ADI Meetings and Events Incentive and ROI Presentation
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Transcript of ADI Meetings and Events Incentive and ROI Presentation
INCENTIVE TRAVEL &RETURN ON INVESTMENT
ADI Meetings and Events4801 S. Lakeshore Drive #108
Tempe, AZ 85282(480) 350 9090
www.adimeetings.com
Dominican Republic, 2013
Scotland, 2011
Panama, 2014
ADI Meetings & Events helps put together incentive trips all around the world. Pictured are some of their trips, including in
the Dominican Republic, Scotland, and Panama.
Incentive Travel serves as a way to help keep employees
motivated through a non-cash reward program
What is Successful Incentive Travel?
Successful Incentive Travel Defined: “A motivational tool to enhance productivity or achieve business objectives in
which participants earn the reward based on a specific level of achievement set forth by management. Earners are rewarded with a trip and the program is designed to recognize earners for their achievements”
The five essential elements that form the core of a successful travel program:
1. The earning and selection criteria for the reward are closely tied to business objectives
2. Communication about the program and the progress participants are making toward goals was clear and consistent. Anticipation built throughout the year and keep employees motivated to achieve their objectives
3. The design of the travel program, including desirable destinations, interactive sessions and leisure time for the earners, add to the overall excitement.
4. Executives and key managers act as hosts to reinforce the company’s commitment to the reward program and recognition
5. The company keep detailed records that prove the productivity of the earners and their contributions to the company’s financial performance
The Importance of Incentive Travel for Companies
Since the economic turndown of 2008, incentive’s slow and steady comeback has finally hit its stride
46% of U.S. business use incentive travel U.S. businesses spend $22.5 billion annually on incentive travel Organizations that provide non cash rewards such as incentive travel
have 3 times higher revenue increases 100% of Best-in-Class companies (those with the highest customer
retention and sales growth) offer group travel to recognize year-end sales success
Incentive travel is not just for sales. Of companies that run award programs, 53% use incentive travel to recognize sales, 43% to recognize employees, 33% to recognize channel partners and 27% to recognize customer loyalty
Properly designed and executed incentive travel programs can increase sales productivity by 18% and produce an ROI of 112%
Per person incentive travel budgets are now up to an average of $3,440. http://theirf.org/research/7-incentive-travel-stats-everyone-should-know/1386/
Why Reward Employees? 80% of employees show up and get the
job done. Rewards help shift people into the group of super achievers who are already getting top results
Advantages of Incentive Travel for Business and Employees Alike
Advantages for employers Facilitating communication and networking
opportunities, especially in senior management Encouraging the corporate culture and social
interaction Creating enthusiasm for next business period
Advantage of employees Physical motivation (rest, health, sport, etc.) Cultural motivation (desire to get to know and
experience other cultures) Interpersonal motivation (meeting and connecting with
other people) Status and prestige motivation
Return on Investment Return on investment is a powerful tool for
measuring the net financial benefits of an investment and is commonly used by business-oriented organizations when evaluating where to spend resources
An attractive element of incentive travel is that the actual return on investment can be measured and the reward is granted only if and when the goal has been reached
There are numerous ways to calculate ROI to get an accurate measurement for the return on investment
Calculating Incentive Travel ROI Step 1. Estimate your maximum budget. As a guide
line, your total budget should be about 10% of your participants base salary compensation. Therefore, in a sales force of 250 (as an example) whose average annual base pay is $50,000 you can expect that expenses will not exceed $1,250,000. (250 x $5,000).
Step 2. Project incremental margin. Project sales lift or cost savings at 5% to 10% improvement over trend (we’ll use 10% here for ease of calculation, and assume a recent trend of 0%). If the average lift of 10% equals $20,000 monthly in margin, the incremental margin gain is $240,000 annually ($20,000 x 12 months).
$240,000 x 250 people = $60,000,000 x 10% improvement = $6,000,000.
$1,250,000.
ProjectedBudget
$6,000,000
Projected Incremental Margin
Calculating Incentive Travel
Step 3. Calculate investment required.A. Fixed costs. Fixed costs (communications,
administration and tracking systems) should require 10% to 15% of the projected budget. We’ll use the worst-scenario cost of 15% (.15 x $1,250,000. = $187,500.)
B. Projected reward budget. Estimate rewards at 10% of average compensation (.10 x $50,000. = $5,000), including tax liability, your reward budget will be $840,000. ($5,000 x 168 qualifying employees).
INVESTMENT (Cost of program – total of A plus B)
$187,500
$840,000
$1,027,500
Calculating Incentive Travel ROI
Step 4: Calculate ROIA. Subtract cost of travel program from
projected incremental margin to get ROI dollars. $6,000,000 - $1,027,500 = $4,972,500
B. Divide dollar ROI by cost of program to calculate projected ROI $4,972,500 / $1,027,500
ROI Percentage on Increase from Bottom Line
$4,972,500
484%
ADI Calculations for ROIAnother Formula to Consider…
Projected Annual Sales Net Revenue for the year: $9,500,000
Projected 10% increase in sales (subtract) $950,000
= $8,550,000
Projected budget for incentive program 30% $2,565,000
Net profit = $5,985,000
(divided by cost of trip $2,565,000)
ROI percentage of increase for bottom line: 235%
Step 1. $9,500,000 - $950,000 = $8,550,000
Step 2. $8,550,000 X .30 = $5,985,000
Step 3. $5,985,000 / $2,565,000 = 235%
ADI Meetings & Events4801 South Lakeshore Drive #108
Tempe, Arizona 85282www.ADIMeetings.com
(480) 350-9090