Incentive Programs

• Delivered cost: This is the total cost of a merchandise item that is charged to a participant in a program for an item that is redeemed. The delivered cost includes the cost of the item: markup and SHIAT
• Goal Sharing: A group incentive plan that is designed to measure performance against future-oriented business objectives or performance targets (i.e., not against history).
• Incentive: Reward for a purchase or performance. Objects or events that are valued, which incite to action or effort. Something valued by an individual or group that is offered in exchange for increased performance. "A stimulus or condition that exists in an organization with the expectation of directing or influencing the behavior of organizational members” (Chung, 1972, p. 31).
• Incentive Compensation: Variable rewards for performance or achievement of short-term or long-term goals. Designed to stimulate employee performance.
• Incentive Eligible: A term referring to groups or classes of employees who are eligible to participate in an incentive plan.
• Incentive Marketing: Incentive marketing is the device used to communicate and promote an incentive program to the target audience(s).
• Incentive Program: Within the context of international compensation, any one of a variety of payments in excess of base pay made as an inducement either to accept, remain on or complete a foreign assignment. Plan that ties employees' earnings to their actual production on either an individual or group basis. A planned activity designed to motivate an individual to achieve predetermined organizationalobjectives. A program designed to reward specific behavior to achieve desired results.
• Incentive System: An organized program of awards and/or recognition offered for the purpose of motivating employees in specific ways. Attributes of an incentive system include intentionality (deliberately developed with the intention of influencing employee performance); externality (devised and administered by agents external to the employee or employee group); standardization (applied in a clearly defined manner that specifies employees affected by the incentive system, the nature of the incentives and the rules for attaining specified rewards). The program by which incentives are offered for the achievement of work goals and assessment procedures are identified and explained. The four types of incentive system formats or schemes are: quota, piece rate, tournament, fixed rate (Bonner, et al., 2000). Also, open-ended, closed-ended, and plateau type programs.
• IMS: Incentive Management System. Some companies refer to the platform management system used for incentive as an IMS.
• Programs - Closed-ended: Incentive programs that have a pre-determined number of award earners. Incentive programs that have a fixed-awards budget.
• Programs- Open-ended: A type of incentive program that enables all people who achieve program goals to earn awards. An incentive program format with an open-ended budget, awarding unlimited performance against stated objectives.
• Perceived Value: What someone believes merchandise to be worth. To successfully sell premiums, the consumer must be convinced the proposed premium is worth putting forth the extra effort required to earn the item.
• Plateau Programs: A type of incentive program that provides awards at different levels of program achievement.
• Point-Based Programs: An incentive program where participants earn a universal currency of "points.” Points have no consistent value and can change by program through indexing.
• Points Program: A type of incentive program where participants collect and redeem points for awards. Points programs also apply to reloadable ("Stored Value”) gift cards.
• Premium: A product or service offered free or at a reduced price if the recipient performs some task, such as purchasing an item or meeting a sales quota. Generally to induce an individual to buy a product.
• Prize: Reward given to winner in a contest, sweepstakes or lottery, sometimes referred to as a sales incentive award. Anything of value awarded to winners, even if the value is nominal.
• Productivity: Any index measuring the efficiency of an operation, usually involving a ratio of outputs to inputs or costs. Rewards frequently are tied to productivity-related measures.
• Retention: The portion of the premium retained by an insurer to cover risk, expense charges, profit or contribution to surplus.
• SHIAT: Abbreviation for Shipping, Handling, Insurance and Administration and Sales Tax. This is typically added to a merchandise item to derive a delivered cost.
• Short-Term Incentives: Rewards that are based on the attainment of short-term results of 12 months or less (e.g., net income). See also annual incentive.
• Small-Group Incentive: Any incentive program that focuses on the performance of a small group, usually a work team. These incentive programs are most useful when measurable output is the result of group effort and individual contributions are difficult to separate from the group effort.
• Target Audience: A group of people or some sub-segment of a group, who has a propensity to purchase a company’s products and to whom a company markets their products.

Incentive Program Applications

Consumer / Loyalty

• Account Opener: Premium given to customers as a reward or thank you for opening an account.
• Advance Premium: Premium given to new customers on condition they will earn it by later purchases.
• Bonded Premium: Point-of-purchase premium attached to a product by a bond of plastic, paper or tape.
• Combination Sale: A tie-in of a premium with a purchase at combination prices; sometimes self-liquidating; often an on-pack.
• Consideration or Purchase: What an entrant must do to participate in a contest; can be monetary or non-monetary. For example, a customer must buy the sponsor’s product and show proof of purchase with entry, or the customer must answer survey questions in order to qualify for an entry.
• Consumer: The end user or company to whom a product or service is sold, and the person or company who will make use of the product or service purchased.
• Consumer Incentives: Motivational products targeting consumers.
• Container Premium: A product container, which when empty, may be used as a container for other items. These items are usually partially or completely self-liquidating since the consumer pays for the product.
• Contest: A competition based on skill, in which prizes are offered. A game in which chance is eliminated. Winners are chosen according to predetermined criteria or skills, such as writing the best essay or reaching a sales goal.
• Continuity Premiums: A series of related premiums offered over a period of six to eight weeks.
• Continuity Program: An offer of products over time. A program designed to offer an incentive to an individual that encourages her or him to return to do additional business. Types of continuity programs include frequent flyer mileage, trading stamps, etc.
• Direct Premium: An item given free with a purchase at the time of the purchase. These include on-packs, in-packs and container premiums as well as those given separately.
• In-Pack: A premium offered inside a product package. Merchandise that is offered free with other merchandise. Frequently found in supermarkets.
• Keeper: A premium offered in direct-mail marketing for accepting a free trial of the sale merchandise and to be kept by the consumer even if the trial item is returned.
• Loyalty Program: A program that is designed to reward customers or consumers for specifically designed performance. This could be a frequency-based program like hotel or airline programs; referral programs like "Friends & Family,” or any number of programs designed to create long term advocacy for a brand or company.
• On-Pack: A direct premium attached to the exterior of a product package or sometimes riding with it in a special sleeve, carton or film wrap.
• Point-of-Purchase: Marketing term for where product is displayed in a store.
• Point of Sale (POS): POS is a generic term used across many industries to describe information gathered or distributed at the time a product or service is sold. This could be POS advertising, a POS device used for debit or credit card transactions, or information collected on the actual transaction (e.g. SKU, quantity, etc).
• Referral Premium: A premium offered to customers for helping sell a product or service to friends or associates.
• Self-Liquidating: The money expended for the product equals the amount of money received for the product.
• Specialty Container: Merchandise that can be reused, like a basket or cup.
• Sweepstakes: A promotion that awards prizes to winners who are determined by chance. A game in which consideration has been eliminated.
• Through-the-Mail Offers: Offers that are generally self-liquidating for the company offering them. Save UPC labels, proof of purchase, and send money for shipping and handling to receive "free merchandise.”
• Trading Stamps: Collect and redeem stamps for merchandise.
• Traffic Builder: A promotional product or premium designed to get consumers to come to a store or a trade show.

Employee

• Employee Incentive: Motivational product targeting an employee of a sponsoring company.
• Attendance Program: Promotion designed to reduce employee absenteeism and
• increase productivity.
• Safety Program: Promotion designed to motivate employees to work safely, or drive safely, in their work environment. An incentive program designed to reward employees for not having accidents.

Sales

• Channel: A generic term used to describe one of various ways that a manufacturer may market and sell products to end users and consumers. Members of a channel may include a direct sales force, resellers, distributors, retailers, agents, dealers, catalogs, and/or web stores.
• Channel Partner: A generic term used to describe a company with whom a manufacturer partners to market and sell the manufacturer’s products and/or services.
• Dealer Incentive: Premium or other reward given by a manufacturer to retailers or distributors in return for a specified bulk purchase.
• Dealer Loader/Display Enhancer: Merchandise designed to motivate dealers and distributors to purchase larger quantities of product than they traditionally buy. Usually includes a point-of-purchase display.
• Dealer Premiums/Dealer Programs: Premiums offered to retailers who meet certain sales or performance standards.
• Door Opener: An item of value offered by a salesperson to persuade potential buyers to listen to a sales presentation or to initiate interest in a product or service for a sales call follow-up.
• Operational ROI: The ratio between the cost for operation of a channel incentive program and the reduction of costs realized through changes to prior processes and systems.
• Sales Incentive Program: Promotion designed to motivate salespeople to sell a specific product during a promotion period, or achieve a certain percentage of sales increase in a time frame.
• SPIFF: An acronym for "sales performance incentive fund” or "special performance incentive for field force”. A SPIFF is an award used to reward behavior for the achievement of short-term sales objectives.
• Trade Channel Program: A manufacturer-initiated sales or marketing promotional campaign that is targeted at channel partners or that was developed for use by the channel partners.
• Trade Promotion: A sales or marketing promotional campaign that is targeted at a segment of the channel rather than at the end user of consumer; a push marketing strategy.

Incentive / Recognition Product and Service Providers

• Advertising/Sales Promotion Agency: Agency that designs or coordinates promotional programs to help clients achieve their advertising and/or marketing objectives.
• Consultant: Advises to special markets, provides management and sales information for companies entering the premium/incentive marketplace.
• Distributor: See Promotion Product Consultant.
• Fulfillment Company: Warehouses and fulfills awards for incentive programs.
• Gift Card/ Gift Certificate Supplier: Company that provides gift cards and/or gift certificates to be used as awards in incentive and recognition programs.
• Incentive House: Company that designs and administers incentive programs and fulfills program awards. Additional services often include design of print and online award catalogs.
• Manufacturer: (Manufacturer/Supplier) Company that manufactures durable products that are marketed and sold to the Incentive and/or Promotional market.
• Manufacturers Representative or Representative: Represents the manufacturer or supplier as a direct factory agent to purchasers of premium and incentive merchandise. Usually works within a defined geographic territory.
• National Marketing Company: Company’s primary function is to represent a manufacturer(s) in the marketing and sales of durable products to the Incentive and/or Promotional market.
• Promotional Product Consultant: Company’s primary function is to source merchandise and provide services to corporations who desire Incentive or Promotional Marketing products.
• Performance Improvement Company: Provides full-service solutions for their clients that include incentive marketing programs that offer a variety of awards including travel, merchandise, and gift cards/certificates. Capable of providing program design, fulfillment, performance tracking and Return on Investment (ROI) analysis.
• Recognition Provider:Provide strategic recognition solutions or consult on the design/delivery of strategic recognition programs -- focus which may be on strategy, design, communications, training, implementation, award fulfillment, tracking and/or measurement.
• Reseller: Independent companies which are authorized to purchase and resell a manufacturer’s product(s).
• Supplier: A company that manufactures, imports, converts, imprints or otherwise produces or processes products offered for sale through the Incentive and/or Promotional market.
• Travel Specialist: Company that offers accommodations, transportation, event management or destination management services as a component of individual or group incentive program.

Awards / Rewards

• Award: Something awarded or granted, as for merit. Recognition merchandise, often personalized, used to acclaim performance or milestones; may be useful objects (paperweights, clocks) or for display only (plaques, trophies). An item given to an individual or team in recognition of a specific accomplishment. (Typically non-cash)
• Awards Budget: The amount of money specified for awards that will be given to participants in incentive programs.
• Award Voucher: Certificate that recipient may exchange for gift cards/merchandise award.
• Business Gift: Merchandise given by a business in goodwill, without obligation to its customers, employees, friends and the like. Often, this business gift is not imprinted with the advertiser’s identification. Some companies prohibit employees from accepting business gifts.
• Collectibles: Premiums designed to have inherent value based upon their perceived "collectibility.”
• Commemorative: A merchandise keepsake used to mark a ceremony, anniversary, event or milestone.
• De Minimize Awards: Cash or non-cash awards, property or services offered by an employer to an employee, the value of which is so small as to make accounting for such benefits unreasonable or administratively impracticable, taking into account the frequency with which they are provided by the employer to employees.
• Group Incentive Travel: Qualifying meetings and incentive trips held in especially appealing destinations, usually targeting salespeople and resellers – among the most potentially powerful in terms of impact but also among the most logically complex.
• Incentive Travel: 1) Any form of face-to-face event designed to motivate, either directly or indirectly. This includes the traditional definition of a formal, qualifying incentive program that offers incentive travel as one or all of the awards. It also includes any motivational use of a face-to-face event to accomplish a business objective-distinct from meetings designed to get work done and communicate routine information. 2) Packaged programs for individuals and significant others, used in every type of program from employee recognition to consumer sweepstakes and contests. Many major airlines and hotel chains sell certificates for such awards, and there are several dozen companies that package and resell them.
• Host Gifts/Hosts Incentives: A gift or premium given by a party plan operator to a consumer who agrees to be the host for a demonstration party. The value of the gift is usually proportional to the amount of sales at the party.
• Non-cash Incentives/Recognition Programs: Incentive payments that are not readily convertible to cash (e.g., points towards a personally selected gift, merchandise awards, extra time off, meal, a reserved parking space, membership in a luncheon club).
• Non-Monetary Awards: Non-cash compensation, such as travel and merchandise. It excludes other nontaxable items (not on W-2 form) such as gifts and plaques/pins.
• Recognition Merchandise: Award, often personalized, used to acclaim performance or milestones; may be useful objects (paperweights, clocks) or for display only (plaques, trophies).
• Reward: To recompense. An item given to an individual or team for meeting a predetermined goal. (Sometimes cash-based).
• Reward To Recompense: An item given to an individual or team for meeting a pre-determined goal. (Sometimes cash-based).
• Rewards: See rewards system.
• Rewards System: An organization's choice of cash and non-cash motivational elements and the mix of its total rewards program that is used to support its business strategy.
• Total Rewards: All of the tools available to the employer that may be used to attract, retain and motivate employees. Total rewards include everything the employee perceives to be of value resulting from the employment relationship. This strategy is a rewards system for organizations to mix cash and non-cash motivational elements.