Editor’s Note: this article was originally published on October 25th, 2011. Some changes were made for timeliness and relevancy.
I recently had an interesting discussion about incentive programs for the financial services industry with a colleague of mine, Harold MacCaughey, Principal at Travel Award Solutions. As an industry expert with many years of experience planning and implementing incentive programs, he shared with me some very valuable information about the benefits of non-cash incentive programs for the financial services industry in particular. Here are just a few of the insights he shared with me:
Incentive programs for companies in the financial services industry are very important for achieving long-term success, particularly during times of decline, like what many countries are facing in the near future as a recession hits.
Incentives help sponsoring companies:
All of the above are crucial to success, especially in an economy staring down a recession, and incentive programs are the most cost-effective strategy available to management to achieve results in these areas.
Many wholesalers in the financial services industry expect recognition beyond standard compensation, and they react especially well to non-cash incentive programs. Non-cash incentive programs don’t just drive sales. They provide a better ROI than cash incentives. Typical non-cash incentive programs only cost between 4% and 10% of the incremental revenue generated by the incentive program, meaning that even after administration costs, 90% or more of the profits generated as a result of the program go straight back to the company. Incentive programs are standard practice for the financial services industry and companies that ignore them do so at their own peril.
The best incentive strategy for the financial services industry is one that combines both a points program in which all wholesalers can qualify for points and a group travel program that only the top 10% – 20% of wholesalers will qualify for. This two-pronged approach targets 100% of the sales force with a special emphasis on the top performers.
Planning and implementing a successful incentive program, especially a multi-level one like is often necessary for financial service companies, can be a complicated task. Check out more about planning a points program, here and a group travel program, here. If you’re ever stuck , book a meeting with us! We’re happy to help.