In order for business incentives to be effective they need to meet certain criteria and avoid certain pitfalls. Here are the dos and don’ts of planning successful business incentives:

• Do offer the incentives as a competition or drawing in order to get as much benefit from as many people as possible with as little money as possible.
• Don’t consider giving substantial incentives away without a reason.
• Do consider giving smaller incentives away periodically as well as in lieu of winning larger incentives. Coffee mugs with corporate logos are a great incentive for just about everyone!
• Don’t consider giving minor gifts as rewards for great actions. If Bob from the help desk saved the company $8,000 a month by helping set up a new VoIP calling system then giving him a mug as a reward is insulting.
• Do consider offering incentives to employees that find new ways to save money. Some companies do with the best incentive of all: a percentage of the savings for a set period of time.
• Don’t consider altering deals later just because of the bottom line. Trust is an important factor in any business relationship and it is nearly impossible to rebuild once seriously abused.
• Do consider different types of rewards for different types of employees, partners, suppliers, and so on. Incentives that work for employees probably won’t work well for suppliers.

Any company that is reviewing its incentives and bonuses needs to keep an eye on the bottom line while simultaneously trying to find the best value possible for their spending dollar. It is simply a question of economics, but that does not necessarily mean that an affordable trip to Nebraska is going to seem attractive. A cruise on the other hand is almost always a great travel option worth considering and can be surprisingly affordable. Here’s why cruise travel should be on the incentive plan of any company with travel incentive options:

• Incentive cruises are all inclusive, meaning that they are incredibly easy to budget.
• All inclusive means no need to give spending money and collect receipts or give out a prepaid company credit card.
• Cruises are almost universally considered to be enjoyable which probably explains why they have been around for so long.
• Cruises can change the recipient(s) perceptions of the company dramatically, and not in the same way that a ‘fun’ vacation to Nebraska might do the same. A partner might become more amenable to agreements, an employee more loyal, a supplier more reliable, and so on.
• Regardless of the outcome of a cruise, the recipient is likely to sing the praises of the company to any and all that will hear. Nothing beats good word of mouth, nothing.

According to a new  research study conducted by Oxford Economic, for every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits.

Face-to-face meetings and incentive awards to top performers seem to improve the bottom line.

While many companies have cut travel budgets, this study may help change the minds of the decision makers.

Your client has noticed that public opinion regarding incentives is not good. She is worried that her company will be seen as wasteful and she will be seen as a spendthrift. In some companies that assessment may be accurate, but in some cases it may be way off. If you have a client who is worried for no good reason, perhaps you can convince her that canceling the program isn’t only not necessary, it can be detrimental to the business’s bottom line.

One reason is that the employee may have been expecting it, and perhaps working with a goal like that in mind. Bob may have noticed that last year Joe got a trip to New Zealand for being the top producing sales person, and he just broke Joe’s sales record. If Bob doesn’t get an incentive gift, he’s not only going to ask, “Why bother?” but he may also end up working for the competition.

Another reason is because others are watching. If Bob and Joe are retail partners and the same thing happens, other retail partners will see that and also ask, “Why bother?” Driving sales down is a negative return on investment, and sales is the only thing that makes money.

So the real reason not to cancel is because the top ROI a client can get on a canceled trip is zero. Zip, zilch, nada. That’s if she’s lucky. If she’s not, she will have a possible attrition of good sales people, or less participation from retail partners, and general malaise of employee attitude.

While we usually think of incentive programs benefiting the top producers–and the incentive itself does–the real effect is on the average employee, according to Fay Beauchine. In May 2009’s Incentive Magazine, she made the point in Incentive House Roundtable that it’s the middle producers who move up.

“We all know top performers are usually top performers,” she said to interviewer Leo Jakobson. She claimed that it’s the middle that improve by trying to hit the target. Even though they will miss it, they will still improve, even if only a few percent, and that will increase the total sales by “huge numbers in some cases.”

This underscores the importance of the incentive travel programs currently in place in corporations today. You as the meeting planner need to understand that you are a key player in your client’s bottom line, and you have to produce sales in an indirect way. This can be more difficult than the motivation speaker who simply gives them all a good talking to.

Remember that when you plan incentive travel, you need to plan with the person in mind. Tailor it to fit a participant’s ideal needs and wants and she will talk about it for a long time–and she will say it to some of the middle producers in the company.