Incentive Travel is a Profit Center

   The cost of an incentive travel program is paid for by the profit generated from the incremental business the program creates. The percentage of profit earned from incremental business is approximately six times the percentage of profit earned from budgeted (forecasted) business. 

   The P&L projection, below, shows the result of a 10% sales increase: Profit Before Taxes on the forecasted business is 5.8%, while Profit Before Taxes on the incremental business is 33.2%. The cost of the Warehouse, Selling & Marketing, Advertising and Administration, et al. were paid for in the forecasted sales, a 10% increase will not measurably raise the cost of any item printed in blue. What we called "Period Expenses" were 35.3% on Forecasted Sales, but 7.9% of Incremental Sales.

   Talk about a win-win situation: You pay nothing in advance for any of our individual incentive programs, thus you have the increase before you pay out any monies!  

It is relatively simple to create a pro forma for your own company or division. It has to turn out similar to the above. The methodology is logical and the logic is indisputable.

Note: I say "relatively simple" because this is the actual pro forma I turned into my President, I was Director of Advertising for a vacuum cleaner company, to convince him to allow us to run our first incentive travel program, lo those many, years ago. Needless to say the program was a smashing success.        rjg