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INCENTIVE TRAVEL & RETURN ON INVESTMENT ADI Meetings and Events 4801 S. Lakeshore Drive #108 Tempe, AZ 85282 (480) 350 9090 www.adimeetings.com

ADI Meetings and Events Incentive and ROI Presentation

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Page 1: 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

Page 2: ADI Meetings and Events Incentive and ROI Presentation

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

Page 3: ADI Meetings and Events Incentive and ROI Presentation

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

Page 4: ADI Meetings and Events Incentive and ROI Presentation

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/

Page 5: ADI Meetings and Events Incentive and ROI Presentation

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

Page 6: ADI Meetings and Events Incentive and ROI Presentation

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

Page 7: ADI Meetings and Events Incentive and ROI Presentation

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

Page 8: ADI Meetings and Events Incentive and ROI Presentation

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

Page 9: ADI Meetings and Events Incentive and ROI Presentation

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

Page 10: ADI Meetings and Events Incentive and ROI Presentation

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%

Page 11: ADI Meetings and Events Incentive and ROI Presentation

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%

Page 12: ADI Meetings and Events Incentive and ROI Presentation

ADI Meetings & Events4801 South Lakeshore Drive #108

Tempe, Arizona 85282www.ADIMeetings.com

(480) 350-9090