Anatomy of incentive planning

Recently, Strategy invited representatives from three sides of an incentive program - the client, the incentive house and the destination - to participate in an open discussion about the mechanics, the motives and the benefits of using incentive travel to motivate...

Recently, Strategy invited representatives from three sides of an incentive program – the client, the incentive house and the destination – to participate in an open discussion about the mechanics, the motives and the benefits of using incentive travel to motivate dealers.

In this case, the client was Lennox Industries Canada, a heating and air conditioning company which has 351 dealerships across Canada, the incentive house was GTC Group Travel Coordinators, and the destination was represented by Swissair, which works closely with the Swiss National Tourist Office in promoting and organizing incentive trips to Switzerland.

The panel included Bill Moltner, national marketing manager with Lennox; Grace Brown, sales manager gtc; Bill Mawhinney, regional manager for Ontario and Western Canada, Swissair; and Martine Jamison, and Helga MacGregor, sales representatives, Swissair.

Moltner: Historically, Lennox would have off-shore travel every other year and it was not purely incentive. We held business meetings with that travel.

However, a lot of pleasure was mixed into the trip. It would, typically, be a week in a sun-and-sand destination. There would be meetings, but the balance would be pleasure.

In our industry, many of our competitors are offering pure incentive trips. So we took a look at incentive trips from a competitive perspective.

We were hearing from the field that we needed to do that just to be level with the competition. We also felt it might be an effective use of our funds.

Last year, 1991, was our first foray into the incentive trip arena.

Part of mix

Travel was part of our whole balanced marketing mix. Travel I would categorize as more of a continuity program. Our program had a year duration. It extended from January to December.

Most of our other dealer-directed promotions are very seasonal. They’ll be a month, two months, short-term incentives to get an immediate blip in the sales numbers.

This program was aimed at encouraging continuity. But, also, we structured our program in such a way that we could enhance our short-term promotion efforts.

We used it to support everything else that we were doing. We set up a frequent buyer program. We issued monthly statements. Dealers received points for doing certain things.

Co-operative ads

In one of our incentives, we wanted to encourage our dealers to participate in our co-operative television advertising programs. So, for example, if they bought one package, they would receive 5,000 extra points.

Then you look at something like our early season program, where we like to promote air conditioning in the spring before the hot summer weather hits. We offer triple points on qualifying equipment. You have short-term objectives that you could support with a year-long structure.

Why travel relative to anything else?

Travel merchandises extremely well and markets well. You can show pictures and cite examples of what you’re doing.

When we launched the program with our dealers, we did it with a slide presentation that showed them what was at the end of the rainbow. If they met the criteria, here’s the reward.


Also, one of the reasons we got into travel was feedback from the field. We were responding. Our u.s. division has done many pure incentive trips as well, so we spent a lot of time learning from them.

In choosing an incentive house to handle the program, we began by briefing six agencies. We gave an approximate budget, and said, ‘Here are some guidelines. We don’t want to go here, here or here, either because we went there last year, or our competitors are going there. Here are the objectives of the program and the timing.’

And we left it purposely very open so they could come back with proposals.

When the proposals came back, we had everything from Disneyworld, to Arizona, to Bermuda, right through to Hong Kong.

Some presentations came in with total disregard to the budget. They were wonderful programs, but we couldn’t afford half of them.

Swissair was very direct. Their proposal was superior in the value they offered. That’s really why Swissair won out.

It was our first incentive trip, so it had to be a nice destination. Business was tough. We had a limited budget, and we were willing to put some hard work into it.

It wasn’t that we said to Swissair, ‘Here it is, we’ll see you in a year when we travel.’ We wanted to participate in the program. And Swissair was able to present Switzerland within our budget.

A couple of the incentive houses had presented Switzerland at a totally inflated budget. So it was an interesting comparison.

We were under really tight time pressures, too, so we had to pick a destination before we did a site inspection.

We announced the program in December, and we did a site inspection in January.

It worked really well. Our numbers were lower than we were projecting initially, because it was a very tough year.

Our business is somewhat cyclical, based on the economy and based on the weather. The economy and the weather are two very difficult things to control, especially when you are dealing with air conditioning.


If you don’t have a warm summer, it’s difficult to sell air conditioning.

There were hard and soft benefits that were going to accrue out of the program. Hard benefits are in this year’s sales.

The soft ones are the relationship-building.

At Lennox, we have an independent dealer network and we really do have more of a relationship than a typical manufacturer/distributor.

We had a small group, 60 people or so, but it was the size of group we could really make feel special, get to know them. In terms of the soft benefits, it was very successful.

gtc got involved, not in our Switzerland program, but our up-coming 1993 program. It’s not a pure incentive trip, it’s a dealer meeting.

We wanted to have a cost-effective destination, where we could get high participation. So we chose Las Vegas as the location.

Larger group

We are having a much larger group, over 400 people. We had seen gtc on a cruise, so I was very comfortable going to them and saying if you put together a proposal we are happy with, we’ll work together.

We went out with the initial program, and it wasn’t well received.

Rather than dump the whole thing, we decided to backtrack and re-package it, adjusting all of the concerns out in the field. We went back and said, ‘We’ve listened to what you’ve said,’ and we were extremely well received.

The brief we gave to gtc involved timing, budget, numbers of people, and general guidelines in terms of ‘This is what we want to accomplish.’

We had a formal brief, but a lot of it came out in conversations, through questions that are asked.

Brown: My job begins with listening to my clients.

If they have a history of doing incentives, or incentives/conferences, I ask them where have they gone, what have they done, what have they done in the past that they enjoyed? What happened that they didn’t like?

Past history

In some cases, a client doesn’t like a certain airline. Or they are not golfers, or they like tours. You work with what their past history is, you get a feeling for what they like, because they know their dealers.

If you present Spain or the Canary Islands or the Caribbean and they say, ‘Well, we did that last year, and it worked okay, but we’d prefer not to do a sun location again,’ you may suggest Europe.

Incentive houses are not involved in just the travel aspect.

The trip is the carrot and, yes, that must be promotable, exciting and be able to excite dealers, or whoever the client is targetting.

But what is so key is to find out exactly what the budget is, to find out what they want included. The budget is so important, especially in the ’90s.

The best thing to do is say, here are the destinations that we recommend. We can come in under budget on this plane, this line.

However, we give additional options. If you want to upscale your final night, if you want to include lunches for everybody in the group, then it’s an extra $20 or $30 per person.

For instance, one program that I did in Switzerland, we used the Orient Express [train.] We brought it down from Zurich and did an evening dinner train ride out of Interlaken.

It was something that I envisioned would knock the socks off of these dealers and it did. But it was not totally within the budget. It was 70% within the budget, but they decided to bring it in because they could promote it.

The creative can be so vital, even for somebody who’s already in the process of running programs.

The way gtc is set up right now, we are involved in all areas of incentives, so if we are talking to a new client, then we look at their total needs and it may be that they do a full program, perhaps involving a merchandise program, a travel program, a full range program.

For me, personally, I feel that that is a good way to go. If it’s a slow season in November for Lennox, for example, and they want to get the air conditioners off the floor, then perhaps they build in a double points incentive during that period.

Moltner: In my experience, the role of the incentive house can vary.

With our current trip, our marketing services manager, who also acts as our internal trip planner, was very new.

She came on board just before the Switzerland trip, so was not involved in a lot of the upfront planning. I called our gtc sales rep.

I said, ‘We’re going to do a brief, but I wanted to use this as a development exercise. Prompt us on everything you need to know.’

She faxed an outline. It had more in there than we would ever present in a brief, but it gave an idea of the types of thinking she had to know from a structure point of view. It gave the appropriate guidelines.

Next time, she’s going to be much more familiar with the nuts and bolts.

As a marketing organization, we believe strongly in briefs, because a good brief tells you many things.

It lets your supplier know what’s expected and gives you benchmarks to evaluate their proposal. It also helps tell you who is a good supplier and who isn’t.

If you’ve budgeted for a $2,500 per person program and the supplier comes back with a $3,800 program, they’ve lost the business.

We go into the process with our investment in travel predetermined. That’s determined at the planning stage before we go to the supplier.

Brown: There are a lot of companies that use point systems and there are a lot of companies that use percentage over previous sales or over a sales target.

If your salesman or distributor sells a certain amount over what he’s targetted, then he wins a trip.

There are some companies that we will assist from ground floor. We find out what your objectives are, what are your targets.

Obviously, an increase in sales and market share are key for every business now because of the economy. But how do you want to go about it?

Different facets

Do you want to have a team effort, or do you have individual salespeople that are so spread out across the country who need the support of their district or their area. There are so many different facets.

We might have three or four sessions just brainstorming over our boardroom table as to what the client’s target is.

We’ll help them structure a point system. Something that sells off the shelf, obviously you don’t have a high point value, but a top of the line air conditioner, that doesn’t sell as easily, you target higher points.

Moltner: You’ve got to look at your audience. We were running a program that, in hindsight, was too sophisticated.

In our business, they want it really simple. You have to know your audience. You need to strike your own required balance between the reward function and the incentive function.

Brown: If your people are getting discouraged, then that’s when you bring in a change to your program. You might jump in and say, ‘Okay, every air conditioner that’s sold between June and August, you get double points.’ Then there’s a surge of excitement and they are back on track.

Jamison: You have to constantly stay in touch with your audience.

I know with Lennox, we asked a lot of questions. I was there every month. It was a constant checking

With Swissair, it’s different, we have the control. We’ve got the tourist board. We’ve got all the people that are working with us.

If I were doing a trip, I would want to know all the nitty-gritty details, exactly what they want. We have the knowledge. We know the territory, we know the areas, we know what is appealing to clients.

It’s a case of really knowing your objectives and then coming up with a plan to make the most of the program.

Perhaps a mailing should be done to keep your dealers reminded and motivated all the time. You’ve got to create and maintain excitement.

Moltner: This hits a really important point, and that’s the psychology behind the planning. You have to be prepared, or you’re destined for disaster.

You start at the top level. What are my business objectives for the year? What are my business plans?

‘Is there a role?’

First question you ask: ‘Is there a role for incentive travel?’ And then you have to say, specifically, ‘What are my objectives?. Incentive travel to reward loyalty? Thanks for sticking with us this year, we’re looking forward to doing business with you again next year.’

This is a totally valid objective, but it’s sure not right for everyone, especially if you want to double sales.

If you have somebody that is earning this trip for a year and you disappoint, you’re better off not doing anything. It can backfire on you.

Mawhinney: We, as an airline, aggressively approach the incentive market, offering programs that an individual would not normally be able to purchase themselves.

There are many charters to Mexico, Florida, to Nassau. Anybody with $420 dollars in the bank can buy a week’s program in the Bahamas.

From Swissair’s point of view, we’re trying to offer something that will motivate a group of people because it’s something that they cannot buy themselves.

Anybody can buy a destination, but anybody can’t get their name on their headrest cover, or a dinner in a castle. And that’s what we can put into program.

For example, we can arrange a day trip to Gstaad.

Rather than just taking a bus or an ordinary train, we can rent a turn-of-the-century train. The dealers are served coffee and croissant. It’s constantly add-on, add-on, add-on. They are totally pampered, the whole time.


It’s creating experiences for them that they’ll never forget. A farewell dinner in the castle, with magnificent surroundings, trumpeters to welcome them. And you have the leg of veal roasting on the fire. It’s constant, and the experience will stay with them forever.

Jamison: It must be something really special, out of the ordinary.

Mawhinney: It’s something that they continually talk about amongst their friends. Our product [incentive travel] is totally different from anything else.

Our goal is to help Lennox sell more British Thermal Units (btus) to as many people as they possible can. And we do that by providing Lennox with a product that is going to be talked about by that family of Lennox dealers.

You can do that with travel. You can’t do that by offering refrigerators to your dealers. I defy you to talk about the refrigerator you just got at a cocktail party.

Attention to detail

Moltner: And to make it truly memorable, you need to pay attention to every single detail.

You walk through on the site inspection and think about how the dealers are going to be greeted Are they going to be hungry, are they going to be thirsty? Every minute, you walk through the program, and say, ‘What can we do for them?’

Picking room gifts can be an effective idea.

We thought, what will the dealers feel like when they get here? Maybe a nice gift of Swiss wine to welcome them? Then they can kick their shoes off, after a long trip and relax.

We booked all lake-view rooms. Again, it’s attention to detail. You don’t want anybody to think, ‘He’s facing the lake and I’m facing the parking lot.’ So everybody gets lake-view rooms.

One day we took photographs, and on the final night, we gave them the pictures so they had them as a take-away. They were high-quality, beautiful pictures.

Brown: That’s where we come in.

Better spent

The client’s time is better spent attending to marketing responsibilities, or sales responsibilities. If the client chooses to go on the site inspection, then that’s great.

Other than that, any of the small difficulties that may come up, or the small details like room gifts, are things that the client shouldn’t have to worry about it. We’ve taken care of it.

Mawhinney: In structuring your program, you should allow for little structure. You should have free days. There are people who want to do their own thing. They’re going to rent a car and go to Italy.

There are other people who will show up in the lobby lost. So we have to package things so that they don’t feel lost. You have to think about what they might be thinking.

For evening functions, some people like to get dressed up. For others, a pair of jeans is what they care to wear. So you build in the flexibility.

Brown: The trick is to have all of this done beforehand. You have to count on the unexpected happening when you arrive.

You have to be flexible, but every single detail that you can take care of prior to the group leaving, means less that you have to deal with on-site.

Your primary concern on-site is to make sure that the winners are taken care of. Your time is spent doing that, not organizing what should have been organized two months ago.


Moltner: You rely on experience. You need to have people that you can trust. It makes all the difference.

Brown: When we have a dining situation, whether there are five restaurants or 15, we make sure that we have eaten at every single one of those restaurants.

I had a major program in Switzerland, with Swissair, where I had 15 restaurants.

This was a car rally, an excursion. We had 400 people, 100 Mercedes. Talk about logistics. We started in Zurich, I had 15 restaurants in Zurich and we ended up in Geneva and I had 15 restaurants in Geneva. And we went to every single one of those restaurants.

Of course I can’t control that restaurant, but at least I know the quality. When I’m advertising the restaurant, I know whether it’s casual, upscale and elegant. I’ve been there.

So when we do site inspections, they are killer days. They are 20-hour days, till I’ve seen everything. I not only do the tours that we have booked for a program, I do as many of the other available tours as I can.

Because if something happens, and I can’t use that tour A, then I have plan B.

Mawhinney: A lot of principles that apply to any good marketing program apply to this. Good planning up-front, and then sticking to the plan.

Brown: One of the advantages of travel as an incentive, as opposed to merchandise, is that in this day and age, it may be the only vacation a couple gets. Because they can’t take the time and they don’t have the money.

Moltner: With some dealer networks, it’s their planned holiday. With our u.s. divisions, their trips aren’t heavily structured.

The dealers often bring their kids, it’s very open, there are not a lot of group meal occasions. A lot of people rely on that each year for their vacation.

The important thing for me is to get the recognition from the dealers that this is our program that we’ve put on for them. We never want our dealers to think of anyone’s hosting them but us.

It’s not the airline, or the incentive house that’s rewarding them. We are very careful about that.

Even though gtc may be the contact point, we will name the contact point the Lennox travel desk. It just happens to the be gtc fax number and a name. But it’s always us that’s ultimately responsible for this program.

Brown: The trip has the potential of building a certain cohesiveness for the whole organization.

Sales meetings are one thing, where you’re pumping the new product, and it’s sell, sell, sell.

But an incentive program has the difference of including spouses, who have very often put up with the fact that their mates have been working 16-hour days, on the road three weeks out of four. So it’s a reward for them as well.

Plus, this is the one time of the year that they get to see many of the same people with whom they have something in common. This might be the only time that they get together. And it becomes a way of enriching the relationship between them and the company.

Moltner: These are the soft benefits. You could never put a number on it. But it’s crucial.

Jamison: In some respects, this becomes even more important today.

So much of modern communications is with faxes and conference calls, which means that people have an even tougher time to meet with each other.

An incentive trip suddenly becomes an important tool to get people to finally meet that person thousands of miles away, to know that voice.

Moltner: That’s one of the reasons we’ve decided to go to Las Vegas this year. Some of our dealers have said: ‘Your big trips are great, but you don’t need them all the time. How about something smaller?’

An incentive to me is being able to rub shoulders with my counterparts in other provinces, and that’s a real benefit.

That was key to us.

We said we’d have to get to some place that was ecconomical, that you can send four or six people from a dealership. We’ll provide an opportunity to mingle, to build a relationship with your Lennox representative.