In mid 2007, Online-Rewards was asked to be a 'technical expert' for the Cincinnati Business Courier in regards to Incentive Program Technology. Once a month we answered questions related to the implementation of the Rewards Programs. They are reprinted here for your information.
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| 1. There seems to be an increase in the popularity of incentive programs, how do you account for this? |
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| 2. How can I use an incentive program to increase my sales? |
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| 3. How can incentive programs help me retain employees and save money? |
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| 4. How should I calculate my rewards program budget? |
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| 5. Why should I consider merchandise rewards when I already offer cash incentives? |
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| 6. I have a database of loyal customers, how can I leverage this with an incentive program? |
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| 7. How much time should I allocate to running an effective Reward Program? |
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| 8. How do I convince the decision makers in my company that implementing employee programs is a good investment? |
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| 9. What differentiates you from other employee program vendors? |
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How should I calculate my rewards program budget?
Your budget should be considered in 2 parts, the rewards you are offering and the overhead of the program.
For rewards, you need to determine the value of the actions being performed by your participants. In sales or cost-saving programs, this number can be calculated as a percentage of the financial return to your company.
To reward non monetary-based actions, consider the 2+ year benefit to your company for changing the behaviors of your participants. As a simple example, if replacing a quality staff member costs you $40,000 and a recognition program doubles the length of time they stay with you from 4 to 8 years, you will save $10,000 in 2 years by not turning them over. This number acts as a baseline for your program budget.
For set up and administration, you should anticipate no more than 20% of your total rewards budget. This will include your website, any necessary collateral print materials, and your program support.
Your rewards provider should act as a consultant to help you set your budget correctly.