Are Points-Based Rewards Programs Really Super Meaningful?

 

When a company budget only allows for nominal reward amounts like $25 up to per $100 person to incentivize or recognize employees, the typical award program options available to them are cash, points for awards and gift cards. Researchers have conducted many studies on the benefits of cash versus non-monetary rewards, but it is rare to find research to compare a points based reward system to other types of awards deliverable. In fact we’ve never seen one.  

The single biggest benefit of using a points based award system is being able to combine budgets from disparate departments, or over longer periods of time which allows the employee to grow their points account so they can redeem for larger more significant awards, and in many cases even travel.  When your total overall awards per employee is a less significant amount ex. $100 or $150 in awards, the excitement and motivation can wane especially considering the time between the issuance of the points and the redemption for a suitable award.

 Another benefit of a points based system is that it allows you to have a large array of award options in one place and promote them often.  Just make sure that if your assortment of awards includes very desirable and costly items that you have enough earning power in the program to be able to redeem for that item, and it doesn’t take an overly long time to earn those points. Check the average expected points issuance cost per employee during the program.  If that won’t allow the average employee to be able to redeem for 75-80% of the items in your catalog, your program is either underfunded or your award catalogs has too many high priced items.  Be realistic, it will save you a lot of complaints down the line.

 If you are going to implement a points based system, you need to be very diligent in your supplier search and be able to compare costs accurately.  Most award companies that sell their points system at low or no cost will make up that price difference making you use their awards in the system.  But those awards are usually priced unreasonably high compared to retail.  Everyone knows about the bank reward points you earn on your credit card.  But anyone you ask will also tell you that the prices of the award items in those programs are ridiculously high.  The best way to test the pricing is to look at the gift card section.  If a $25 gift card doesn’t cost you $25 in points issued, you are probably paying too much.

 Frankly points based systems can be the best type of incentive or recognition program you can implement, if you take the time to think through the steps above.  Here is a blog post we wrote a few years back that will delineate all the caveats you need to consider before you implement a program.  Don’t get caught up in thinking that a points based system will be the cure-all for your recognition needs. There are other ways.