Creating a tiered incentive travel programme

A single-trip incentive programme may have so many trip earners that it can become difficult to manage and such trips may start to lose some of their lustre. Lincoln Smith, chief strategy officer for HMI Performance Incentives, shares tips on how to create a tiered incentive travel programme:

Faced with an overwhelming group-travel programme, it is often tempting to scale things back. You could narrow your earners to only the highest performers among your customers or employees. That would definitely make it feel more special to those top performers — but how do you reward and recognise those people who are outside the top tier?

Rather than cutting back your group incentive travel programme, consider a tiered or segmented program. Segmenting your customers or employees into top-, mid-, and low-performing groups allows you to save the top-level trips for your true stars. It also gives some love to very important mid-tier customers or employees. They are not producing the same volume, but definitely deserve recognition.

A successful programme can move some of those mid-performers into the top tier over time, and can motivate the lowest-tier performers with points-based rewards, so they can earn points that can be redeemed for merchandise, experiences or even individual travel packages.

Tier 1 - the VIPs

By taking a close look at your sales data, you can see who among your performers should be in this tier. This is the cream of the crop, those businesses who have stuck it out as your closest partners year in and year out, or the top sellers in your organisation.

This group should be limited to about 10% of your customer or sales base. These top performers will deliver 80 to 90% of your revenue. For that level of loyalty and performance, you will want to take out the big guns. President’s Club trips or other VIP rewards offer once-in-a-lifetime experiences. We are talking tours through the Italian countryside, European river cruises, and tickets to massive sporting events like the World Cup.

Since these go-getters already give you most of their business, do not ask them to grow their spending level with you. Instead, focus on maintaining their current spending levels or sales. Reward them for their continued business/outstanding performance.

Tier 2 - the Mid-Level Earners

What about the rest of your program members, especially those who would have earned the VIP trip before the program was restructured into tiers?

Providing a loyalty-building reward for a customer or salesperson and then taking it away can be the death knell for your relationship. This is especially true in the B2B space, where loyalty is sometimes fleeting or transactional. Rewarding them with a separate trip aimed at mid-level earners will likely be your best option.

For this group, goals should be growth-based. That means creating personalised purchase goals for these customers (or sales goals for employees). Base these on their previous year’s spending or sales. Since these goals will generate revenue, they will also end up funding the trip itself.

While earning a trip is not a given like it is in the VIP tier, the reward still can be highly motivating and memorable. It is not going to be quite the same level of luxury as your VIPs receive. With a larger group — and the mid-tier is typically 60% of the group — your trip budget will be smaller.

You should still reward their commitment to your business with something that makes them feel special. Five days at an all-inclusive luxury resort offers trip-earners a memorable and exciting experience that will help secure business in the long term.

Tier 3- the "Growth" Group

This group does some business with or for you but still has significant potential for growth. The common philosophy behind incentive programme design is based on the Pareto Principle, which states that your top 10 or 20% of customers contribute the lion’s share of your revenue. Your middle 60% are ripe for sales growth. Focus heavily on growth for this group. As for the bottom tier, there might be specific reasons why they are the least-productive performers. Consider how to address those pain points to build loyalty and retention.

For example:

· Create goals based on purchases/sales for the year or quarter,

· Offer training programmes to help them understand your product better,

· Request behaviour changes, such as adopting your eCommerce and omnichannel functionalities.

· Focus on growing their sales, and then foster loyalty. You not going to turn every low-tier customer into an exclusive business partner or sales star overnight, but in the long run, recognising their efforts will pay off.

· By creating a points-based reward system, they will feel appreciated, and hopefully will be motivated to sell more the following qualifying period to join the mid-tier group.

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Source: Northstar Meetings Group