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How to Measure the Effectiveness of an Incentive

This article was originally published by micebook on 16th January 2023


Incentives are an effective tool to drive performance or change behaviours. Exciting rewards can motivate people to perform against a range of pre-set criteria that are frequently sales driven. To understand whether your incentive has been effective, it’s important to set out the KPIs (Key Performance Indicators) that you’ll track from the start.

tracking the effectiveness of an incentive

While some KPIs are straightforward, such as target achievement, there is a whole range of others that may be important to you. This could include data such as open rates on the marketing communications to measure campaign engagement, to attendee feedback post-event. By understanding what data you’re capturing from the very beginning, you can ensure you don’t miss key performance metrics that may be more difficult to measure post-event.

Incentives have evolved over time and the data gathered should gauge more than a programme’s effect on the bottom line. It should take a more holistic view; whether company culture has improved, retention rates have increased, staff engagement has grown, or brand sentiment has risen.

There are a whole range of metrics/KPIs to track with an incentive, and below is a snapshot of the data you could measure:

  • Employee engagement (i.e., absenteeism, turnover, retention rate, employee net promotor score)
  • Email open rate
  • Email click-through rates (CTR)
  • Sales growth
  • Pre, during and post-event feedback
  • Incentive activity feedback
  • Event app interactions
  • Brand sentiment improvement
  • Productivity


Go granular with your KPI objectives

Start off by truly digging deep to understand what you are trying to achieve and why an incentive is the best way to support that. Is it to motivate the sales team to grow revenue? Is it to increase employee engagement and reduce staff turnover? These objectives will form the foundations of what you measure.

For instance, if the incentive is to reward sales performance, then consider how that will be structured to create a fair and level playing field. There is no point in only engaging a small percentage of the sales team if the majority feel demotivated by an unachievable target or measurement criteria. That can actually create a negative impact overall.

It is also important to benchmark activity so you can see whether any performance upturn is due to the incentive rather than seasonal factors, increased marketing or some other factor. Once you have a baseline and sound structure, your KPIs will more accurately reflect how successful the incentive has been in driving performance.

Of course, getting the incentive reward right will also have an impact on success, so it is worth looking at what has proved effective historically, as well as researching your audience’s preferences. For instance, did an all-inclusive week in Bali drive a higher performance than New York? Understanding what experiences and destinations drive improvement will also help you to determine future destination choices within your budget.

Build in 12 months of data tracking

Incentive communications shouldn’t just be during the few weeks in the lead-up to the big event, they should be a full, campaign-long activity. From launch throughout the whole measurement period, especially if this is a year-long programme. This continuous activity helps to drive real change in the business and gives maximum opportunity for your audience to achieve their predetermined targets.

Throughout a 12-month cycle, there will be multiple touchpoints, and each of these touchpoints can be tracked and measured for engagement. Emails open rates, click-through rates and event websites can be assessed on page clicks, and bounce rates. Teaser video content can be assessed on views and watch time. Each of these pieces of data will help to paint a continual picture of the success of the campaign engagement.

Understand the cost of the incentive

If your goals are around increased sales performance, then you can calculate the financial ROI of your incentive. To do this, you have to understand the full incentive budget which means not just the event itself but all your design and communication elements including emails, websites, videos and teasers, project management time, data analysis and performance reporting. Don’t forget there is also a benefit in kind taxation to consider on any incentive programme.

Ideally, any incentive activity should be self-funding.  The investment in the programme should deliver increased performance over and above what would be expected in the same period. That difference delivers additional profit to the bottom line and covers the incentive costs.

This data is crucial in evaluating whether an incentive has driven real change to the business. It’s important, too, that ROI is never measured as a standalone. Was there an 800% ROI the year partners were invited, compared to the 400% the year prior when they weren’t? By tracking ROI year-on-year and analysing where the incentive took place, the experiences and the format, you can better understand the performance trends.


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Originally published Jan 31, 2023 5:18:07 AM
Last updated on Feb 1, 2023 12:11:53 PM

Written by Mark Rose


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