Remember that time you found some crumpled up dollar bills in that old jacket in the back of the closet? Or how about the time you got a birthday card from Aunt Louise out of the blue with a couple of cold, hard Jacksons tucked inside?
Getting cash is great, and no one would complain about a few extra greenbacks in their wallet.
But what, exactly, did you buy with that extra money?
Chances are, you don’t remember.
A cup of coffee here. A sandwich there. A tank of gas and—poof! That’s the end of it.
When people get a monetary reward from your incentive program, it has a tendency to disappear in the same unremarkable way. This doesn't mean that there isn't a time and a place for monetary incentives, but according to the CPD Standards Office, you’ve got to consider whether the cash sums are high enough to justify a change in attitude; otherwise you could end up causing more stress in the workplace as employees push themselves to meet targets to achieve these. Always make sure the outcome will justify the means. To have a strong impact these days, you can't expect cash to cut it—tangible awards are key.
What Are Tangible Rewards?
OK, cash technically is a tangible reward, as you can pick it up and touch it. But, for a number of good reasons, your boss probably isn’t dropping a stack of bills on your desk.
In general terms, tangible rewards are things or experiences, where monetary rewards are compensation.
In a perfect world, an $800 TV is equivalent to eight hundred-dollar bills as a reward. So why don’t participants see it that way? And why make the switch at all?
Why Transition From Cash to Tangible Rewards?
Just like you don’t remember where you spent that birthday money, people don’t pay much attention to where they spent the cash earned in an incentive program.
Since that cash typically gets lumped in with a participant’s paycheck, it’s effectively identical to their regular compensation. Their reward can vanish quickly, between regular household goods, gas, food and other short-lived purchases.
Tangible rewards, however, are different. They are central to your people connecting their achievement with your brand. They're also lucrative drivers of employee motivation. Take a look at the video below in which Dan Ariely explore this idea of the value of tangible rewards versus non-monetary rewards and their impact on employee motivation.
When you earn a tangible reward in an incentive program, it’s not forgotten. It’s displayed prominently, put to use and bragged about. For your employees, it’s a trophy that serves as an ongoing reminder of their hard work and your dedication to them as an employer.
According to the Incentive Research Foundation's Industry Outlook for 2020 , top-performing organizations see clear value, and therefore put rewards in reach—for all employees—and prioritize higher value payouts.
Make the Transition From Cash to Non-Monetary Incentives
Let’s set the scene:
You’ve got a large team of sales pros and they push hard each day for one goal—money. Your current cash incentive program is ingrained in the culture of your company and people have grown to expect it as an extension of their salary.
Accordingly, that expectation has made them complacent. That cash doesn’t really incent them at all anymore. But cutting out the cash outright (the “cold turkey” approach) would invite mutiny.
It’s a catch-22. That is, unless you handle that change strategically.
Follow these seven steps to manage a successful transition from a monetary to non-monetary reward-based incentive program.
1. Allow Time to Roll Out Your New Incentive Program
Change is never easy, and change involving people’s income can be formidable. Above all else, allow your program ample time—years, not months—to make the switch.
The best way to do this: Introduce tangible incentives in small doses, such as to a select audience or with a tailored group of reward catalog products.
Not only does this make the transition feel more natural, it builds organic awareness of the program, rather than pulling the rug out from your team members who might have missed the memo (“Hey, why doesn’t my cash card work anymore?”).
2. Start With Effective Communications
If patience is the most important thing to remember when transitioning from cash to tangible incentives, then communications isn’t far behind.
Promote your award offering throughout your organization so employees have ongoing awareness of the opportunity—plus all the autonomous ways they can maximize their award potential throughout the year—with tactics that might include employee e-newsletters, on-site digital video boards and your intranet.
Both program stakeholders and participants must be completely bought into the program to be successful.
You won’t reach the results you want if you can’t tell the story of why these awards are important. And the only way to tell that story is by branding your incentive program and creating engaging communications that catch your audience’s attention and encourage participation.
3. Create Multiple Performance Tiers
In many old-school monetary incentive programs, all sales people are on the same tier: sell one product, get a defined amount of money. But that’s not always the best approach.
When you segment your audience into different tiers and incent them according to their historical performance, you get better results. When participants proven to sell at higher rates earn more, lower-tier performers work harder to get on that level.
Don’t take our word for it. Read for yourself how an incentive ignited momentum in one financier’s dealer channel to deliver a 254% ROI.
4. Test the Waters With a Short-Term Tangible Incentives Program
With the right mindset, engaging communications and participants divided into individual groups, the time is right to dip your toes into the water.
A great place to start is a short-term tangible rewards program on top of your existing base cash structure. Don’t implement it as a permanent component of your incentive program quite yet. Try it out for a month to help get your people accustomed to the idea of tangible awards.
Here’s how that might look:
5. Encourage Familiarity With the Rewards Catalog
If your participants are used to getting cash awards, catalog points can feel a bit like Monopoly money at first. But the problem there doesn’t lie with the points itself; rather, lack of familiarity with the award catalog is the culprit.
The reward catalog itself must be introduced to participants at a slower pace. You can’t just introduce a catalog, give people points and hope for the best.
One tried-and-true tactic to getting participants excited about a catalog? A “wish list” incentive.
Encourage your people to explore the catalog at their own pace, find an item they’re interested in and add it to their “wish list,” a central spot for tracking progress toward awards they want.
Then, select a few participants who completed those steps and give them the prize they wanted.
The experience is everything, so make your catalog easy to navigate the options and allow your people to sort by product category or by value, or a combination of both. Even better—make the catalog mobile-friendly so your people can browse at their convenience and redeem instantly.
Knowledgeable participants and happy winners are a great start to any program.
(Proof: We put this tactic to use for one client, and it helped them increase the number of users 229%.)
6. Align Catalog Toward Larger Incentive Rewards
Frequently, if incentive programs are using cash as an incentive, participants probably aren’t earning paltry amounts. People can earn thousands of dollars; the cash from your incentive program is truly supplementary to their paycheck.
Accordingly, starting with a catalog that features a limited number of low-cost items is a big mistake. $50 restaurant gift cards, coffee makers and fitness trackers are attractive, but aren’t an accurate analog for $1,000+ cash.
You want your people to feel like they’re getting a reward equivalent (or more) than what they were earning with their previous incentive program. It’s imperative you offer substantial awards alluring enough for top-dollar earners.
Creating a collection of awards spanning multiple categories and values creates widespread appeal. Electronics are huge—with everything from the latest smart home gadget to wearable technology—but are just the tip of the iceberg. Everything from designer travel accessories to home and garden goods to corporate-branded apparel options may make up your selection. And don’t discount experiences—experiential travel is a hot commodity among participants.
When big-ticket items such as appliances, upscale electronics, experiential rewards, travel packages and luxury home furnishings—things participants wished they could buy on a whim but wouldn’t otherwise buy for themselves—are available, people will be excited to show off their new reward.
7. Grow Your Incentive Program
Now you’ve got a segmented audience who is aligned with your catalog. They're growing more familiar with (and less suspicious of) your new incentive program. The time is right to grow.
Implement another, larger program and keep iterating toward your ultimate goal of shifting away from monetary incentives.
Need more information on building a successful, profitable incentive program that appeals to all the different ways your people are motivated? Check out our ebook, 50+ Ways to Motivate Your Employees for Measurable Results.