Choosing the right partner to sharpen your incentives isn't complicated. Just focus on the people, not the paperwork.

Incentive programs are big-budget, high-profile, and essential to many companies' marketing strategies. To be effective, a program must have proper design, creative promotion, professional administration, and superior award delivery. Success can enhance an incentive planner's career; a failure will likely kill it. That's why selecting the right incentive partner is one of the most important decisions you will make. Bear in mind, too, that this entails a fundamental challenge: Incentive companies provide a service that you can't try before you buy. The following steps will help you overcome that, and other, obstacles.

1. Decide What You Need

If you have run a number of incentive programs, you probably know what you want from an incentive house. Experienced users tend to outsource specialized activities, such as promotion and award fulfillment, while retaining design (e.g. rules structure) and administration (measurement, tracking, reporting) in-house. For example, a company that runs a group travel incentive program for its top salespeople every year may need assistance only with trip planning and operations. But new users or companies with limited internal resources may opt to outsource the entire process from incentive design through award delivery. Most companies will, at a minimum, outsource award fulfillment. Deciding which services you need will help you focus more acutely on the key factors in your choice of an incentives partner. Consider carefully the resources and expertise that you have in-house. For everything else, you will turn to your incentive company.

Here are factors to consider when deciding which services you can perform in-house and which you will need from an incentive company:

• Incentive program design
  - Objectives—what behavior or results do you want to drive?
  - What do you want to measure—sales, orders, quality, safety?
  - Rules structure—how do people qualify for the program and earn awards?
  - Costs and budget;
  - ROI—how do you structure the program to get an acceptable return on investment ROI?
  
  
• Award design—Do you need help in determining what type of award (travel, merchandise, debit card) is appropriate, given your audience, objectives, budget, timing, past experience, and laws or other regulations?
  
  
• Promotion
  - Campaign development, design, writing, layout;
  - Production and packaging of pieces;
  - Interactive, direct mail, or other forms of distribution.
  
  
• Program management and administration
  - Performance, qualification, earnings tracking;
  - Feedback and reporting to participants;
  - Management reporting.
  
  
• Fulfillment—delivery of awards to winners.
  
  
• Performance evaluation—Analyze success of the program, the award delivery, participant satisfaction, vendor performance and ROI.

2. Identify the Most Likely Candidates

Industry associations, such as the Society of Incentive & Travel Executives (SITE), will provide you with membership lists of incentive service providers. Incentive magazine publishes an annual guide to incentive companies. In addition, you can check Web sites, such as http://www.incentivemarketing.org/, which links you to candidates' Web pages. Finally, ask for referrals from industry contacts.

3. Prescreen the Candidates

Many companies make the mistake of asking a half dozen or more candidates to submit detailed proposals before they have culled the field to a short list of qualified companies. This results in you sorting needlessly through mountains of information. A better approach is to circulate a request for information (RFI), a brief document that asks candidates to describe their ability to provide the services you need. The RFI should focus on questions about credentials, services, processes, and experience. The result will be that your list of candidates will not only be shorter but better.

Here are some tips especially helpful in screening potential incentives suppliers:

• Ask the company to provide a revenue breakdown (at least on a percent basis) by type of business. How much of their business comes from incentive travel, merchandise, other awards, communications, training, and so on? Ask for a breakdown of employees by department and position. Answers to these two questions will tell you what business a company is really in.
  
  
• Visit their Web site. That's where a company lets it all hang out. If it describes its business as "performance improvement" but most of the Web site talks about incentive travel, the company is most likely in the incentive travel fulfillment business.
  
  
• Write a half-page case study describing your incentive challenge. Ask respondents for their recommended incentive solution and rationale. The answers will separate true incentive companies from fulfillment operations.
  
  
• Ask questions that will identify the leaders. Samples: What distinguishes you from other incentive companies? If we selected you, would you give us a money-back guarantee based on your service performance? On the programs' results? Explain.

4. Interview the Short List

Conventional wisdom would say that the next step is to circulate a detailed request for proposal (RFP). This thinking is based on the misconception that it is more efficient to deal with paper than with people. And many buyers seem to have an aversion to "being sold." Let's face it, when you buy a service, you buy people, knowledge, experience, and processes. You need to meet the key people from the companies you're considering. Invite them to your office to discuss your situation. The interpersonal chemistry, cultural compatibility, and trust that are critical to a long-term partnership can be determined only through face-to-face contact. In addition, meeting will result in insights and understanding for all parties. A good candidate will help you think through complex issues and gain clarity on your true requirements. Meet early in the process and you will save yourself hours in the long run.

Here are some excellent probing questions to ask:

• How would you measure (ROI) for our program?
  
  
• What are the pros and cons of open-end vs. closed-end programs? Which would you recommend in our case?
  
  
• Should we use a fixed or a variable approach when budgeting for the award fulfillment?
  
  
• How do you keep awards from becoming institutionalized and perceived as entitlements?
  
  
• Everyone says they have the best people, highest quality, best value, and happiest clients. Convince me your claims are real.

5. Request for Proposal

After a round of interviews, your short list will be even shorter. Once you have made the cut, invite the remaining companies to make a proposal. The proposal may be based on information you have shared with them or in response to a formal RFP that you prepare. If you use an RFP, bear in mind one simple principle: The quality of the proposals you receive is a function of the information you provide. Your RFP should articulate your needs, requirements, and expectations and provide details about objectives, audience size and demographics, past programs, and timing. If you have a budget, disclose it. You want to see who can provide the most value for your money, not who can come in at the lowest price.

Don't make the mistake of thinking it's easy to prepare an RFP. Not even Fortune 100 companies seem to get it right. RFPs generally are poorly written, ask for irrelevant detail, miss the important issues, and put unreasonable requirements on respondents. If an incentive company is given access to people with the right information, it doesn't need an RFP to do a proposal.

Technology, now more than ever, is crucial to obtaining the best performance. You should be sure to pursue some of the issues listed below.

• Can the company provide online access to:
  - participants' performance data;
  - point earnings/redemption data;
  - program rules information and promotional messages;
  - registration forms;
  - awards redemption or shopping capability;
  - delivery status (in a merchandise program)?
  
  
• Ask for copies of reports generated by incentive performance tracking systems.
  
  
• Ask for a demo Web site address so that you can verify Internet technology claims.

6. Evaluation

In addition to comparing services, features, and costs, make sure that your evaluation considers operating processes, technology, and vendor relationships. How an incentive company does things is as important as what they do. For example, does a single person manage your program from soup to nuts? If so, your program may be jeopardized if that person leaves and the program is not well documented. Is the company flexible, or are you required to conform to its business methods? Are they trying to sell you a product (e.g., travel, merchandise, certificates, debit cards), or do they offer you services and solutions? How well do they retain their clients and their employees? Do you like these people?

The best way to understand the intangibles is to visit each company in person. What you observe will tell you more about them than anything you read. Make sure you meet the people who will be responsible for delivering your program. Analysis is important, but a gut-feel comfort level is an absolute must.

7. Check References

You would not hire a new employee without checking references. The same holds true when you hire an incentive house. Request at least five current clients and three former clients. Ask them open-ended questions, such as, What are ABC Company's greatest strengths and weaknesses? Tell me how ABC Company performed compared to your expectations? Why did you stop doing business with ABC? Follow up with some of these questions that get to the heart of an incentives program:

• How would you rate ABC on its expertise and service in the following areas:
  - incentive design and planning;
  - incentive promotion and communication;
  - award fulfillment;
  - customer service;
  - technology capability;
  - price/value?
  
  
• How much of your success in reaching marketing objectives do you attribute to ABC?

A Final Word

When you select an incentive house, you're buying a company, not a program. Put at least as much time and effort into understanding the companies you are considering as you do analyzing the programs they propose.