Point based award systems have been in the incentive
industry starting in the fifties. In
those days all the rage was issuing paper checks worth thousands of award
credits or points that were redeemed for merchandise awards out of physical catalogs. These ubiquitous points’ schemes now permeate
the marketing world in all sorts b2b as well b2c programs.
With advancing technology these software incentive
management tools offer an ever increasing number of features and mechanisms for
“limitless options in one simple solution,” designed to free you up and make
all your incentive programs worry free!
Really?
The web is full of these systems, some very
sophisticated, and it seems that every full service awards company has their
own. As new software companies spring up
with the next “digital points system for the ages”, one seemingly better than
the next, we think it is important to let you know that with these, the devil
is indeed in the details. And in the
planning and design phase these details are critical to cost and how effective
the program will be. Before you decide
on a points based system, remember the phrase Caveat Emptor, or let the buyer
beware. Here are just a couple of
important details to be aware of.
Value
you ascribe to a point.
To be frank, points based systems were originally
invented to hide the price of the
merchandise awards. At the time they were substantially higher than retail and by using thousands of points for an item, it was difficult to determine the actual value of that item. With the advent of online merchandise portals it is relatively easy for your participants to determine the real value. By simply dividing the value you determine the item to be from an online search by the number of points necessary to redeem for the item value per point is readily available. Take the time to do a random check of items offered to see if they are competitive. If experience is a guide….you will find that most will not be.
merchandise awards. At the time they were substantially higher than retail and by using thousands of points for an item, it was difficult to determine the actual value of that item. With the advent of online merchandise portals it is relatively easy for your participants to determine the real value. By simply dividing the value you determine the item to be from an online search by the number of points necessary to redeem for the item value per point is readily available. Take the time to do a random check of items offered to see if they are competitive. If experience is a guide….you will find that most will not be.
How and
when you pay for the points
Whether you pay for the points when you issue them (most
suppliers love this approach) or when they are redeemed, opens up a can of
worms called “breakage” or “non-redemption.” Regardless of all the mumbo jumbo
provided by the supplier, including the scare tactic of which way does or
doesn’t have income tax liability, it is typically not in your interest to pay
for these points on issuance….period! We
will be happy to consult with you on this particular subject if the facts are
being distorted.
The
complexity of your point earning rules structures
With any of these systems it’s relatively easy to
download a list of participants and the
points earned for a program part. But we have not seen one system that will take your various raw data that combines to determine how many points were earned based on the specific rules and do those calculations. That tedious and time consuming chore is up to you.
points earned for a program part. But we have not seen one system that will take your various raw data that combines to determine how many points were earned based on the specific rules and do those calculations. That tedious and time consuming chore is up to you.
Buying
more features than you need
You don’t need a sledge hammer to crack a walnut. All of these systems have many more features than you will ever use. In a survey we did of customers a few years back, the average company that had multi-featured systems used less than 25% of them.
Who
controls the award portfolio in your system
This is a critical point often overlooked in the buying process. Most of these suppliers have come to realize
that the profit in selling these systems is in the awards, not the
software.
They often give away the software at cost or for nothing to be able to sell the awards. When they control the awards piece they control the ongoing profitability. This is often at the expense of your participant where only a portion of your overall program budget gets to them in awards. And wasn’t that the idea in the first place?
They often give away the software at cost or for nothing to be able to sell the awards. When they control the awards piece they control the ongoing profitability. This is often at the expense of your participant where only a portion of your overall program budget gets to them in awards. And wasn’t that the idea in the first place?
There are many more caveats that you should consider when
you’re in the process of implementing a points based award system. There’s not enough space to enumerate them
here but we would be happy to discuss them with you. Just let us know.
For
more information on Ultimate Choice Inc.’s products or services or other white
papers please contact us at Ultimatechoiceinfo@cox.netultimatechoiceinfo@cox.net
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