Well Done. Now Go Away | BTalk Australia

(9min 03) The incentive market is an important part of the travel business, but does it work? If you want to make people perform why not just give them more cash?

In today’s BTalk Australia Phil Dobbie talks to Richard Froggatt, a Director of NGT Travel in Melbourne about why, even when times are tough, travel is a good way of encouraging performance from your employees.

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See also:
Air Today, Gone Tomorrow | BTalk Australia
Creating A Successful Premium Incentive Program

• Today’s transcript

Dobbie: Hello I’m Phil Dobbie and today on BTalk Australia we look at incentive travel. Does it do any good? They call it incentive travel a lot of us call it a jolly. And with the current state of the economy is it going to be one of the first things that companies drop? On the phone is Richard Froggatt and he’s the director of NGT Travel conference incentives in Melbourne. Actually Richard, I should say Sir Richard Froggatt if that’s the correct term because you were awarded the Austrian Knights Cross first class for your work at Austrian Airlines.

Froggatt: Yes I was Phil and good morning to you. But I tend not to worry about that sort of title these days. It was a great form of mirth throughout a lot of my friends.

Dobbie: Right, I’m sure.

Froggatt: So I tend to drop it. But yes I was fortunate enough to be awarded that award by the Austrian Government for my services to the Austrian Business Association within Australasia.

Dobbie: Right, okay. And you didn’t have to get down on knee and have a sword spread across your shoulders.

Froggatt: No in fact I had the option of going to Vienna. But because most of my work obviously is being done in Australia it made more since to have it done here. So, we had a small function at the Austria Trade Council’s House in Sydney.

Dobbie: Right, and listen I’m very grateful that you still talk to ordinary people these days.

Froggatt: [laughs] You’re not ordinary at all.

Dobbie: Now, incentive travel, who is it for and does it work?

Froggatt: Well, incentive travel is for a lot of companies, I mean most of them tend to use them for one of two things. One is the achievement of sales results and the other one is for visits to overseas factories which can be used to demonstrate to both sales people and production people where their product is made and also give them a reward for the work that they’ve done throughout the year. You made in your, mentioned in your opening comments about, you know, incentive travel on the economy. That’s exactly what incentive travel is designed to do. When sales are down a lot of people say to me well you know we can’t afford to have any incentives. But that’s just not the case. That’s what it’s in place to do. And you can have incentives going for call centres for the number of calls that people take and also for sales results as I say. And of course the point when people turn around and say to me well we can’t afford to operate an incentive program you got to remember that the increase sales that result from salesmen achieving predetermined targets is that the incentive itself is funded by part of those profits.

Dobbie: But why travel? Why not cold hard cash as a motivator?

Froggatt: Well, cash is good but it tends to just go into the normal family revenue pot and end up paying bills like electricity bills, gas bills and so on and so forth.

Dobbie: Right.

Froggatt: And there’s no lasting memory of it. The great advantage of travel is the people go to places they probably haven’t been to before. And they take photographs etcetera and they come back and frame them. And it’s something which lasts in their memories for quite some time. And that’s exactly what it’s designed to do.

Dobbie: Now, is it normally just the person who works for the company who is taking that incentive trip? Or do partners tend to go as well?

Froggatt: In many cases companies try to get the wives involved so that none of them are feeling that they’re left out of the equation. And, of course, sometimes it is the wife who turns around and persuades her husband that he’s got to get out on the road and make some more sales because she’d particularly like to go with him up to that destination.

Dobbie: Now, is incentive travel harder in Australia because I mean it takes a long time to get out of this country so it reduces the opportunity for those shorter trips overseas? Like a weekend in Thailand is really a long flight going out for dinner isn’t it if we have to get the plane back again.

Froggatt: Yes it is Phil. But see, a lot of people get confused about the time it takes to get anywhere both within Australia and overseas. I mean if you’re travelling from Sydney to Bangkok you’re talking about seven and a half hours, which is not far. And when you, if you’re looking at people they say to me well, you know, we can’t afford to go overseas we’ll have to go within Australia. But when you take the cost of airfares within Australia if you’re going to for example Hamilton Island or Hammond or somewhere which is just a little bit different that people haven’t been to before once you add the travelling time on there really isn’t much difference in it. In fact the ground arrangements that you can negotiate in the near points of Asia, Cambodia, Vietnam, Bangkok, particularly Malaysia, the cost is very, very favourable.

Dobbie: What’s the cost that people are looking at normally? What’s the average cost per person of any incentive trip?

Froggatt: You can’t really generalise on that Phil. It depends what the budget is of the company that is operating the incentive and in fact on how much they want to plough back into the incentive scheme itself. I mean all incentive programs are tailor-made for individual clients. And you’ll find that it can be anything from 2,000 dollars a head up to 4 or 5,000 dollars a head. And sometimes with the top achievers for example companies will take a lot of people who have achieved a certain level of sales to one destination and then they will take the top achievers somewhere else. For example you could go to Bangkok, have your incentive tour there and do what you’re going to do. But then the top achievers will move on to Chung Mei for example just have another three or four days up there to celebrate the achievement that they’ve obtained.

Dobbie: So the tax implications here I mean does it make it easier if you’re attaching an incentive to, for example, like you say a factory visit?

Froggatt: Well, I think we try not to get involved in tax issues. That’s really up to the individual company to check with their own accounting staff on that. The only advantage that you have or one of the advantages that you have would be a better way of putting it, if you’re going to for example on a factory visit it’s because there’s an educational content then there are some sort of tax breaks there where people can claim money back because it is an educational content as well as being an incentive program.

Dobbie: We are seeing increased fuel costs. Do you think the incentive market is going to be hit hard by changes in the airline industry over the next year?

Froggatt: I think all business is going to be hit hard. I mean you’ve only got to look at the price of taxes on the ticket in addition to the cost of the ticket these days. And obviously when the economy is slowing, particularly apart from the mineral sector of course, you’ve got a situation where people are looking at their expenditure budgets very, very carefully. And they’re having to make a decision as to where they’re going to put their disposable dollars in their marketing budgets. And that does effect sometimes the destination they’re going to go to. It would certainly effect the frequency instead of doing an incentive once a year they might do it once every two years. And a lot more evaluation goes into the decision as to whether they’re going to operate an incentive-based program or endeavour that travel or merchandising. All that comes into the mix.

Dobbie: And I guess if travel’s going to be harder for people generally in the near future, then that, then that travel incentive is actually a bigger incentive in some ways.

Froggatt: Yes it is but then with airlines particularly the national carrier here and others who are, who are looking at their root structures and may be trimming down on services between points which are not necessarily as profitable as other areas of their business then you find you’ve got a shortage of capacity and because of that then the fair level will eventually go up.

Dobbie: Alright hey Richard thanks very much for your time. Listen I’ve been down on bended knee all through this interview so, which I thought was appropriate. I can get up now though can I?

Froggatt: Well I can tell you what you can do you can get up now but when you come down to Melbourne maybe we’ll go out and you can buy me a bite to eat.

Dobbie: The sounds very good or maybe even the other way around.

Froggatt: Even the other way around.

Dobbie: Speak to you then. Thanks for your time.

Froggatt: Alright Phil. Thank you very, thank you very much.

Dobbie: Next time on BTalk the Cult of Six Sigma.

Skinner: The actual term Six Sigma means about 3.4 out of merely an opportunity for doing something wrong or doing something right in front of a customer, only 3.4 times do you make a mistake or deliver a defect.

Dobbie: That’s Alan Skinner from the Faculty of Business at the University of Technology in Sydney. We talk to him next time on BTalk Australia.