effective incentive programs

Effective Incentive Programs Perform at Higher Levels

  • August 11, 2016

Claim audits of effective incentive programs are not simply about timing, they are about the failure of randomness. Random audits are problematic because they make claims validation more difficult. For example, if we audit 100 percent of claims and find that 8 percent or 9 percent of them are invalid, and another firm conducts 3 percent random audits and detects that between 8 percent and 9 percent of claims are invalid claims think of how many invalid claims are missed.

Another important factor to consider is what can happen when a company batches their audits after the programs have paid out. This puts them in the uncomfortable position of having to take action to collect on the fraudulent or invalid claims. These companies, obviously, are looking to sell and not to incarcerate partners or consumers, but that is what can happen when claims are not audited early. That is why 360 audits prior to paying out the claims.

This is where a systematic approach to auditing and accounting is crucial to incentive management models. That is particularly true for fraud detection, which requires measuring and investigating variances in claims information such as sales, invoice numbers, serial numbers and a variety of other factors.

“A systematic approach to auditing is crucial to incentive management.”

The models effective incentive programs employ
First and foremost, companies need to modernize their systems with paperless, cloud-based platforms. With all claims submitted electronically, all data can be constantly tracked for auditing with compliance and validation algorithms. That enables the program to discover issues that would not otherwise be detected. Our research showed that with our platform that employs this technology, we reduce an average of between 10 percent and 20 percent of total program spend for manufacturers within the first three months.

The next key facet of any effective incentive management program is that incoming claims requests are audited instantly. Manufacturers that use programs based on randomized audit approaches have a higher probability paying out invalid or fraudulent requests – at least more than companies that use a system that audits 100 percent of claims.

These platforms also need to employ accountability, transparency and engagement with sales channel partners. With sales performance and claims information more visible to manufacturers and payouts from manufacturers on regular schedules, all stakeholders involved in the sales channel will be more engaged in the program.

Effective incentive programs also take out a lot of the guesswork and interpretation with data. With more advanced data sets, manufacturers can identify opportunities and implement strategies to better engage sales channel partners in the program.

Perhaps just as important to the effectiveness of incentive management programs is their ability to creduce operational costs associated with running the program costs. These include administrative expenses with manual processes, discretionary business rules, complex schemes and multiple data sources that drive down sales channel productivity – not to mention increase the marketing spend for the program itself.

effective incentive programs
Using spreadsheets to track incentive claims data is behind the times.

Bottom line
The reality is that if a manufacturer still uses spreadsheets or file-based systems to track their incentive claims data, they are behind the times. They expose themselves to risks with fraudulent and invalid payouts, which may seem small now but can add up over time. Above all, they are missing the major opportunity that comes from collecting digitized claim data and using it to refine future incentive strategy.

360insights is not only a thought leader in the incentive program field, but we are also the leading provider of cloud-based technology in the space. Our platform centralizes all claims data for all incentives programs, enabling manufacturers to manage their programs efficiently and effortlessly while also receiving advanced metrics in real time.

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