Like any business investment, finding a way to measure the success of an incentive programme is key. Part of the process of designing an effective channel sales incentive programme is defining the ways in which it will be monitored and what it should be measured against.

Generally, the performance of a channel sales incentive is monitored and measured against Key Performance Indicators and the Return on Investment.

Key Performance Indicators (KPIs)

It's your KPIs that will provide the benchmark against which the success of your channel sales incentive will be measured. With the right KPIs in place you will be able to show how the incentive has performed, both as a standalone initiative and in terms of helping to drive the business forward towards meeting its broader goals.

Which KPIs should you use?

There are no defined KPIs to use - it will depend on the programme, the participants, and also your business and its objectives.

Your KPIs in some ways will be defined by the main objectives of the programme. For example, if the incentive is to 'book more appointments' then by definition 'the number of appointments booked' will be one of your main KPIs. However, in most cases there will probably be a range of other criteria which you will also use to gauge the overall success of your incentive.

Here are some typical KPIs for channel sales incentives:

• The number of registrations - how many participants registered? (and how many as a percentage of the potential overall number)
• The number of active participants - how many then actively participated?
• How many people achieved the targets and earned rewards? (also as a percentage of people participating)
• Participant activity - e.g. number of training activities undertaken (such as completing online educational modules) or scores on training questionnaires (giving an indication of the level of product knowledge)
• Sales activity - e.g. calls made, appointments made, referrals made
• Sales made - either as units sold or revenue (profit) generated
• Cost - the cost per partner
• Participant feedback - what participants said about the programme or simple percentage expressions of whether they found it to be valuable
• Customer feedback - using customer surveys (before and after) to gauge whether the customers' experience has improved

Return on Investment (ROI)

ROI is often used pre-launch in order to build a financial business case for running the programme in the first place. It will then also be used to judge the performance of the programme on completion.

In simple terms, you can evaluate the viability of running an incentive (and, in effect, check it will be self-funding) by comparing the expected gains from the incentive to the investment costs.

For example, the expected ROI for a new sales incentive programme that is expected to cost £200,000 and deliver an additional £300,000 in increased profits during the same time would be calculated as follows:

ROI = (Gains - Investment Costs) / Investment Costs = (£300,000 - £200,000) / £200,000 = a 50% ROI

ROI is usually based on a purely financial consideration. However, there are times when your objectives - and therefore the way you measure your ROI - may be more subjective. For example, if your objectives are to get market share or promote your brand, then your ROI might be measured in terms of meeting one or more of these objectives, rather than in immediate profit or cost saving.

Monitor, measure and modify

Remember, it's important you are monitoring your KPIs and measuring your ROI on a regular basis throughout the programme. It's too late to leave it to the end. If your channel sales incentive isn't performing as expected, be prepared to modify it as you go along to make sure your end goals are met.

Defining and monitoring your KPIs is essential to ensuring your channel sales incentive delivers ROI. Active's online incentive platform gives you the tools to do just that. Contact us to find out more.

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Other articles in this series

An introduction to channel sales incentives

Where to start when setting up a channel sales incentive?

What are the best rewards to offer in your channel sales incentive?

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