Working with an Incentive Program Management Partner

You know why incentives are important, how to design a program of your own, and the nuts and bolts of running programs targeted at both employees and customers. But before you launch a program on your own, you’ve got one last question. Is it worth working with an outside firm? Would it be better to outsource some (or all) of this work, rather than try to do everything in-house? In this article, we’ll take a detailed look at what it means to work with an incentives firm. We’ll discuss the major advantages of contracting an outside agency, along with what to look for when you’re shopping around. Let’s get started.

Should I Hire an Outside Firm to Manage my Incentive Program?

It’s important to highlight that management partners are not banks. Banks and similar financial institutions won’t offer turnkey management of your programs. They might offer a way to pull reports and submit simple payment files, but their services are narrowly focused on the debit cards themselves. There are no custom web portals, no SSO, no program customer service, no submission validation, no consulting, no marketing assistance, etc. In fact, typically your management partner will find the right bank for your needs, and handle that banking relationship on your behalf as a part of their services.

Now that you understand the differences between a management partner and a bank, should you hire an outside management partner? In a word, yes. You need an outside firm to serve as Program HQ, and to provide you with the wide array of services necessary for the success of an incentive program. Of course, it may be the case that you have a team of people on staff who could run an incentive program themselves. You may have employees who understand the best practices outlined in this book, who have the experience necessary to make it work, and who have the time in their schedules to dedicate to the program. If so, go for it. But the reality is that the vast majority—and we really do mean the vast majority—of businesses simply don’t have the people and resources to run a successful incentive program in house. And even when they do, it’s usually much more expensive and troublesome to try to run a program internally.

This is true for a number of reasons.

First, there’s the learning curve. It’s unlikely that you have a team of employees who have run dozens of incentive programs in the past. The learning curve is steep, as a good incentive program will involve a lot of moving parts, from the initial planning stages to the achievement of your goals. Considering how complex these programs tend to be, trying to pass them off to your internal team can result in major issues.

Next is the issue of added cost. When you actually crunch the numbers of running a program in-house versus outsourcing it to a partner, you might be surprised to see just how much more expensive it is to try and run the program yourself. A large part of this is often due to higher internal labor costs. A good outside firm will have all of the pieces in place ahead of time, and they’ve likely already achieved certain economies of scale with labor costs down as low as they can go. Even if they’re compensating their employees comparably to yours on a per-hour basis—in fact, even if they’re paying them more—the speed and efficiency with which they’ll be able to accomplish tasks generally translates to a significant decrease in labor costs. Those savings can be passed on to you.

Finally, you have to consider your internal team’s lack of experience handling a variety of issues. There are a lot of problems and complications that are likely to emerge when launching your first incentive program. Even after reading this book, anticipating all of them ahead of time is next to impossible. Attempting to handle everything in-house means that you’ll be on your own when things do go wrong, and your lack of experience will make handling various issues more difficult.

Still not convinced that working with an outside firm is the way to go? We understand. The idea of keeping things in-house can be appealing, as it means you’ll have some degree of added control over the program. But, consider all of the various roles that you’ll require to run an incentive program. At a very minimum, every incentive program needs:

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  • Sales: You’ll need someone on your team who’s sales-focused. This person has to understand the products that you’re looking to incentivize, along with the types of incentives that will yield the best results for those products. This requires incentive-specific experience.
  • Creative: You’ll also need to have a creative person to handle branding the program and all of its various elements, along with things like graphic design and web portal visuals.
  • Numbers: Every incentive program needs a number cruncher, or analyst. They’re essential when it comes to determining the best incentive amounts to offer, whether you’re talking about customer rebates or employee rewards.
  • Administrative: Without an administrative staff in place, you won’t be able to audit your program along the way for reports and data extraction. Having the right administrative people ready to go is incredibly important.
  • Customer service: Of course, we can’t forget about customer service. Even the smallest of programs will have to field participant inquiries. If your program is sizeable, you’ll need to be prepared for a ton of phone calls and emails. You need a customer service team in place that can handle these communications with authority and grace. Attempting to throw together a couple of people to respond to emails at the last minute isn’t a great option.
  • Technical: Finally, you’ll need a developer, or development team, to actually support the technical requirements of the program. This would include the program website, SSO, bank APIs, server configuration, and other technical matters.

This is only a cursory overview of the sort of team you’d need to assemble in order to run an incentive program effectively. As you can see, things get both complicated and expensive very quickly. Just imagine what the staffing costs alone for the above scenario would look like for your company, especially if your program is large.

When you go with an outside partner, all these pieces are ready to go on day one. Not only will the above roles be filled, they’ll be populated by people with considerable experience with incentive programs. This can save you a massive amount of headache in the long run.

There’s one last advantage of working with an outside firm that we should also mention. We’re talking about accountability. When you hire a reputable third-party with a proven track record, there’s a certain amount of accountability that you know you’ll be getting. A good firm will have a system in place for maintaining a proper paper trail, something that allows you to eliminate the potential for internal fraud, theft, money laundering, or any other nefarious activities. You can also rest easy knowing that there are experts handling your program, and that the task of troubleshooting every problem that arises won’t consistently fall in your lap.

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What to Look for in a Management Partner

So what should you look for in the ideal management partner for your incentive, loyalty or rebate program?

First off, experience is arguably the most important factor. Recall our discussion of what to look for in a bank from What to Look for (and Avoid) in a Bank article. In pointing to a few cautionary tales derived from our own experience, the common theme for bad banks was lack of experience and accountability. The same goes for working with an external firm. If they don’t have any experience, they’re probably best avoided. 

It’s important to get specific here. Don’t let someone brush off your questions about their previous experience managing incentive programs. How many years have they actually been at this? How many clients have they helped? The higher these numbers, the better. Who are these clients? Were their needs similar to yours? Make sure that you’re not jumping on board with a company that’s unable to address your organization’s specific needs. Do they have references from these clients? They should be comfortable giving you the contact information for the people they’ve worked with so that you can get firsthand testimonials.

Next, you’ll want to spend some time examining the firm itself. How is it structured? Are they based in the United States? One problem that we’ve seen with some all-in-one incentive management providers is their tendency to outsource as much of their labor as possible to overseas call centers. Many of these management firms simply pay representatives in less developed countries to handle all their customer service needs. This can turn into a big problem, particularly if you have a large program that could require extensive support. If people are unable to access quality customer service, they’ll blame it on your brand. Before you know it, your incentive program has created the opposite of brand affinity.

Along the same lines, make sure to find out what other services the company offers and how those services are actually delivered. Are they able to answer phone calls, respond to emails, and provide chat support? Unless you plan to train your own dedicated customer service team, this is essential. On top of that, though, can the company provide verification services? Can they plan and book travel for your employee rewards program? You can see how quickly the details begin to pile up. If you’re going to work with an outside firm, you want to ensure that you’re getting your money’s worth. Don’t go with a firm that leaves these jobs to you, as these seemingly small administrative tasks can overwhelm you in a hurry.

It’s important to be specific when asking these questions, and to hold the firm accountable for providing specific answers. What do we mean by this? Don’t simply ask the firm, “Do you handle customer-service calls?” If you do, their response could simply be, “Yes, we take care of customer service.” Instead, ask pointed questions about timelines and numbers. “How quickly do you respond to customer-service inquiries? Will our program have a dedicated phone number? What are your operating hours? Can customers leave a message? What’s your response time for email inquiries? What hours will chat support be available?” And of course, “is your call center domestic or overseas?”

Once you start asking these kinds of questions, the difference between a dedicated, in-house customer service team and a foreign call center will quickly make itself obvious. Don’t be afraid to nitpick about the details here.

Lastly, it’s worth pushing a bit further to see exactly how integrated the firm will be with your own organization. Can they become a literal extension of your own team? Will they be trained to perform the verification and auditing of your reward submissions, or will you still have to do this in-house? And if they will be handling these tasks, can they perform them flawlessly and without error? Find out if they’ve taken care of these sorts of details for past clients, and then ask those clients about their experience.

One final and very specific note about experience and accountability. Ask your potential partners if they have Errors and Omissions Insurance (E&O) specifically for the purposes of covering incentive programs. From personal experience, we know that these policies can be very difficult to obtain due to the extremely unique nature of these services. For example, unlike the services provided by attorneys or accountants, most insurance carriers simply don’t know how to rate and price the coverage required for incentive providers. But assuming the partner has E&O insurance, their potential mistakes (in a worst-case scenario) should be covered, thus limiting your risk.


Once you’ve vetted your options, it’s time to move forward with the planning process. Before you can get things off the ground, though, there are other items left to consider. As with all things in business, there’s one important item which is essential to consider, but which we’ve yet to address: cost. In the article How Much Do Incentive Programs Cost?, we’ll discuss some of the costs involved in launching and running an incentive program.



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