How to Create a Tiered Incentive Travel Program

Incentive planners always love an incentive travel program. It’s a great way to motivate your customer base and express your gratitude by sending winners somewhere unforgettable.

However, problems with a single-trip program can arise over time. It could be that your trip has gotten too large. With so many trip earners, a program can become difficult to manage and start to lose some of its luster.

Faced with an overwhelming group-travel program, it’s 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 recognize those people who are outside the top tier?

Rather than cutting back your group incentive travel program, 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 aren’t producing the same volume, but definitely deserve recognition. A successful program 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 organization.

This group should be limited to about 10 percent of your customer or sales base. These top performers will deliver 80 to 90 percent of your revenue. For that level of loyalty and performance, you’ll want to take out the big guns. President’s Club trips or other VIP rewards offer once-in-a-lifetime experiences. We’re 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, don't 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 permformance.

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 personalized 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’ll 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’s 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 percent 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

Finally, we have your customers/sales reps that are lower than your Tier 2 group. They do some business with or for you but still have significant potential for growth.

The common philosophy behind incentive program design is based on the Pareto Principle, which states that your top 10 or 20 percent of customers contribute the lion’s share of your revenue. Your middle 60 percent 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 programs to help them understand your product better,
• Requesting behavior changes, such as adopting your eCommerce and omnichannel functionalities.

With this group, focus on growing their sales, and then fostering loyalty. You’re not going to turn every low-tier customer into an exclusive business partner or sales star overnight, but in the long run, recognizing 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 in order to join the mid-tier group.

One of the signs of a strong incentive program is its versatility and flexibility. Can you make a program work for many different types of customers and reps? If you apply the same strategy for everybody, then probably not. But segmenting your qualifier base allows you to leverage different types of tactics and rewards where they work best. Not all of them are going to be as devoted to their partnership with you as your top performers are. But with a well-executed incentive travel program, they might get there. And you’ll be building loyalty and raising revenue along the way.

Lincoln Smith is chief strategy officer for HMI Performance Incentives.