Merchandise, Travel and Cash – Oh My!

The trifecta of incentive program award outcomes:  Merchandise (stuff) purchased with points or awarded flat out; Travel awards –either individual or group; and Cash – the root of all evil (according to the Bible and Dan Pink).  

Most, if not every incentive program ever conducted includes one of these three options (many include all of them.)

Incentive companies will tell you cash is more expensive and less effective than merchandise and travel.  Travel suppliers will tell you that nothing is better than a group trip to celebrate success.  And some die-hard, old-school folks continue to scream “cash is king.”  I leave out debit cards just ‘cuz I think they neither provide the benefits of cash nor the emotion of merch/travel (but people seem to love’em.)

The truth, like so many courtroom dramas, lies somewhere in the middle.

All Awards Are Equal – Some Are Just More Equal Than Others

I posted a looooong time ago (July 2008) about the award trifecta with a bit of different spin.  The idea from that post (and I stand by it today) is that awards are “me” awards or “we” awards.  Cash being at the far end of the “me” spectrum and travel being at the far end of the “we” spectrum.  I just re-read that post and it’s a good one – check it out.

Since I focus on your outcomes not my awards, I have recommended everything from cash to group travel (sometimes I recommend no awards at all!)  I firmly believe that program design is the #1 thing you need to focus on if you want to hit your goals and reinforce appropriate behaviors.  But the awards you use are important as well.  

So - if you use awards in your program – what you use and how you communicate it – will have an effect on your audience.

Experience Trumps Stuff

This article from MSNBC on March 5, 2010 “To buy happiness, book a plane ticket.  Study: Life experiences make you cheerier than new stuff” takes on the award trifecta from a bit of a different angle – how happy you are with the choice.

The article highlights results published in the January issue of the Journal of Personality and Social Psychology showing that “experiences” make us happier in the long run and “things” create anxiety, jealously and decrease our happiness.

I don’t think the study is going out on a limb with this analysis – but it does reinforce the idea that in order to really engage the mind and the emotion of someone we need to move awards from the transactional part of the brain and move them to the social side.

From the study –

"The findings, based on eight separate studies, agree with previous research showing that experience-related buys lead to more happiness for the consumer. But the current work provides some insight into why.

Among the reasons:

• People are more likely to mull over their material purchases than they are experiential ones, second-guessing themselves about whether they really made the best choice. 
  
• We tend to think of experiences more on their own terms, rather than in comparison with other things. 
  
• It's easier for us to decide on an experiential purchase than a material one.
  
• We're more upset if we learn that someone else got a better deal, or that a better option exists, for a material purchase than for an experience-related one."

Now, I’ll be the first to say it – this study isn’t about people who received awards via an incentive program – they are talking about folks who “bought” their stuff so there might be differences in the outcome had they been “given” an award vs. paid for a trip or a toaster.  

However, I’m willing to bet that the results would be a bit similar in an audience of award recipients.  Just because I don’t hand over cash for an award – doesn’t mean there wasn’t a transaction.  I did do something to earn it and therefore there is a “transaction” in the back of my mind that I’ll be comparing the award to, so I’m pretty sure the study results would hold in incentive program participants.

Make It About An Experience

If you want to use cash (it does have a place) or merchandise  – you might be better off in the long run connecting that reward to an experience.  Some quick examples:

• When promoting the merchandise options in your program talk about the people will DO with the item – not the features of the item itself – “Imagine sitting back with your high-school buddies taking in the Super Bowl on your new 55” LED HD TV and know they are jealous of your hard work.”  That type of promotion will connect with the experience – and increase happiness.  Don’t talk about about 1080P, 240 HZ sub-field flux capacitor.  Not gonna help.
   
• Even your cash incentives can be targeted to the individual.  Highlight how the bonus can be used for their family vacation, new car, etc.  Don’t focus on the cash – focus on what the cash will allow them to DO.

Make your audience happier by focusing on how they will “experience” the award regardless of the reward type.  

Overall – you win – they win.

 

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Comments

[Brian W.]

I'm probably an outlier, but as soon as you start talking to me (the employee to be rewarded) about the experience money will buy me instead of a dollar amount, I'm going to feel that I've gone from participating in an honest business relationship to viewing an advertisement, and I'm going to feel like you're insulting my intelligence.

[Paul Hebert]

That's very valid. It would seem that you are in a "business relationship" with your employer. Nothing wrong with that but from a company standpoint that is equal to mercenary. Again, for some that is a great way to manage the relationship. I would submit that the real thing that keeps employees going isn't all the monetary stuff - but the relationship stuff.

The idea in this post however, is that people are irrational. We say one thing and do another. I think this is an example of that. When we have an experience - it is almost impossible to compare to anyone else's - no buyer's remorse not jealously of someone else's bigger TV at a lower price. It all about long-term in my mind.

And... it should be handled correctly - you're comment makes it sound like the ending of the Price Is Right - "and you will be wisked away on a charter..." That's not what is about.

If your manager and you were communicating regularly - he'd/she'd know your goals/objectives and could position it nicely and subtly.

Thanks for weighing in Brian.

[Brian W.]

Paul, more good points, thanks. Hopefully my hypothetical manager is tuned in enough to tailor his message differently when dealing with me vs. my experience-motivated peer.

I guess my real frustration is that people are irrational in the first place, but pretending it's not so would be unwise.

Thanks for bringing that research to light.

[ecartlidge]

Another downside to cash incentives is how employees use the cash. All too often employees use their cash incentives to pay their mortgage, tuition and monthly bills. Employees view cash incentives received as another form of pay and not a reward for how they performed their jobs. They do not have an experience (trip or vacation) or physical prize (that TV they always wanted but never would spend money on) that links their performance to a reward. Cash incentives once spent, are forgotton by employees whereas a prize or gift that they are given will always be a reminder of their accomplishments and give them a sense of pride.

[Paul Hebert]

I do agree that cash has little if any "trophy value." However, I do take exception with traditional incentive companies pushing this as the main reason for using non-cash points for merchandise.

If a company has a poor compensation system in place - no amount of points will drive appropriate behaviors. Too often we try to cover up a bad comp system with incentives. My main point in this post is that how we use awards - and how they are positioned can affect our ultimate satisfaction and happiness.

Cash can be effective if I use it to buy a second honeymoon. Not so much if it goes to fixing the roof. But that is more a compensation and financial management issue at the individual level than an attribute of the award itself.

Thanks for stopping by and being part of the conversation.