What is an annual incentive plan?

B2B incentive: definition

Before we delve into what an incentive plan is, let’s first define B2B incentive.

What is B2B incentive?

B2B incentive is implemented by companies for their employees. It involves challenges or objectives associated with rewards. The goal is to engage and motivate employees on a daily basis over varying periods of activity. To a lesser extent, B2B incentive can also be extended to strategic partners of the company.

What are the applications of B2B incentive?

• To enhance employer branding and make the company attractive for recruitment: organizing a referral program where employees leverage their network to recruit profiles that are hard to find.
• To motivate the sales force: launching a time-bound challenge for sales representatives with a reward at stake.
• To boost the sales of specific product lines or solutions: setting objectives linked to the sales of a particular product or service, with a reward for the best result.
• To motivate all employees in the long term: defining a policy with a set of rewards based on performance.
• To foster a connection with all employees: providing a gift during special occasions such as Christmas.

What types of rewards are available?

• Cash bonus
• In-kind rewards (travel, gift cards, etc.)
• Varying levels of commission
• Stock purchase options
• …

It’s important for companies to carefully design and implement a B2B incentive plan that aligns with their objectives and the needs of their employees. By effectively utilizing rewards and challenges, companies can foster motivation and engagement among their workforce.

Definition of an Annual B2B Incentive Plan

Generally, companies don’t limit themselves to a single incentive action. They multiply and coordinate them with the aim of achieving a final objective set for a full year. This is what we refer to as an annual incentive plan.

An annual B2B incentive plan is established on two levels:

• Short to medium-term objectives that reflect a strategic vision based on a current business opportunity. This level focuses on operational activities.
• Long-term objectives aimed at enhancing the company’s attractiveness and visibility in terms of human resources. This plan spans multiple years but is often reviewed on an annual basis.

How to Implement an Effective Annual B2B Incentive Plan?

In an annual B2B incentive plan, it is important to carefully choose your target(s), set appropriate objectives, determine suitable rewards, and allow some flexibility for managers of each team. Let’s explore this in more detail.

Setting the Right Objectives

Just like in any program, if the set objectives are not appropriate, the plan is likely to fail. There is a well-known method that can be applied universally: the SMART method. A SMART objective should be Specific, Measurable, Achievable, Realistic, and Time-bound.

The objective should be realistic and attainable for employees. If a team member realizes from the beginning that they will never achieve the set objective, even with doubling or tripling their efforts, they will give up. It may even lead to disengagement from their work.

The objective should be specific, meaning that the company must define a clear scope around it. This allows for targeting the right individuals within the teams.

Measuring the objective will help determine when the reward can be triggered. Without proper measurement, it becomes challenging to justify the granting of a bonus, for example.

And of course, the objective should be time-bound. Employee motivation is easier to sustain over a shorter period.

An example of a SMART objective for B2B incentive: Reward the top salesperson in France for the month based on the number of signed clients to date.

Ideally, the objectives of a B2B incentive plan should be able to:

• Reward top performance
• Motivate the best employees
• Align with business priorities
• Foster a connection with employees

By ensuring that your objectives meet these criteria, you can create a more effective and engaging B2B incentive plan.

Optimizing the Budget

Every company can implement an annual B2B incentive plan, regardless of the budget. It’s all about finding the right balance. You need to consider the ratio between the maximum budget allocated to incentives, the proper distribution among teams, the appropriate allocation based on objectives and priorities, and the implementation of rewards that are attractive enough to challenge employees.

Ensuring Fairness

Proper budget allocation and fair distribution of rewards are crucial. It’s important to strike a balance between rewarding top-performing employees and providing encouragement bonuses at different performance levels. The goal is to avoid potential frustration among employees and teams.

Offering the Right Reward to the Right Employee

The reward is the focal point of an employee’s motivation. It should be appreciated and have a value that exceeds the effort exerted. Some rewards are well-received by employees, such as gift cards. They strike a perfect balance between a gift and a monetary value. This is why gift cards are considered an ideal reward by 67.7% of employees.

Providing Flexibility to Each Manager

Managers are in the best position to know their teams, set appropriate objectives, and distribute the right rewards to the right individuals. Therefore, even though the B2B incentive plan is formulated at the executive level, it is beneficial and meaningful to involve managers from the beginning and give them some leeway for an agile incentive plan.

Defining the Period and Duration

What period should the incentive be activated? Should the company prioritize peak periods to further motivate employees or quieter periods? What will be the duration to achieve a challenge: 1 month, 3 months, 6 months? If the company wants to foster a connection with employees, which significant events should it focus on? Christmas, the back-to-school season, or individual acknowledgments for a relocation, birth, etc.?

Measuring

Key Performance Indicators (KPIs) need to be tracked to determine if objectives are met, when to trigger a reward, and, most importantly, to measure the effectiveness of the incentive plan and identify possible areas for improvement.

Asking the Right Questions to Shape the B2B Incentive Plan

To construct an effective B2B incentive plan, it’s valuable to ask the right internal questions: What will attract, stimulate, and motivate employees? What needs to be achieved this year, and how can we leverage it within the framework of compensation? It’s also important to examine what competitors are doing, their strategies, and the trends in our industry.

Why is the e-gift card a good reward for B2B incentives?

The digital gift card is a rewarding option that makes sense and remains flexible for both the management and employees.

Employees perceive it as a genuine gift. It is a useful gift as it provides additional purchasing power within a specific brand.

For the management, the e-gift card is a great opportunity because it is quick and easy to create and deliver. The choice of the amount allows for budget control in the B2B incentive plan. However, it remains fully customizable with the recipient’s name and a personalized message.

It is precisely for these reasons that we are increasingly seeing the e-gift card in B2B incentive programs.

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