May 01, 2003
Meetings & Conventions: Incentive News

Bob Dawson A leading incentive expert is calling for a radical restructuring in the way performance improvement firms charge for their services.

Bob Dawson, managing director of The Business Group, a Rocklin, Calif., performance improvement firm, believes incentive companies should rethink the standard per-person or per-program fee and instead charge 25 percent of the ROI the incentive firm creates for its clients’ overall business. Dawson has been using this fee structure successfully since 1991.

Not only is the strategy beneficial to the client, according to Dawson, but it can earn planners twice as much as they typically are paid. The prevailing pricing methods encourage incentive firms to design programs in which large numbers of participants qualify for rewards, which might not be what is best for a client, said Dawson.

“It creates a sugar high,” he said. “All you look at is the sales increase, but you don’t look at the other costs incurred by other areas of the firm due to the sales push.”

“I think his idea is good,” commented Bob Vitagliano, president of V Associates, an incentive consulting firm in Wilmington, N.C. “It keeps incentive companies honest and can create long-term client relationships, but it works only for full-service firms. Many incentive companies only handle the promotion and reward portion of the program.”

Another obstacle, said Bill Vastine, executive vice president of Arlington, Texas-based incentive firm Galactic Inc., is that clients often don’t want to share too much information. “They might just tell us their sales target, period,” said Vastine, who also is president of the Society of Incentive & Travel Executives. Vastine added that incentive firms should be paid regardless of the outcome, since factors well beyond their control can upset program results.

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