Travel incentive

Travel incentives are a way for companies to promote their business and increase sales by offering a free or discounted travel package to their customers. Many companies offer these incentives as a bonus for making a purchase, such as a cruise with the purchase of a new car. Other uses include rewarding individuals for business referrals and generating business leads.

Types

There are two main types of travel incentives available to businesses. The first type of incentive is based on fulfillment. This means that the incentive company wants the recipient to use the certificate and will ensure all certificates presented for fulfillment are fulfilled.

The other type of incentive is based on breakage or slippage. Breakage refers to the fact that more money will be made from people not using the certificates than will be lost from those who do. For example, if a company sells 1,000 incentive certificates for $10 each ($10,000 total) and only 5% (50) of the people use them, costing the incentive company a total of $100 per person (=$5,000), they have made a profit of $5,000. The cost is often offset on breakage certificates by the association of a timeshare company offering property tours to certificate holders. Many of the incentive companies receive a kickback for each person they send to the property who agrees to and takes a tour. The breakage is often created in the terms and conditions with strict stipulations that require recipients to do things such as send in a postal money order within a very short period of time. If the recipient sends in anything other than a postal money order or does not return it within the time specified, the certificate becomes void.

Another type of certificate that has been increasing in popularity are unlimited printing certificates. In this model the company issuing the certificate is not performing the final fulfillment for travel. They merely provide a certificate between the recipient and the actual certificate that provides a travel benefit. For example, if there is a cruise certificate that would normally cost the business owner $30, the unlimited printing company may provide a certificate that requires the recipient of their certificate to send in a $50 processing fee. At that point, the company then sends out a cruise certificate fulfilled by a different company. In such situations a certificate recipient may not be aware of who will ultimately provide the service the certificate leads to.

See also

*Incentive program
*Incentive
*Loyalty program
*Loyalty marketing