Choosing the Right Incentive Reward

To power an incentive program, you need rewards that are highly desirable.

When designing an incentive program, there are many steps that come before selecting the rewards that will be used to motivate employees and channel partners to give their all and push their performance and the company's results to the next level. You have to set goals and figure out how to measure them. You have to create rules that push your participants to reach those goals while making them attainable. You have to communicate those goals and rules so that they are not only understandable, but engaging as well.

But when that's all done, you do have to choose rewards that are so desirable that participants are not just willing but eager to make that extra call, work that extra hour, do what it takes to earn that reward.

So, how do you make sure the rewards you are offering are that desirable?

This starts by understanding what a reward is. "Rewards to me are really something that's earned through performance," says Tina Gunn Weede, president and CEO of Peerless Performance. "I think we use the terms 'award' and 'reward' interchangeably. An award is something that's given based on a result or a benchmark such as a service anniversary, or recognition for a job well done within the normal day-to-day work requirements. Highly successful companies understand that there's a need to incorporate both in their organization."

Next, understand that not every reward is interesting to every person. "People are individuals with unique preferences and needs," says Susan Adams, vice president of engagement for Next Level Performance, as well as a trustee of the Incentive Research Foundation (IRF). "We see this day-to-day in our own lives with every gift that we purchase, every restaurant we select. Logically, it makes sense that the participants in an incentive program would be just as unique. What motivates each of them individually is distinct, driven by their own experiences and circumstances. This is why so many incentive programs rely on choice to emotionally connect to program participants. We know that the Millennial furnishing their first home wants and needs very different things than the Gen X employee caring for aging parents and young children simultaneously."

That is why choosing the right award can be tricky, says Mike McWilliams, vice president of marketing and client strategy for incentive firm MotivAction. "Each of us is driven by different motivations."

The Three Reward Types

Incentive rewards come in three flavors: merchandise, gift cards and travel. Each has its own strengths, and its own place in a reward program. 

Travel is an incredibly powerful motivator, McWilliams notes, but it is also the most expensive type of reward, and thus is usually reserved for the top performers in a company's sales force. It has trophy value and exclusivity, but only a small fraction of the sales team gets to enjoy it.

Group travel's goal is to create an experience that cannot be replicated by the participants on their own, says Weede, who is also vice president of research and content for the Society for Incentive Travel Excellence's SITE Foundation. Aside from going to an exciting destination, travel participants are publicly placed in an elite group, can be feted by top management and get to share the reward with a spouse or significant other. But it is expensive, so it is reserved for programs with a long build-up, usually a year.

Each of us is driven by different motivations, which can be a daunting task when architecting the 'perfect program.' Travel, merchandise and gift cards each have distinct strengths and, depending on the application, a more meaningful impact on the recipient.
Paul Gordon, senior vice president of sales for Rymax Marketing Services

A merchandise reward is often available to everyone within a group, with incremental performance gaining points usable in a catalog with a wide variety of choices and price points, so almost everyone can win something. It is flexible enough that it can be used as reward for performance by non-sales employees. It has trophy value -- that new Sony TV, Citizen watch or diamond necklace can be shown off and bragged about -- and it lasts for years, so you think of how you got it every time you use it. 

Gift cards are similar, and provide immediacy, says Scott Siewert, president of Fab at Incentives, noting that a gift card "can be sent at the speed of the Internet to your smartphone or computer." They also provide great flexibility, McWilliams adds, noting that gift cards are available for virtually any item or service, and can be used as a contribution towards a larger purpose.

Choice Is Key

One person might want an Apple iPad, another might want a Michael Kors handbag and a third might want a Citizen watch, says Paul Gordon, senior vice president of sales for Rymax Marketing Services, a leading reward fulfillment company. 

"Leaving it up to them creates a more rewarding experience," Gordon says. "Some participants want the most expensive item. Some want items that they don't want to buy themselves. And others are very brand loyal and don't deviate from that brand. By giving them a choice, you can motivate them at a higher level because the prize is something that they truly aspire to have."

But, choosing the right awards can be tricky, says McWilliams. "Each of us is driven by different motivations, which can be a daunting task when architecting the 'perfect program,'" he says. "Travel, merchandise and gift cards each have distinct strengths and, depending on the application, a more meaningful impact on the recipient."

While gift cards provide the greatest flexibility and choice of awards, merchandise -- assuming the items on offer are "viewed as premium or exclusive," McWilliams notes -- provides trophy value and bragging rights that let the award become a symbol of the recipient's achievement. Then there is travel, which McWilliams calls an incredibly powerful motivating force.

"From exploring a new destination, immersion in a different culture, recognition from colleagues and organizational leaders, and perhaps even sharing the experience with family, the benefits of travel are many," he says.

The goal of incentive travel is "to create an experience that is not easily replicated or could not be replicated at all," says Weede. "When I look at what makes a reward desirable, it's about creating the experience, it's about meaning and purpose."

Recognition Is Vital

Experiences matter more than the reward, Adams says. "Program participants are on the lookout for a positive reward experience," she notes. "Who presents recognition, in front of what audience and how they present it is more important than the reward itself. We are all keenly aware of the social aspects of the reward, and of the sincerity or authenticity with which it is given."

Calling recognition the foundation of the award process, Peter Hart, CEO of Rideau Recognition Solutions, says that it provides meaning and context to the award.  

"There is no replacement for authentic praise and recognition of good work," adds McWilliams.  

That's one reason it's vital to know the recipient. "Awards should be presented in the manner that brings your employee the most comfort," Hart says. "Unfortunately, sometimes managers don't take this into account when presenting awards. There are people who would rather have one-on-one recognition or award presentation and those that would rather have their accomplishments touted by bullhorn. Neither is right or wrong, one is not better than the other. Presenting an award should make your employee feel good, not cause any stress."

Cash Is Not King

If asked their preference, most people say they would prefer cash over merchandise, a gift card or group travel. So why use anything else? Well, cash has a number of weaknesses that make it an inferior reward.

First and foremost, "cash awards can be perceived as compensation and are then considered an entitlement," says McWilliams. "Should the recipient not earn that award in the future, that can yield not a neutral but a negative result in engagement levels."
 
Nor does it have trophy value, he says, pointing out that "It is more socially acceptable to brag about a great travel experience than the size of a deposit in your checking account."

Thirdly, cash can be and often is used for practical things like groceries or paying off a Visa card. "Ask someone two years later what they did with the cash and they will be hard-pressed to recall," Gordon says. "Ask them about their watch, their handbag, their TV and they will tell you how, when and why they got it." The same applies to group and individual travel awards, which create lasting memories.  

"Study after study reveals that while cash is what everyone thinks they should want -- think of all the things you could buy or the bills you could pay -- it quickly is proven to be inefficient, easily forgotten and too easily lumped with compensation," says Siewert. "That doesn't really achieve any of the goals of an organization and doesn't lead to long-term satisfaction or motivation on the part of the participant."