Embed Size (px)
DESCRIPTION
Essential Elements for design of an ROI Incentive Program
Citation preview
Essential Elements of Incentive Driven Performance:Data, Design and ROI
Your Presenter
Bob Dawson, Managing Consultant i-Myth, Inc.
Over 20 years of providing Incentive ROI for large and small companies representing over 30 different industry sectors
Author of Best Selling book on Incentive ROI based on real company experiences Bob has worked with
Architect of the first ever Incentive ROI software applicationCopyright 2011 i-Myth, Inc.
Sales Objectives
Copyright 2011 i-Myth, Inc.
Goal $1,000,000
Copyright 2011 i-Myth, Inc.
Sales VPSales People
Support Staff
More Sales = Increased Profits
More Sales = Trip to Tahiti
More Sales = More Work
ROI Equation
Copyright 2011 i-Myth, Inc.
Align Objectives
Profit
EPS
Shareholders
Expenses
CEO/ Business Owner
Incentive Professional
Need to book 100 people on
a trip
Copyright 2011 i-Myth, Inc.
CEO Talking PointsFollow the money Present a united front
What’s in it for me?Do your homework
Copyright 2011 i-Myth, Inc.
Meet the Competition
• Marketing
• Operations
• R&D
• Purchasing
• Finance
• Human Resources
Copyright 2011 i-Myth, Inc.
Plan for Success• Forecast the people impact
• Consider the flow of your incremental volume• Forecast the financial impact
Copyright 2011 i-Myth, Inc.
Budget Based on ROI
• Incremental Revenue• Cost avoidance/savings• Incremental expense/cost• Incentive rewards/administration expense
ROI Budget ProjectionJan – Sept
ActualsProjected Jan- Sept
Projected Best Case
Projected Most Likely
Projected Worst Case
Net Sales $5,000,000 $5,150,000 $5,562,000 $5,510,500 $5,459,000
Cost of Goods Sold $3,475,000 $3,553,500 $3,559,680 $3,581,825 $3,602,940
Gross Margin $1,525,000 $1,565,600 $2,002,320 $1,928,675 $1,856,060
SG&A Expense $1,450,000 $1,442,000 $1,446,120 $1,432,730 $1,473,930
Net Income $75,000 $123,600 $556,200 $495,945 $382,130
Projected Incremental Net Income
$432,600 $372,345 $258,530
Projected Program Budget
$129,780 $111,704 $77,559
Projected Net ROI $302,820 $260,642 $180,971
Copyright 2011 i-Myth, Inc.
Net Profit ImpactIncome Statement
IncomeRevenueCost of Good Sold
Gross Profit
ExpensesMarketingT & EOperationsLabor
Net Profit
Sally Salesperson
Mike Marketer
Oliver Operator
Stakeholders
Copyright 2011 i-Myth, Inc.
Increased Net Profit is Good
“ Although our sales and profits were up, our bank refused to increase our
line of credit.”
~ CEO, Harley Davidson
Increased cash flow is better…
Copyright 2011 i-Myth, Inc.
Balance Sheet Impact
Balance Sheet
AssetsCashA/RInventory
LiabilitiesA/PLine of Credit
Cindy Customer
Bob Banker
Copyright 2011 i-Myth, Inc.
Budget Based on ROI
• Incremental Revenue• Cost avoidance/savings• Incremental expense/cost• Incentive rewards/administration expense
Copyright 2011 i-Myth, Inc.
Accounts Receivable
$4,000,000 Credit Sales
Baseline Collection Days = 58 Days = $640,000Revised Collection Days = 51 Days = $560,000
Increase in Cash Flow of $80,000
Copyright 2011 i-Myth, Inc.
Inventory
$3,250,000 / 4.01 Turns per Year = $810,474
Baseline Inventory Turns per Year = 4.01Revised Inventory Turns per Year = 4.99
$3,250,000 / 4.99 = $651,303Increase in Cash Flow of $159,171
Copyright 2011 i-Myth, Inc.
Sounds Good… But How?
We’re thinking about implementing an incentive program that would…
Just Ask!
Copyright 2011 i-Myth, Inc.
Include All Departments
• Marketing• Sales• Finance• Purchasing• Operations• Human Resources
Copyright 2011 i-Myth, Inc.
Develop Rules That Matter• Hard metrics• Soft metrics
• Competitive Intelligence
Copyright 2011 i-Myth, Inc.
Rewards That are Earned… Not Won!
Incentive rewards are those things your participants could not or would not buy on their own.
Copyright 2011 i-Myth, Inc.
Create a Win-Win-WinSponsoring Company
Incentive Planner
Incentive Suppliers
Sales
Net Profit
Cash Flow
Total Support
C-Level Support
Secure Budget
Multi-Year Contract
No Surprises
Increased Revenue
Long Term Customer Value
WIN WINWIN
Copyright 2011 i-Myth, Inc.
Yes, It Does!
It is not a question of will it work in your business, but rather a
question of how well it will work!
Copyright 2011 i-Myth, Inc.
How Well?Find out your own potential for Incentive ROI
Welcome to i-Valuator!
A complete Incentive Management Planning and Implementation SaaS application for Incentive ROI
Easy to use, no finance degree required!
For details and our special pricing offer for webinar attendees, contact us at [email protected]
Use Promo code: BottomLine
For 25% off an i-Myth
membership
