Issue:
May 2005
This obviously is a debate that will never go away, however from time to time it
is worth revisiting. Let's start this discussion by defining cash rewards. First
there is money (dollars) awarded for achieving stated goals. The second is debit
card awards (despite one industry leader's claim to the contrary). The third is
Gift Certificates; although many gift card providers have discontinued their
policy of allowing participants to receive cash when the entire amount is not
spent, so they are not exactly a pure cash reward.
There are so many reasons why cash is an inferior reward to non-cash options.
Here is a condensed version of some of the most compelling:
-
Merchandise is memorable. Cash is
forgettable.
-
Cash costs more— it is fully taxable and
no breakage.
-
Winners don’t brag about cash, they do
about merchandise and travel awards.
-
In time, cash is perceived as
compensation. Participants grow to expect it and to change
or discontinue a cash program becomes problematic.
-
It takes 3-5 times the value in cash to
equal the motivational value of merchandise.
-
Merchandise and travel are easily
promoted. Cash is not.
-
Merchandise involves the family. Cash
does not.
-
Non-cash awards promote personal award
goal setting. Cash awards promote higher income
expectations.
-
Merchandise awards offer greater
motivational impact for the investment dollar.
-
Merchandise has been a proven motivator
for nearly 100 years.
A debit card program is nothing less than
an additional form of compensation indistinguishable from an
awards program. It has been documented that incentive program
participants use their debit card earnings as they would cash,
spending their winnings on gas, groceries etc. As a result, the
trophy or award value is completely negated. This is why study
after study shows that cash awards are far less memorable than
tangible awards like merchandise and individual travel. Further
complicating the situation for companies using cash, is that
although cash may be forgotten as an incentive reward, it is
remembered when the cash rewards go away and suddenly
participants perceive that they’ve had their pay or salary
reduced.
Memorability and the blurring of the lines are two of the most significant
drawbacks to using debit cards as an incentive reward. Here are some other
significant drawbacks:
·
Family participation is often the most powerful
motivating factor driving incentive program participants to
success. Historically, debit card rewards are less likely to be
shared with family members. In most cases there is no catalog
and only one card issued to the participant. Plus more often
than not, award-earning statements are sent to work rather than
home.
·
Traditionally, incentive award winners share their
success by freely and easily talking about the awards they have
won. Debit Card winnings are rarely discussed in a public
setting because how the winnings were spent is either forgotten,
or, if earnings have not been spent, they hardly hold up as a
point of pride as well as a home theater or big screen TV does.
·
Debit Cards often look exactly like a standard
Visa or MasterCard. However debit cards either have a preloaded
amount or are at best re-loadable. Because the two are so easily
confused, it has proven very easy for participants to be out
using a debit card in a store or at a nice restaurant and have
it rejected because they exceed the amount loaded onto the card.
They can add an additional form of payment but the whole
experience leaves a negative impression with the participant who
was trying to redeem his/her earned reward.
·
In many cases Debit Cards are issued with blocks
preventing their use at ATMs, however participants have found
ways around this, by directly cashing in their cards using a
bank teller.
·
Debit Cards present an
opportunity for fraud and misuse, participants can often charge
more than the amount deposited at vendors that can’t or fail to
get on-line authorization. These off-line transactions many
times turn the program sponsor into a credit collector, which
rarely results in a positive outcome and continued goodwill.
You must pay 100% of the tax on dollars awarded via a debit
card vs. only 70-80% of the merchandise award value (as low as 60-80% when you
exclude freight and state sales taxes).
·
Debit card programs have substantial setup and maintenance costs.
It has been generally accepted that average earnings should exceed $250 per
participant per year in order to justify the startup and maintenance costs.
Below are important statistics that clearly show how cash fails to stack up as
the best motivator. These statistics are taken from the 2003 Incentive
Federation Research Study.
-
Nearly
3 of 5 respondents (57%)
agree that a cash payment is perceived to be part of an
employee’s total remuneration package.
-
Over half of the respondents perceive
that travel is remembered longest (57% agree),
merchandise is remembered next longest (52% agree), and cash
is remembered for the shortest time (58% agree).
-
Three of 5 respondents (60%) agree that
merchandise or travel is preferred because these are
something that people do not get for themselves.
-
Slightly fewer respondents (48%) agree that that they can build a more exciting,
memorable program around merchandise than around cash.
-
Slightly more than half of the respondents
(51%) agree that employees often look at bonus payments as something they are
due.
-
Nearly
7 of 10 participants (68%)
agree that bonus payments can have a negative impact if they
are not paid or are not large enough.
-
You can’t beat the convenience of a
merchandise award program where you can shop for thousands
of awards with proven motivational appeal from the comfort
of home 24/7.
-
Merchandise catalogs provide hundreds of proven motivational awards that satisfy
participant wants, not needs. Participants don’t call them wish books for
nothing!
Unlike ending a Debit Card program,
ending a merchandise awards program provides continued
participant goodwill and improved behaviors long after the
program earnings period deadline. Award redemptions continue for
months after the program end, and the rewards for the home and
family act as lasting reminders of a job well done for many
years to come.
The following
are valuable statistical facts about the usages of the Internet
for running, communicating and supporting incentive program.
This data is based on a 2003 Incentive Federation Study.
-
Fewer than two in ten respondents (15%) have ever run an incentive
program online.
-
Among respondents who have ever run
an incentive program online, nearly half of the online
programs (48%) were sales incentive programs.
-
Slightly less than
one-third of the online
programs (29%) were employee recognition programs; about
one-fourth of the online programs (24%) were customer
acquisition/loyalty programs.
-
Among non-users of online incentive programs, there are
two main reasons for not
using an online incentive program:
- About 4 out of 10 (42%) have not run an online
incentive program because they are not sure how an
online incentive program would work.
- About 3 out of 10 (29%) have not run an online
incentive program because most participants have limited
access to the Internet.
The important information in these numbers
is that there is much room for growth in the use of Internet
incentives. Internet-based incentives can save your clients
money in printing and catalog issuance, present more timely and
frequent communications and provide a more cost effective
administrative system.
We’re heading back to Atlantic City for the Promotions East
show, Tuesday, June 7th through Wednesday June 8th. If you are
planning on attending the show, be sure to stop by Booth 2250.
Sue Niebuhr, Director of Sales and Marketing and Jim Kapcar,
Regional Manager will be at the PFI booth throughout the show.
Take advantage of the years of experience these two industry
professionals possess and plan to visit the booth with
questions, ideas or requests for support in your efforts to
build your incentive business.
PFI has developed a comprehensive incentive award support and
fulfillment system designed to save you and your clients time
and money. With the largest collection of stock catalogs in the
industry, a team of merchandise buyers to offer custom
solutions, a customer service and support department second to
none, you owe it to yourself and your clients to check out how a
partnership with PFI is the perfect solution to delivering
incentive programs to your marketplace. Whether your challenges
are sales and marketing oriented or employee performance issues,
we are ready to partner with you to develop a solution for an
efficient and effective incentive awards program.
Below is a list of just some of our award products and
incentive support services we will be prepared to discuss with
you at the show:
- Award Products
- Deluxe Catalog
- Deluxe-Lite Catalog
- Plateau Award Collection
- Mini-Max Brochure
- Sr. Mini Module
- Jr. Mini Module
- Canadian Award Catalog
- European Award Catalog
- Mexican Award Catalog
- Service Award Gift Collection (Reflections)
- Online Catalogs
- Rock N’ Run The Warehouse
- VacationAmerica
- VacationPoints
- Turnkey Award Solutions
- Safety Excellence (Safety Award Incentives)
- Reflections (Service Award System)
- You Make The Difference (Employee Recognition)
Administration Solutions
- Bank of Awards (offline and Online personal point bank
accounts)
- Performance Tracking Systems
- Extensive Reporting Capabilities
- Instant Access Award System
- Instant Award Check System
Web Solutions
- Awardlink- Online incentive management and reward system
- Online Catalog of Awards
- Participant Rewards Wish List
- Mass E-mail
- Online Surveys and Quizzes
- Online Performance Tracking
If your clients need it PFI has got it.
To learn more about anything on this
comprehensive list, get with Sue Niebuhr or Jim Kapcar at the
Promotions East Show or contact us a
sales@spihq.com.
There are two important and valuable
incentive industry resources you should know about; The
Incentive Federation and Incentivecentral.org. Legal advice,
important industry information, case studies, case histories etc
are available either on line or by a phone call. The following
is a brief description of each organization.
About The Incentive Federation
The Incentive Federation was formed to
protect the rights of organizations to motivate customers and
employees through the intelligent and ethical use of incentive
programs. Comprised of the leading associations, trade shows,
and some of the top suppliers in the incentive field, the
Federation monitors Federal regulations that could affect the
proper use of incentive programs and lobbies against proposals
that could hinder the ability of businesses to properly use
incentive programs. As part of its industry services, the
Federation also conducts the only regular research on use of
incentives by U.S. organizations, and manages the Incentive
Performance Center, the industry-wide effort to promote
professional use of incentives.
For information, call 908-233-4009 or
e-mail:
IncentiveFed@aol.com.
Need Help With Incentives? Check Out
www.incentivecentral.org
Incentivecentral.org is a portal to the incentive business created with funding
from The Motivation Show and the industry's leading trade associations.
Incentivecentral.org was created to provide business management with objective
and thorough information on all aspects of incentive programs and to list all
available resources without favoring one commercial entity over another. At this
site you will find case studies, industry articles, benchmarking tools,
incentive rationale and more. It’s a tremendous resource and a tremendous tool
to help you sell incentive programs.
PFI Summer Holidays:
Our offices will be closed in observance of
the following Holidays:
• Monday May 30th Memorial Day
• Monday July 4th Independence day
• Monday, September 5th Labor Day
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