Respondents believe that travel was best at building loyalty in employees and channel partners. One survey participant stated Travel easily establishes an emotional connection which increases its effectiveness as a reward. Why Travel is the Most Powerful Reward Selection A desirable, tangible reward can increase performance by an average of 22 percent, as reported by the IRF in their paper, Incentives, Motivation, and Workplace Performance. 2 Incentive Travel is Good for Business
3 Reward selection is critical to engaging employees or channel partners with the program. The reward must fit the effort required to attain it and be something participants aspire for, rather than something they would do for themselves. Failure to inspire with the reward can demotivate the very workforce needed to reach the target. Monmouth University research shows that as budgets increase, travel takes over and that 77% of incentive travel programs are targeted at sales, since the incremental revenue produced by sales incentive programs will more than pay for the cost of the program. A good rule of thumb is to budget five percent of the audience s normal compensation during the qualifying time period. Generally associated with annual programs, group travel requires a minimum of $5,000 per winner An inspiring destination will drive participation to provide a full-service program. Lower per person incentive budgets are more frequently associated with points programs, merchandise rewards, or individual travel. Additionally, incentive program managers choose travel because they understand that individuals value experiences over material objects. In the Journal of Consumer Psychology article, If Money Doesn t Make You Happy, Then You Probably Aren t Spending It Right, researchers note that Individuals experienced elevated mood when contemplating a past experiential purchase (relative to those contemplating a past material purchase), suggesting that experiential purchases produce more lasting hedonic benefits. In other words, the experience of an incentive travel program is more desirable, more memorable, and has a longer lasting effect many other rewards of equal value. Further, both travel and merchandise are more effective and perceived to be of a greater value than a cash award of the same amount. In their paper Rewards and Recognition as a Vital Compensation Component, Aberdeen Group and IRF tell us that, Organizations that provide non-cash reward/recognition had an average year-over-year annual corporate revenue increase of 9.6% versus 3% for all others. Non-cash awards work best, and travel is the most effective noncash award. 3 Incentive Travel is Good for Business
4 Travel Program Planning is an Art Incentive planners know that the on-site experience is absolutely essential to the success of the program. Program winners must return home having had an unparalleled experience that exceeded expectations and was worth all the effort to get there. Only then is the promise of the program realized. Compelling travel programs should include: Personalized pre-trip and on-site communications, filled with information to increase anticipation and answer any questions. Activities and events that live up to or exceed expectations. The reality should outdo the fantasy. Impeccable guest service. Program winners must be treated as the important individuals they are. Public recognition of the efforts and achievements of the program winners. Create excitement for the program with evocative communications Importantly, the on-site experience directly represents the brand and how it treats essential stakeholders. Ensuring that employees or channel partners can clearly see that they and their hard work are valued is a critical final step. Benefits Extend Far Beyond the Program Dates The experience of a travel award extends well beyond the four or five days of the trip. Anticipation begins with the announcement of the program and builds until winners arrive at their destination. The program itself is enjoyed, shared with colleagues and spouses, and provides important opportunities for recognition and networking. Upon return, program winners share their experiences with colleagues and friends, igniting the motivation for the next program before it has even begun. In fact, Site International Foundation research reported in Incentive Travel: The Participant s Viewpoint shows that travel rewards reach not only those who earn the award, but also those who are eligible but do not qualify. While 96% of those who won the reward reported being motivated to earn it, 91% of eligible non-earners also reported that they were similarly motivated. Nearly 68% of non-earners reported that they would want to work harder in order to be an earner in the future. 4 Incentive Travel is Good for Business
5 The positive effects of an incentive travel program last long after the last guest has returned home. The Incentive Travel Council reported on these benefits in their paper, Behavioral Economics of Incentive Travel. These An incentive travel program has high impact on achievement and low impact on costs. It s good for business and good for people. include the opportunity to: Develop business contacts Foster teamwork Improve customer service Build employee loyalty Energize morale Maintain and increase sales Improve competitive position Attract and retain talent Shared experiences on site melt formal business barriers, deepening relationships that are important to success throughout the year. The momentum created by one incentive travel program rolls into the next one, as employees and channel partners recall the recent experience, anticipate the next one, and share their excitement with colleagues who did not win in the previous year. Good for Business, Good for People Travel incentives are part of a sound strategy to engage employees and channel partners, and to inspire performance both during the program qualifying period and long after it s over. Business outcomes are linked to an individual s personal hopes, ambitions, and drive to succeed. By aligning personal and professional aspirations, an incentive travel program inspires great commitment to the goal and motivates eligible participants to contribute extra discretionary effort. With thoughtful program design, well-crafted communication, and the right award, an incentive travel program has high impact on achievement and low impact on costs. It s good for business and good for people. 5 Incentive Travel is Good for Business
6 Just the Facts Companies with engaged employees show higher customer ratings, profitability, productivity, and reduced absenteeism. Gallup Each incremental 1% of employees who become engaged translates to 0.6% increase in sales. Aon Hewitt A desirable, tangible award increases performance by an average of 22%. Incentive Research Foundation Organizations using non-cash rewards had an average revenue increase of 9.6% versus 3% for all others. Incentive Research Foundation Experiential purchases produce more lasting hedonic benefits than merchandise purchases. Journal of Consumer Psychology Program managers report that travel is best at building loyalty and creates an emotional connection which increases program effectiveness. Monmouth University & Incentive Research Foundation 77% of incentive travel programs are targeted at sales goals. Monmouth University 96% of those who won a travel award reported it was motivating. 91% of non-earners also reported being motivated. Site International Foundation Travel programs have lasting benefits long after the program is complete, including improved customer service and increased employee loyalty. Incentive Travel Council For more information, visit or Aberdeen Group and Incentive Research Foundation, Rewards and Recognition as a Vital Compensation Component, Aon Hewitt, Aon Hewitt Analysis Finds Managing and Improving Employee Engagement is Key to Achieving Revenue Growth and Profitability Goals. May 30, July 24, Managing-and-Improving-Employee-Engagement-is-Key-to-Achieving-Revenue-Growth-and-Profitability-Goals/default.aspx Gallup, The Relationship Between Engagement at Work and Organizational Outcomes, February Incentive Research Foundation, Incentives, Motivation and Workplace Performance, Incentive Research Foundation, The Use of Reward and Recognition Awards in Organizations, 2011, Incentive Travel Council, Behavior Economics of Incentive Travel, 2010, Journal of Consumer Psychology, If Money Doesn t Make You Happy, Then You Probably Aren t Spending It Right, March 2011, Site & Incentive Travel Council, The Participants Viewpoint of Incentive Travel, Part 1. August 19, 2014, 6 Incentive Travel is Good for Business
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