Without measurement, incentive programs could be especially vul- nerable during challenging economic times. Organizations talk about this
fact, but data shows they might not be doing
much to prepare for such eventualities.
Measuring the effectiveness of incentive
travel programs in terms of sales and profits is
not new, but the recent Society for Incentive
Travel Excellence (SITE) Index discovered
that the practice is still surprisingly limited:
It begs the question: Why are 47 percent
of both users and suppliers not making ROI
measurement a part of every incentive trav-
el program? Like any sound business invest-
ment, the use of incentive programs to
engage employees and partners to achieve
business objectives must offer proven value
to the organization. But where does one
begin to determine this value?
Return on Investment (ROI) is a recog-
nized approach for evaluating the feasibility
of any business proposal and is measured to
determine if there is a good business reason
for spending funds on any venture. Is it a
feasible use of a company’s money? Will it
add to bottom-line profit?
As applied to incentive travel, measuring
ROI determines the contribution to profit
attributable to an incentive travel program,
less the total cost of that program. Spending for an incentive program is justified if
the ROI is positive.
There are numerous methods of measuring ROI for incentive travel programs.
They vary from the very simple to some
rather complex approaches. But they are all
based on the simple formula: Increased revenue (generated by the incentive program)
minus all costs associated with the program
(the travel itself, promotion and administrative costs) equals the ROI. A positive ROI
is an addition to profit.
It is important to note that most objectives for which incentive programs are
planned — increased sales, reduced turnover, greater market share — can all be
reduced to numerical (and hence, measurable) factors.
But certain objectives, particularly those
associated with events, do not lend themselves so easily to measurement.
A Different Way to Measure
Return on Objectives (ROO) is a model
based on understanding what an event must
accomplish. Obviously, objectives must be
identified before any project is launched so
it can be designed to accomplish those aims.
Moreover, they are essential if there is to be
any kind of measurement. They also need to
be stated in a way that can be measured.
This is where the major difference
between ROI and ROO comes in. ROI
objectives are primarily numerical, while
ROO objectives may not be reducible to
Frequently, pre- and post-event surveys
are used to measure ROO. While this can
be a very simplistic approach, it is the basis
for most ROO measurement — a comparison of the situation before the event to the
situation after the event.
Measuring the success of incentive programs — whether ROI or ROO — estab-lishes an environment of accountability,
and is the first step toward demonstrating
why future investment is warranted.
Travel Insights By Tina Weede, CRP
How and why to measure ROI and ROO
Tina Weede, CRP, president
of USMotivation, has designed,
implemented, and managed incentive
programs of all sizes, providing wisdom through measurable results.
Corporate Users 31% 22% 53%
Third-Party Suppliers 28% 25% 53%
Always or Almost Always
Source: SITE Index Annual Study 2015
Making the Business Case
For Incentive Travel