How To Fund an Incentive Program

Hypothetical Funding Analysis for an Incentive Marketing Program for A large Dealer Sales Network

Industry Growth Cycle	Growing
Company Annualized Growth (3 years)	10%
Base Period Sales, Per Dealer	$150,000
Built – in Growth Factor	(10%)
Program Goal – Increase in Sales	20%
Incremental Sales Generated	$33,000
Company Gross Profit Margin	50%
Incremental Gross Profits	$16,500
% of Incremental To Fund Awards	35%
Per Qualifier Budget	$5,775
Number of Dealers	30,000
Projected # of Qualifiers (1%)	300 Plus Guests
Travel Cost: 300 Qualifiers plus Guests = 600assengers / $2,887.50 each	$1,732,000
Promotion/Communication Budget (9%)	$156,000
Total Budget:	$1,888,000
Minimum Incremental Sales (20%) 300 qualifiers x $33,000	$9,900,000
Minimum Incremental Profits ($9,900,000 x 50% GP Margin)	$4,950,000

Total Program Cost of $1,888,000 is 38% of the incremental profits.

Return on Investment (ROI)
Large Dealer Sales Network Incentive Marketing Program

Income/Investment

Incremental Sales	$9,900,000
Incremental Gross Profit (50%)	$4,950,000
Travel Program Cost (600 @ US $2,887.50)	$1,732,000
Travel Promotion Cost	$156,000
Total Cost	$1,888,000
R.O.I. Gross profits divided by total costs	262%

Editors Notes: While the above configuration may not match your companies own needs, use this formula we have created and just plug in your own numbers. Hint: be realistic and objective as possible. You’ll be amazed at the results.

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Incentives Motivate

How To Fund an Incentive Program

Hypothetical Funding Analysis for an Incentive Marketing Program for A large Dealer Sales Network

Return on Investment (ROI) Large Dealer Sales Network Incentive Marketing Program

Return on Investment (ROI)
Large Dealer Sales Network Incentive Marketing Program