The Value of Points in Your Employee Recognition Award Program

 

The machinations of how the incentive industry has been hiding the price of awards in points-based systems have been around since the award stamp days (Blue Chip, S&H, Gold Bond etc.) where the redemption value of a book full of stamps depended on the grouping of merchandise items that could be redeemed.  With the inclusion of branded gift cards as part of the award mix over 20 years ago, they became the basis used to determine value of points in any type of points-based incentive or employee recognition system. 

The incentive/award industry fought the inclusion of gift cards with a variety of false information for years just to hide the value of merchandise awards that had become ridiculously higher than retail. By adjusting the number of points needed to redeem for an item of merchandise as well as the cost of the point the incentive supplier charged the client, you could easily hide the “price” of the award from the participant.  In past years it was not uncommon for incentive companies to change the cost of these points simply to camouflage the value.  We’ve seen them range from 1 cent to ½ cent to 1/32 cent to a dollar and every number in between.  Then all the incentive company had to do was provide “excellent service” to deliver these awards and everyone was seemingly happy.  

When gift cards arrived on the scene it was transparent what a $50 gift card should be worth in points.  By simply dividing the value of the card by the number of points needed to redeem for it, the cost or value of the point was apparent.   If you had merchandise included as an offering in a program the same calculation holds true.  It was then that folks started to see that the TV that looked so good in the incentive catalog had a point cost of twice or more what you could purchase the same TV at retail.

 It is no wonder that the growth of gift cards in the incentive industry has been exponential since their inception.  Today they represent by some research to be over 90% of all incentive expenditures.  And, when gift cards are available as an option along with merchandise in an incentive or loyalty program, the redemption of the points for gift cards vs the merchandise can easily exceed 95%.  If you don’t have gift cards in your recognition program and want to include them, expect a great deal of push back from your current supplier…. If included these suppliers will lose substantial profit.  

But isn’t the entire idea of recognizing an employee with an award to give them what they want with pricing that shows true value?