Put The Reward Back in The Reward

For years one of the primary tenets of point-based incentive programs is that award earners would be able to redeem their points for merchandise from a catalog featuring "brand-name" and "luxury" items.  The thinking is that if you give cash (or near-cash awards like debit cards) the earner would use that award value for things like gas for the car, fixing the roof or paying down their credit card balances (probably a good thing in today's economy.)  The award then gets lost in "other compensation" and a lot of the value of the award disappears.  Also, by creating a catalog with high-end items, the earner would then have a choice of things they may not buy for themselves normally - increasing the "reward" value.

I pretty much agree with the concept.  I still have a Bose clock radio I earned in 1999 - something I would never spend money on (who can justify $300+ on a clock radio?)  I also got a Coach purse for my wife.  Neither of which I would have spent "income" money on - not when I had to get a new mower, or fix the sink.  But since the "points" couldn't be used for those items I went with the "awards."

I still think about the program and the work I did to earn the points to redeem for those items.  Can you tell me what you spent a small cash bonus on 10 years ago?  Doubtful.  This is why these types of programs work - they separate the award from compensation and in effect - force you to reward yourself with things you wouldn't normally buy.

But as an industry, we're still getting it wrong...

Less Choice - More Rewarding

I posted the other day on studies done that show that when given a larger group of items from which to choose we are less satisfied with our choice and have a more difficult time making the choice.  Now I get information that not only are we less happy with our choices from large samples, we may not look to reward ourselves with the "luxury" item either - we end up going "practical."  Going practical means we choose something less fancy, less flashy - and given the premise of redeeming for something we wouldn't normally buy - less rewarding.

The Influence at Work consulting organization, headed by Dr. Robert Cialdini (I know you've seen that name on this blog before) publishes a newsletter and this months topic was called Choices, Choices, Choices...

To pull from their newsletter:

"Sela, Berger, and Liu argued that the more options a decision-maker has from which to choose, the harder the choice will be; and the harder the choice is, the more people make their decisions based on what choices are easiest to justify. In most cases, the easiest choice to justify is the one that favors function over form, frugality over luxury, and practicality over pleasure."

They conducted tests with cookies and fruit and printers and music players.  The results showed that when given a larger choice sample, people chose the more practical item.  The results weren't even close...

"The authors found that when there were an equal number of printers and music players, only 11% of the participants chose a printer when there were fewer choices (two printers and two music players), but a whopping 50% chose a printer when there were more choices (six printers and six music players). What’s more, the researchers found similar effects even when there wasn’t an equal number of printers and music players in the choice assortment."

What this tells me is that once again, offering a larger selection of items can affect the intended results of your incentive program.  You want people to earn points (or credits or whatever) to redeem for items they wouldn't normally purchase - yet we offer a huge selection of items that inhibits their desire to choose and then they end up choosing something more practical - less "lux" than you want them to.

Don't Go Ronco on Your Program

Help your program - help your participants - help them set a goal - help them choose something nice and something they won't buy for themselves.  Be an active player in their selection.  Don't get lazy and just drop a ton of stuff at their feet and assume you've done your job.  Programs need to be actively managed from design, through launch, reporting and redemption.

Programs are not like the Ronco Rotisserie - you can't just set it and forget it!

 

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Comments

[George Guajardo]

Interesting post. I had not thought about behavior reinforcement in longer than I care to admit. I see your points about these reward programs, but there is another way these "miss the boat."

Behavioral psychology tells us that the most effective rewards (and punishments for that matter) are offered immediately after the target behavior. Waiting around for the accumulation of reward points may actually reduce the desired impact of the reward.

I was a car salesman a lifetime ago. As a whole, we did a lot of things wrong, but reinforcement is something the car sales industry does very right. Most enlightening to this topic is the use of what we called "spiffs." These were special, on-the spot bonuses. If you sold a specific car on a specific day you got an immediate reward. As soon as the customer signed the paperwork, the manager pulled you aside and left one or two crisp 100 dollar bills in your hand. I can't recall anything more motivating than that.

[Paul Hebert]

I worked with the auto companies for about 15 years putting programs together and you're right... they do a lot right - and a lot wrong. The immediacy of the reward it very important. Unfortunately, the cash part created a very mercenary workforce - focused more on the cash than the customer. Just maybe that has something to do with the public's perception of car salespeople?