Proper planning is absolutely essential to the success of an incentive program. If you don’t take the time to put together a high-level plan for your entire program, including goals, timelines, expectations, and more, the odds of achieving your intended outcomes are significantly diminished.

With that in mind, let’s walk you through each of the most important items to consider when it comes to designing your incentive program: How to identify key players, clarify your goals, set reasonable expectations, get bank approval, and put together a realistic timeline. Then you’ll be ready to jump in and start planning your first program.

Identifying the Players

Your first step should be identifying the key players that will be involved with your program. You’ll also want to identify the level that they operate at within their company—whether it’s your organization or an independent distributor.

What do we mean when we say, “key players?” Here are just a few examples:

  • Salespeople at dealerships
  • Dealer sales managers
  • Employees
  • District managers
  • Corporate managers
  • Global administrators
  • Anyone involved in design approval or the decision-making process

It’s essential that you take the time to put together this list for yourself. It will likely include a few players from the short list above, a few different ones. This list could include the end-user of the program, the managers who will need to educate their departments on how the program works, or upper level management who will be reviewing the program each step of the way to approve designs and costs.  You’ll want to take the time to map them all out. By having a bird’s eye view of these various players in place from the beginning, you’ll have a better sense of how complex the program’s execution will actually be. Identifying this ahead of time can save you a lot of aggravation later.

Identifying Your Goals

Once you know who the key players in your incentive program will be, it’s time to identify your goals.

Simply put, every successful incentive program starts with clearly identifying and understanding your goals. Without a well-defined goal, your program can’t succeed by definition. How will you determine how to measure ROI without a goal? How will you know that you’ve accomplished what you set out to do if you don’t have a clear, measurable goal from the start?

Throughout this book, we’ve discussed a wide variety of potential goals for a properly designed incentive program. Some of the major highlights include:

  • Increase in overall sales
  • Increase in total profit
  • Increase in sales of particular product(s) or segment(s) of a business
  • Improved customer retention
  • Improved customer satisfaction
  • Rewarding customer loyalty
  • Changes in salesperson behavior
  • Changes in employee behavior

It’s perfectly possible to achieve more than one of these goals with a single program and this is an important fact to keep in mind. There’s no need to assume that you can only increase total profit, or that a particular incentive program can only focus on changing employee behavior without having an impact on customer retention. If you take another look at the list of goals above, you’ll see that many of them are closely related. By identifying your goals ahead of time, you can design a program that’s well suited to achieving each and every one of them.

Setting Expectations

Once your goals have been set and you know the key players who will be involved in your incentive program, it’s time to set your expectations. Remember: Rome wasn’t built in a day. The same is true for your incentive program. You won’t be able to design and implement a program today, or tomorrow, or even by next week. It’s going to take some time. 

Setting reasonable expectations is important for a couple of reasons. First, you don’t want to get discouraged midway through the process because of expectations that are beyond what’s practical. By knowing what’s achievable and what’s not, you can evaluate how your design and launch are progressing in a way that’s constructive. Additionally, you want to ensure that the other decision makers at your organization are on the same page. If they expect your program to be ready to go two weeks from now, they’re likely to end up pretty disappointed when it doesn’t launch for months.

Generally speaking, the development of a solid incentive program should take anywhere from eight weeks in the best-case scenario to as much as 26 weeks (six months) in the worst-case scenario. These are both extreme examples, though. In our experience, the average development time we’ve seen from start to finish tends to be about 12 to 16 weeks.

What determines these development times? There are two factors that can increase lead time significantly that you have limited control over.

First, if you’re opting to use a fully custom debit card of some kind, expect the actual approval of your design to take time. The powers-that-be at Visa or Mastercard will need to approve your card before it can be issued, and this can result in a significant delay. This means that the sooner your design is submitted for approval, the sooner you’ll be able to launch your program.

Additionally, those opting to use a web portal must devote a significant amount of time to web portal design and functioning. This can be a complex process involving multiple rounds of feedback and revisions. Web portals can indeed be time consuming, but we highly recommend them for the vast majority of our clients. Keep in mind that it is possible to speed up launch time, even if you’re using a debit card. If you’re in a serious hurry, one option involves using a simple branded stock/affinity card rather than a fully customizable debit card option. Affinity cards are generic but aesthetically pleasing debit cards, typically with the ability to add a single-color version of your logo (usually in black or white) for some degree of customization.

While affinity cards certainly don’t provide the same level of customization or potential brand affinity (ironically) as a fully customizable debit card since they just aren’t as striking as a multi-color, custom card featuring your company’s color logo, they offer two major advantages. First, they’re often significantly cheaper for smaller programs; and second, the approval process for these types of cards is much faster. However, considering the relative disadvantages associated with limited customization, we generally only recommend these types of cards to clients where both cost and time are of major concern.

Creating a Timeline

As part of setting reasonable expectations for your program, you’ll want to put together a timeline that takes into account all of your major milestones and program goals.

We can’t stress enough just how important a well thought out timeline is for any program to be successful. There are numerous reasons why a proper timeline is so important:

  1. Setting expectations: A good timeline sets realistic expectations for everyone at your company, particularly the upper-level, key players you might have to answer to throughout the process.
  2. Accountability: A timeline allows you to hold other people accountable. If there are definitive dates and deadlines in place, you’ll know exactly where you stand from week to week.
  3. Avoiding conflicts: By putting together a timeline in advance, you’ll be able to avoid potential scheduling conflicts (other projects, holidays, and so on).
  4. Measuring success: Particularly when you’re putting together a complex, large-scale program, it’s important to be able to check in with your team periodically and see how things are progressing. With a definitive schedule in place, you’ll be able to point to whether things are going according to plan or if adjustments need to be made.

One of the most important things to keep in mind is the sheer scope and scale of your project. Particularly with larger organizations, it’s essential to remember that there will be a whole host of expectations held by the various key players involved in the process. Your incentive program isn’t being created in a vacuum, after all. By laying out a timeline, you can ensure that everyone’s expectations are more or less aligned, and that these key players understand what their responsibilities, roles, and accompanying deadlines look like.

Some of the most important milestones and accompanying responsibilities associated with an incentive program might include:

  • Card design: In addition to designing the card itself, you’ll need to obtain design approval before it can be sent off to Visa or Mastercard. They’ll then have to approve the design, too.
  • Bank approval: Getting approved by a bank can be a lengthy process, and one which will likely involve the collaboration of others at your organization to assemble revenue figures, answer questions about ownership structure, and so on. See the section below for more detail.
  • Web portal: Your incentive partner will likely work with you on your web portal, and you’ll probably need to obtain feedback and revision approval from others in your organization.
  • Program rules: Putting together the rules for your incentive program will likely be a collaborative process and can involve multiple rounds of revision and input.
  • Terms & conditions (T&C): The same goes for your program’s terms & conditions, these will likely be created with input from multiple parties, which can take a significant amount of time.
  • Testing: You should never launch an incentive program without properly testing it first. Be sure to allow time toward the end of your proposed launch calendar for adequate program testing.

You’ll likely need to add more items to this list that’ll be specific to your organization and situation. Remember, a detailed timeline is one of your most valuable tools when it comes to designing and launching your program.

Getting Approved by a Bank

Once your timeline is in place, you’ll quickly arrive at a very important step: Getting your program approved by a bank, a process that’s often a lengthy one. Following the financial crisis of 2008, however, today it’s an even more time-consuming ordeal. Banks are now inclined to take extra time to get to know each of their clients before moving forward with an incentive program. They’ll want to get a complete picture of your business dealings before agreeing to work with you.

There are two things going on here. First, the bank wants to ensure that they’re not putting themselves at risk in the post-recession economy. And just as importantly, the bank is checking to ensure that there’s nothing illegal or otherwise unethical occurring within your organization. This latter point particularly comes into play for certain business types. If you’re running a marijuana-based business, a gambling institution, or a business with overseas ownership based in a country that’s not traditionally considered to be allied with U.S. interests, you can expect additional scrutiny.

Be prepared to fill out various documents with a range of questions about your organization that may include your organization’s ownership structure, rules for doing business, and overall revenue history and projections, along with questions regarding the purpose and intention of your incentive program. If your company is privately held, you can typically provide general revenue numbers rather than specifics. Why would the bank be doing this? They want to ensure that they’ve put in the time for due diligence and are making an informed decision. Additionally, though, they may be looking to determine whether the resources associated with the initial setup for your program will be worth their trouble from a profit standpoint.

The result of this is that startups will generally have a harder time getting approval for certain types of programs, particularly reloadable rewards card. This is obviously less true for startups that are particularly well-funded. Single use rebate cards are much easier to get approved; but, single use rebate cards aren’t ideal for certain incentive programs and goals.

There’s some good news here, though. Even if your company is a new startup or a smaller organization, you can still qualify for more complex programs with the help of a good full-service management partner. (We’ll discuss management partners in further detail later in the book.) For example, it’s not uncommon for banks to have a $1 million annual minimum issuance rule—something that’s unrealistic for smaller businesses. With a larger partner, though, it’s possible to have this minimum reduced. There are two factors at play here. First, the bank will assume that your partner has ostensibly done its own due diligence and is backing you for a reason (i.e., because your program represents a good opportunity). And second, the bank will look at all the business they’re currently doing with your partner organization and take it into consideration as part of their decision making. There’s a certain amount of opportunity cost involved here, as the bank will risk losing your larger partner organization if another bank opts to take the deal instead.

A Note on Banks and Breakage

Incentives for Customers: Rebate Programs article briefly discussed breakage in relation to rebates. You’ll recall that in the example of a customer rebate program, breakage refers to the number of people who fail to redeem the rebate offer that’s presented to them. Breakage rates as high as 50% are not uncommon in such programs. 

When it comes to setting up a debit card-based program with a bank, you might be wondering if breakage is something to take into account. The answer depends on both the bank you’re working with and the specifics of your program.

Consider that of all of the cards you distribute—whether prepaid or reloadable—some amount of the funds on those cards will never actually be spent. With this in mind, you might be tempted to broach the topic of breakage with your bank. After all, shouldn’t you be able to negotiate a better deal considering the funds that will never even leave the bank’s accounts?

In reality, the vast majority of banks won’t want to get into a discussion of breakage. That’s because with most debit card programs, breakage is already factored into the upfront pricing you’re offered. The bank considers this breakage to be part of their business model, and therefore determines their rates based on the assumption that they’ll end up keeping a certain amount of money that your program participants never actually get around to spending.

Some banks will indeed consider splitting the breakage with you, but this approach comes with some risks. First of all, there’s no question that your program’s up-front pricing will increase as a result. You’ll likely see increases in card costs, postage rates, reload fees, and so on. Secondly, breakage isn’t something that happens right away. Depending on the expiration date of the cards you issue, it could take two to three years before you really start to see results from breakage. In other words, breakage is a long game. Finally, breakage can pose problems for your organization’s finance and treasury departments. How should this money be treated? How should the collection take place? What type of income would this be considered?

Considering the added risks, costs, workload, and timeline, we generally recommend that our clients avoid trying to cash-in on breakage. It is an option with certain banks, however.