In a new study released by Incentive Research Foundation (IRF), "Award Program Value & Evidence," the research leaves little room to dispute the fact that a well-conceived, well-run incentive, recognition or reward program improves productivity and performance. In fact, the study noted that companies using rewards programs realized an average performance gain of 44–48% in productivity after just six months.
And the reward that’s making waves these days is experiential rewards.
No matter your industry, experiential reward opportunities are on the tip of everyone’s tongue. They offer an exciting alternative, helping to differentiate your organization from the competition and create strong impressions that last much longer than fleeting transactional rewards.
Experience Is the New Preferred Reward
Experiential rewards can drive better results for organizations and happier outcomes for reward earners, both in terms of engagement and wellbeing. The reason why is rooted in the psychological mechanisms underlying these benefits.
Mental Accounting
Experiential rewards fit naturally with mental accounting, or how you remember the impact of an award. Put more simply, experiences are more memorable than, say, how you paid your heating bill with a cash bonus. Since 97% of reward programs today rely on transactional rewards, giving experiences rather than discounts can truly distinguish your brand from the competition, according to Capgemini.
Experiences can evoke much stronger and longer-lasting emotions than transactional benefits.
“When you provide an unforgettable experience to the essential elements of your brand DNA, you ensure that the memory stays forever connected to your business.” —Madelyn Young, ThinkInk
Effort Justification
Experiential rewards are effective because they involve a level of personalization and aspiration that most transactional rewards lack. Remember that time you really—really—wanted something? Maybe it was the gaming system of your youth; maybe it was a pair of concert tickets for an act that will never pass through your home town again; maybe it was one last world trip before starting the next adventure in life of having kids.
Whatever it was, it’s likely that you would have done whatever it took to make it happen—paid any price. That’s how effort justification works: people place greater than market value on things they’ve worked to build or achieve. This is because as the frequency of thought increases, performance increases, as validated in the IRF report by Scott Jeffrey, Ph.D., an assistant professor in the Department of Management Sciences at the University of Waterloo in Southwestern Ontario, who noted that frequently a larger performance boost is realized for tangible incentives compared to a cash incentive of equal purchasing power.
If recipients know they can experience a once-in-a-lifetime event (one they couldn’t purchase for themselves) the amount of hard work they’re willing to put in for the reward is justified by the incredible opportunity offered. They’re working harder—and happier.
Social Signaling
Let’s face it: people like to do things (duh!)—but more than that, people like to be seen doing things (just try to stop someone from taking an Instagram of their fancy meal and you’ll see). Experiential rewards are by nature things that people seek to publicize. Even better? They might reference that your brand is what helped them get there to family, friends and social networks. This is because people are happy to show off a trip they earned or a hands-on activity they get to be a part of. On the other hand, showing off a bonus check is often seen as less socially acceptable. When people share their experiences with your brand online, they take satisfaction in showing off their earned success and your marketing reach grows. A win, win.
Related: Experiences can elevate satisfaction to loyalty within any industry, but they’re an especially crucial component for a channel loyalty strategy. And loyalty within the channel comes at a premium. It’s a battle of who can deliver better, faster, and now, top the experience that everyone else is offering. That’s why experiential rewards are the future of channel loyalty.
Creativity Sets Your Experiential Rewards Apart
You don’t need to fly your recipients around the world to make an impact (though you can bet they’d love it). Get creative and think about what experiences make sense for your brand, your recipients and your budget. Can you offer a pottery class or take them to a local sporting event? What about a unique, one-time experience for recipients reaching a significant milestone, such as a special night out to celebrate with a top-level executive? Or earning a subscription service like Chef’d or Stitch Fix that can just make a recipient’s life easier and feel like a luxury? There are countless ways that you can refresh your reward strategy with more unique offerings to add impact.
While glitz and glamour certainly make a splash, remember your primary goal of experiential rewards: making that emotional connection between your people and your brand.
So whether you go big or stay more modest, give your recipients an experience to write home—or post to Instagram—about, and reap the long-lasting rewards for your company.
To discover even more great experiential reward ideas download our ebook, Growing Your Brand Through Immersive Experiences.