Once you’ve decided you’re going to do an incentive program, the next big question is: what should we give as an award? Now every award company on the planet will point to studies showing why their particular award is the one and true way to incentivise people – whether it’s using their cash cards, merchandise, gift cards, trips or travel awards. They’ll give you all sorts of reasons why the other award options will have the opposite effect on your participants – driving them away and dooming your program.
Of course that’s not true.
The fact is incentives work – and basically any of those options will help you reward behavior. But let’s think about some of the pluses and minuses of each of those and see how they match up with your particular goals. And we’ll even add in one more that award providers will never mention as an option: your own company-sponsored awards.
Cash: the old adage “cash is king” is true in many instances. It certainly gives the recipient total flexibility to buy whatever they want. The downside is that sometimes people use their cash awards for less meaningful items – like gas or groceries – things that don’t have a lasting value. In that case, the reward is simply looked at as found money to help out with ever-increasing expenses. That’s why, for many employee incentive programs, companies are less likely to see a true change in behavior.
However, for a sales incentive program – especially third party sales – cash is still a huge motivator. Sales people are naturally motivated by money – they are often paid partially or wholly on commission, meaning that every extra dollar they can earn is part of their overall compensation. And when you’re trying to get a distributor or channel partner to sell your product over someone else’s, cash is a great way to go. Just make sure that the cash award for sales people is high enough that they will actually want to sell your product.
Merchandise: everyone loves to look at a catalog of the things they could get when they earn enough points. And having a vision of something from that catalog (a new flatscreen for your family room, a new BBQ grill, or a new computer for your teenager) can motivate people and drive them to participate. Yet the downfall to merchandise is that sometimes things are just beyond the reach of most of your program participants and can be de-motivating. “I’ll never earn enough points to win that” or “They’ll change the catalog by the time I earn enough” or “Just when I get to it, it will cost more points to win.” For sales incentive programs, they may be intrigued by looking at catalog items – but then they’ll think “Just give me the cash and I’ll buy it myself.” And sales people always know they can find the merchandise cheaper somewhere – so they are more inclined to take the money and run.
Conversely, when it comes to employee recognition programs, merchandise has tremendous trophy value. Every company wants their employees to be reminded of the award (watching the TV they won, etc.) and what they did to win it. There is also the residual benefit of the employee telling the story of where the prize came from – and how great their employer is for running such a program. Offering different tiers of prizes also allows everyone in your program to earn something, while giving the top performers the chance to really stretch and get the biggest prizes.
Gift Cards: when you offer gift cards, it gives participants the chance to spend at the retailer of their choice – provided you are giving them multiple card options. But many companies will simply stockpile gift cards from one particular merchant. That would be fine if everyone shopped at that merchant, but the truth is that people have favorite stores and brands – and they may not care if they get $100 to spend at a place they never visit. In that case, they will probably just give it away as a gift to someone else.
Another downfall of gift cards is the leftover money on a card. While rules have changed where merchants can’t simply take the leftover cash after a few months, it still becomes an accounting problem for participants: do I still have money left? Was there two dollars left on the card? So unless they use the full value of the card at one time, they could be leaving some of their incentive on the table – which is not your intent.
Where gift cards excel is when you offer them in conjunction with a merchandise catalog. Participants may look over the merchandise in your program and think, “I want that coffee maker” but then if they have an option to get a gift card at a merchant that carries that coffee maker, nine times out of 10 they will choose the gift card and go purchase it themselves. The gift card gives them the flexibility to go to the store and maybe find something else – or a different model they want instead. Gift cards are also great for customer loyalty programs or rebates where they are rewarded for one-time purchases – buy this product and we’ll give you a $25 gift card to dinner or a gas card.
Travel prizes: the thought of sipping a cool drink on a beach in the Caribbean is something that gets most people through the winter if you live up North. The problem is the likelihood of that happening is about the same as winning a company-sponsored trip through an incentive program. Trips sound great – cruises (as long as the toilets work), experiential trips like being on the red carpet, skydiving or going to the Super Bowl, or sitting on that beach – and they can give people a chance to envision themselves in that situation. But most participants also understand the odds and very quickly decide, “No matter how hard I try, I won’t make it. It’s going to be won by the same people as last year.”
Travel prizes work if they are an added benefit to an ongoing program where everyone has the chance to earn something. So even though most participants will know they are out of the running for the trip early on, if they can still get a new iPod or a $50 gift card, at least they have something to strive for. And that’s what you want – engagement in your program, not exclusivity.
Company-sponsored awards: this is the one option that no loyalty rewards company wants to talk about. Don’t give your own prizes, they’ll say, there’s no motivation there. Sometimes that is true. I mean honestly – if you are only giving employees or customers the ability to win a hat, jacket or coffee mug with your logo on it, it’s eventually going to get very old. And asking participants to do your guerrilla marketing for you by wearing your stuff out in public can be pretty tacky.
However, and there’s always a however, there are some tremendous company rewards that will drive behavior and participation. Offering employees the ability to cash in points for additional Personal Time Off (PTO), schedule flexibility, education credits, even a better parking spot can let them augment your benefits package while showing off to fellow employees, “This is what you could get too if you just do this.” The trick is to not limit your prizes to only company prizes. You will be viewed as cheap and people will think, “Well, of course, it doesn’t cost them anything extra – what’s the big deal?” So you’ll want to make sure there are multiple options – again, giving employees the gift of choice really shows that you want to reward their behavior.
So what’s the best option for your company? Actually it’s a combination of the above that will ultimately engage your audiences. Give your employees the ability to earn some decent company rewards, but also give them the ability to use points for merchandise and/or gift cards. Give your customers the ability to earn points towards merchandise – or one-time prizes like gift cards or single-load cash cards. And give your sales force or third party sales force and channel partners a mixture of reloadable cash cards and bigger prizes through quarterly or year-long contests. Ultimately the award choice needs to get people excited and willing to do what’s necessary to achieve your goals: improve morale, reduce turnover, improve recruitment efforts, increase participation in a wellness program, drive sales, enhance customer loyalty and more.
Don’t pigeon-hole your program by going with just one reward type. Think of what would motivate you – and make sure it’s a fair reward for the activity you would need to perform.