The Elusive Goal of ROI Measurement in Incentives, Rewards, Recognition, and Loyalty
By Bruce Bolger
The Industry Is Not the Cause—It’s the Customer
Multiple Sources Exist for Effective Measurement
As one who reads every published survey or research on engagement practices and who talks with businesspeople involved with all aspects of
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If there are any exceptions, they are most likely in the domain of sales, channel incentive, and loyalty programs, because they usually can be measured in terms of sales increases. But even many of these programs lack essential measurement processes that make sure the program isn’t encouraging unhealthy sales or purchasing practices—such as pushing customers to buy early or otherwise trying to shift their buying patterns to win an incentive, or worse.
The Industry Is Not the Cause—It’s the Customer
The cause for this situation is not for lack of knowledge or investment by industry organizations. The cause is the perennial lack of interest in measuring program outcomes by management, simply because senior management has not insisted on it and middle-management has little reason to open a can of worms if no one is asking tough questions. At best, and of course there are exceptions, management measures levels of engagement, or effectiveness of practices, rather than trying to seriously balance goals achieved, the actions taken to achieve them, and other factors that could affect outcomes or carry long-term consequences, all basic elements of total quality management.
I cannot count the times someone has called me into a meeting with the middle-level managers who plan these programs to discuss return on investment, only to be met with polite nods at best and at worst an immediate desire for me to change the subject.
This is beginning to change. Suddenly our clients showing us requests for proposals (under non-disclosure agreements or hiding the company names) are finding much more desire on the part of potential customers for transparency and the source of value creation, pricing, and program design measurement and expertise, even to the point of asking for the credentials of the team practitioners who will be involved, including links to proof of their industry thought leadership and case studies of their accomplishments.
It took US industry decades to embrace the principles of total quality management in their manufacturing and logistics practices, and that didn’t occur until many companies were forced to by their customers. The younger people are, the more they fail to understand just how long change can take not only in society but in business. The shift to greater emphasis on program design and measurement in human capital in general is being driven increasingly by investors who recognize that enormous waste in organizations due to low customer and employee engagement; by customers who have become increasingly disloyal, and by employees who are as dis-engaged as ever with many ready to flee, etc.
Multiple Sources Exist for Effective Measurement
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The SITE Foundation was created in 1987 producing some of the first research on effective program design practices and remains active today in the incentive travel field supporting efforts to improve program design effectiveness.
In 1992, the ROI Institute was founded by Jack and Patti Phillips to create a systematic approach to measuring almost any type of engagement
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The Incentive Marketing Association in the early 2000s contracted with Bruce Bolger and Rodger Stotz, a
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For about eight years in the early 2000s, the IRR industry supported the Forum for People Performance Management and Measurement at the Medill School of Journalism and Integrated Marketing Communications, which published numerous studies including the landmark study demonstrating the connection between employee engagement, customer loyalty, and financial results in the media industry based on a correlation of emperical data.
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This year, the Enterprise Engagement Alliance founded a research division comprised of experts in engagement
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I am regularly asked how many organizations follow these practices, widely used in manufacturing, in their people management, and the estimate is less than 20% of companies—of whom none that I know of have a name for their strategy as it is simply baked into their way of doing business.
Editors note: The author was a founding board member of the SITE Foundation and served as President for three years before serving on the Incentive Research Foundation as a trustee until the end of his term. He later co-founded the Forum for People Performance Management and Measurement and the Enterprise Engagement Alliance.
For More Information
Bruce Bolger, Founder
Enterprise Engagement Alliance
914-591-7600, ext. 230
Bolger@TheEEA.org
Profit From the “S” of Environmental, Social, Governance (ESG)
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Through education, media, business development, advisory services, and outreach, the Enterprise Engagement Alliance supports boards, business analysts, the C-suite, management in finance, marketing, sales, human resources and operations, etc., educators, students and engagement solution providers seeking a competitive advantage by implementing a strategic and systematic approach to stakeholder engagement across the enterprise. Click here for details on all EEA and RRN media services.
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The EEA promotes a strategic approach to people management and total rewards through its e-newsletters, web sites, and social media reaching 20,000 professionals a month and through other activities, such as:
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