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Essential Elements Of Incentive Roi

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Bob Dawson
Bob Dawson

The document discusses incentive-driven performance and return on investment (ROI). It is a presentation by Bob Dawson from i-Myth Inc. about using data and design to improve ROI through incentive programs. The presentation covers topics like aligning objectives across an organization, budgeting for incentive programs based on projected ROI, and developing rules and rewards that create value for both the company and participants.

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Essential Elements of Incentive Driven Performance: Data, Design and ROI
Your Presenter Bob Dawson, Managing Consultant i-Myth, Inc. Over 20 years of providing Incentive ROI for large and small companies representing over 30 different industry sectors Author of Best Selling book on Incentive ROI based on real company experiences Bob has worked with Architect of the first ever Incentive ROI software application Copyright 2011 i-Myth, Inc.
Sales Objectives Goal $1,000,000 Copyright 2011 i-Myth, Inc.
ROI Equation Sales People Sales VP Support Staff More Sales = More Sales = More Sales = Increased Profits Trip to Tahiti More Work Copyright 2011 i-Myth, Inc.
Align Objectives CEO/ Business Need to book Owner Profit 100 people on a trip Shareholders Expenses EPS Incentive Professional Copyright 2011 i-Myth, Inc.
CEO Talking Points Follow the money Present a united front Do your homework Whats in it for me? Copyright 2011 i-Myth, Inc.
Meet the Competition Marketing Purchasing Operations Finance R&D Human Resources Copyright 2011 i-Myth, Inc.
Plan for Success Forecast the people impact Consider the flow of your incremental volume Forecast the financial impact Copyright 2011 i-Myth, Inc.
Budget Based on ROI Incremental Revenue Cost avoidance/savings Incremental expense/cost Incentive rewards/administration expense Copyright 2011 i-Myth, Inc.
ROI Budget Projection Jan Sept Projected Projected Projected Projected Actuals Jan- Sept Best Case Most Likely Worst Case Net Sales $5,000,000 $5,150,000 $5,562,000 $5,510,500 $5,459,000 Cost of Goods Sold $3,475,000 $3,553,500 $3,559,680 $3,581,825 $3,602,940 Gross Margin $1,525,000 $1,565,600 $2,002,320 $1,928,675 $1,856,060 SG&A Expense $1,450,000 $1,442,000 $1,446,120 $1,432,730 $1,473,930 Net Income $75,000 $123,600 $556,200 $495,945 $382,130 Projected $432,600 $372,345 $258,530 Incremental Net Income Projected $129,780 $111,704 $77,559 Program Budget Projected Net ROI $302,820 $260,642 $180,971
Net Profit Impact Income Statement Sally Income Salesperson Revenue Cost of Good Sold Gross Profit Mike Marketer Expenses Marketing T&E Operations Oliver Labor Operator Net Profit Stakeholders Copyright 2011 i-Myth, Inc.
Increased Net Profit is Good Although our sales and profits were up, our bank refused to increase our line of credit. ~ CEO, Harley Davidson Increased cash flow is better Copyright 2011 i-Myth, Inc.
Balance Sheet Impact Balance Sheet Cindy Assets Customer Cash A/R Inventory Liabilities A/P Bob Line of Credit Banker Copyright 2011 i-Myth, Inc.
Budget Based on ROI Incremental Revenue Cost avoidance/savings Incremental expense/cost Incentive rewards/administration expense Copyright 2011 i-Myth, Inc.
Accounts Receivable $4,000,000 Credit Sales Baseline Collection Days = 58 Days = $640,000 Revised Collection Days = 51 Days = $560,000 Increase in Cash Flow of $80,000 Copyright 2011 i-Myth, Inc.
Inventory $3,250,000 / 4.01 Turns per Year = $810,474 Baseline Inventory Turns per Year = 4.01 Revised Inventory Turns per Year = 4.99 $3,250,000 / 4.99 = $651,303 Increase in Cash Flow of $159,171 Copyright 2011 i-Myth, Inc.
Sounds Good But How? Just Ask! Were thinking about implementing an incentive program that would Copyright 2011 i-Myth, Inc.
Include All Departments Marketing Sales Finance Purchasing Operations Human Resources Copyright 2011 i-Myth, Inc.
Develop Rules That Matter Hard metrics Soft metrics Competitive Intelligence Copyright 2011 i-Myth, Inc.
Rewards That are Earned Not Won! Incentive rewards are those things your participants could not or would not buy on their own. Copyright 2011 i-Myth, Inc.
Create a Win-Win-Win Sponsoring Incentive Incentive Company Planner Suppliers WIN WIN WIN Sales C-Level Support No Surprises Net Profit Secure Budget Increased Revenue Cash Flow Multi-Year Long Term Total Support Contract Customer Value Copyright 2011 i-Myth, Inc.
Yes, It Does! It is not a question of will it work in your business, but rather a question of how well it will work! Copyright 2011 i-Myth, Inc.
How Well? Find out your own potential for Incentive ROI Welcome to i-Valuator! A complete Incentive Management Planning and Implementation SaaS application for Incentive ROI Use Promo code: BottomLine Easy to use, no finance degree required! For 25% off an i-Myth membership For details and our special pricing offer for webinar attendees, contact us at info@i-myth.net Copyright 2011 i-Myth, Inc.

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Essential Elements Of Incentive Roi

  • 1. Essential Elements of Incentive Driven Performance: Data, Design and ROI
  • 2. Your Presenter Bob Dawson, Managing Consultant i-Myth, Inc. Over 20 years of providing Incentive ROI for large and small companies representing over 30 different industry sectors Author of Best Selling book on Incentive ROI based on real company experiences Bob has worked with Architect of the first ever Incentive ROI software application Copyright 2011 i-Myth, Inc.
  • 3. Sales Objectives Goal $1,000,000 Copyright 2011 i-Myth, Inc.
  • 4. ROI Equation Sales People Sales VP Support Staff More Sales = More Sales = More Sales = Increased Profits Trip to Tahiti More Work Copyright 2011 i-Myth, Inc.
  • 5. Align Objectives CEO/ Business Need to book Owner Profit 100 people on a trip Shareholders Expenses EPS Incentive Professional Copyright 2011 i-Myth, Inc.
  • 6. CEO Talking Points Follow the money Present a united front Do your homework Whats in it for me? Copyright 2011 i-Myth, Inc.
  • 7. Meet the Competition Marketing Purchasing Operations Finance R&D Human Resources Copyright 2011 i-Myth, Inc.
  • 8. Plan for Success Forecast the people impact Consider the flow of your incremental volume Forecast the financial impact Copyright 2011 i-Myth, Inc.
  • 9. Budget Based on ROI Incremental Revenue Cost avoidance/savings Incremental expense/cost Incentive rewards/administration expense Copyright 2011 i-Myth, Inc.
  • 10. ROI Budget Projection Jan Sept Projected Projected Projected Projected Actuals Jan- Sept Best Case Most Likely Worst Case Net Sales $5,000,000 $5,150,000 $5,562,000 $5,510,500 $5,459,000 Cost of Goods Sold $3,475,000 $3,553,500 $3,559,680 $3,581,825 $3,602,940 Gross Margin $1,525,000 $1,565,600 $2,002,320 $1,928,675 $1,856,060 SG&A Expense $1,450,000 $1,442,000 $1,446,120 $1,432,730 $1,473,930 Net Income $75,000 $123,600 $556,200 $495,945 $382,130 Projected $432,600 $372,345 $258,530 Incremental Net Income Projected $129,780 $111,704 $77,559 Program Budget Projected Net ROI $302,820 $260,642 $180,971
  • 11. Net Profit Impact Income Statement Sally Income Salesperson Revenue Cost of Good Sold Gross Profit Mike Marketer Expenses Marketing T&E Operations Oliver Labor Operator Net Profit Stakeholders Copyright 2011 i-Myth, Inc.
  • 12. Increased Net Profit is Good Although our sales and profits were up, our bank refused to increase our line of credit. ~ CEO, Harley Davidson Increased cash flow is better Copyright 2011 i-Myth, Inc.
  • 13. Balance Sheet Impact Balance Sheet Cindy Assets Customer Cash A/R Inventory Liabilities A/P Bob Line of Credit Banker Copyright 2011 i-Myth, Inc.
  • 14. Budget Based on ROI Incremental Revenue Cost avoidance/savings Incremental expense/cost Incentive rewards/administration expense Copyright 2011 i-Myth, Inc.
  • 15. Accounts Receivable $4,000,000 Credit Sales Baseline Collection Days = 58 Days = $640,000 Revised Collection Days = 51 Days = $560,000 Increase in Cash Flow of $80,000 Copyright 2011 i-Myth, Inc.
  • 16. Inventory $3,250,000 / 4.01 Turns per Year = $810,474 Baseline Inventory Turns per Year = 4.01 Revised Inventory Turns per Year = 4.99 $3,250,000 / 4.99 = $651,303 Increase in Cash Flow of $159,171 Copyright 2011 i-Myth, Inc.
  • 17. Sounds Good But How? Just Ask! Were thinking about implementing an incentive program that would Copyright 2011 i-Myth, Inc.
  • 18. Include All Departments Marketing Sales Finance Purchasing Operations Human Resources Copyright 2011 i-Myth, Inc.
  • 19. Develop Rules That Matter Hard metrics Soft metrics Competitive Intelligence Copyright 2011 i-Myth, Inc.
  • 20. Rewards That are Earned Not Won! Incentive rewards are those things your participants could not or would not buy on their own. Copyright 2011 i-Myth, Inc.
  • 21. Create a Win-Win-Win Sponsoring Incentive Incentive Company Planner Suppliers WIN WIN WIN Sales C-Level Support No Surprises Net Profit Secure Budget Increased Revenue Cash Flow Multi-Year Long Term Total Support Contract Customer Value Copyright 2011 i-Myth, Inc.
  • 22. Yes, It Does! It is not a question of will it work in your business, but rather a question of how well it will work! Copyright 2011 i-Myth, Inc.
  • 23. How Well? Find out your own potential for Incentive ROI Welcome to i-Valuator! A complete Incentive Management Planning and Implementation SaaS application for Incentive ROI Use Promo code: BottomLine Easy to use, no finance degree required! For 25% off an i-Myth membership For details and our special pricing offer for webinar attendees, contact us at info@i-myth.net Copyright 2011 i-Myth, Inc.