Incentive Programs 101: How to Boost Employee & Customer Engagement

What are Employee Incentive Programs?

Want to thank your team for a job well done and encourage them to continue reaching for the stars? Employee incentive programs are payment strategies designed to motivate and reward employees and sales talent.

Businesses may use different incentive programs depending on their goals and team member preferences. Popular options include trips, physical gifts, public recognition and monetary incentives such as cash rewards.

Incentives may be awarded for employees' hard work and contributions, or for achieving a predefined goal such as reaching a sales target. Generally, the purpose of these programs is to boost employee morale, productivity, and job satisfaction. When the entire team feels rewarded, your business is likely to see increased employee engagement and retention.

Benefits of Employee Incentive Programs

Do employee incentive programs work? A Nectar study found that around 78% of employees would be more productive on the job if recognized more frequently. Additionally, the U.S. Bureau of Labor Statistics found that competitive, performance-based payments motivated employees to work longer to achieve their goals.

Employee incentive plans have long been a trusted way to achieve the following objectives:

Improve Productivity and Employee Morale

Effective employee incentive programs can help increase team morale by recognizing and rewarding employees’ work achievements. In turn, this encourages employees to become more productive.

Additionally, earning monetary bonuses and rewards can awaken the spirit of friendly competition. Sales incentives help drive teams to chase their goals and may make them willing to work longer and harder to reach revenue targets.

Help Retain Top Talent and Loyal Employees

Incentive programs can increase employee retention and decrease turnover rates by promoting employee satisfaction. Findings from Gallup show that only about one-third of workers feel engaged at their jobs. Feeling unappreciated and disengaged can lead to employees looking elsewhere for opportunities.

But there's good news: workers who received high-quality recognition on the job were 45% less likely to have quit their jobs over the past two years. By recognizing and rewarding employees’ contributions, businesses can show appreciation, boost employee engagement and enhance retention.

Improve Employee Well-Being

Recognition doesn't just help employees feel valued. Certain kinds of employee incentives can directly benefit your team members in their daily lives. Non-monetary incentives that promote well-being may range from professional development opportunities and employee engagement activities to more flexible working arrangements.

Employee Incentive Program Examples

Consider these incentive program examples to help your organization motivate everyone from hourly workers to sales teams:

Social Recognition Programs

Not all employee recognition programs involve monetary incentives. Social recognition programs can be a powerful tool for increased job satisfaction, starting with fulfilling the human need for acknowledgment and validation.

Public recognition reinforces positive behavior and helps employees feel valued, fostering a positive work environment and a culture of appreciation. And when combined with financial rewards, social recognition could be an even more powerful way to improve employee performance.

Professional Development Programs

Training and development opportunities can be a tremendous motivator. That's why investing in employees' careers deserves a place alongside other incentive programs. Examples include funding an executive training program for top performers or sending team leaders on an annual retreat.

When employees earn the chance to grow their skills, they not only feel more loyal to their employer. They're also better equipped to achieve individual and company goals. According to a Gallup study, businesses that invest in their workers' professional growth report 11% greater profitability than those that do not.

Sales Incentives and Contests

Sales incentives are often part of the compensation package for sales reps, comprising a portion or even most of their annual salary. Offering monetary perks, such as bonuses and commissions, is a tried-and-true way to drive sales and revenue growth. The Incentive Research Foundation found that 90% of top-performing companies use incentive programs to reward sales professionals.

But, not every sales incentive program is as effective as it could be. Providing more immediate and convenient payment experiences can keep your sales reps motivated and satisfied with their financial incentives. Popular payment choices, such as reloadable cards or the ability to add funds to a payment app or mobile wallet for convenient spend can help make the incentive experience even more rewarding.

Offering additional sales contests and incentives can also motivate sales teams to achieve specific goals and targets. With a modern payment solution, businesses can be more flexible in their incentive offerings—and more ready to reward top sales talent with a seamless rewards experience.

Personalized Rewards and Incentives

The most effective employee incentive programs are personal. Offering choices, such as extra time off to use as desired or gift cards that allow employees to purchase whatever they like, can be a great way to increase motivation and job satisfaction.

Personalization also extends to monetary compensation. While most employees appreciate financial incentives, some may prefer more traditional options such as a bank transfer or physical card, while others may want more modern payment choices that fit with their digital-first lives. Providing choice across employee incentive programs can help recipients get more out of their rewards.

Team Rewards

Individual employee incentives are great. But when teams work together to achieve a goal, consider rewarding them together, too.

Think of incentive ideas that could benefit the whole team, from simple off-site team-building activities to exciting trips or retreats. Such rewards could help employees or sales teams feel a stronger sense of camaraderie, make memories together and learn more about each other so they can collaborate even more effectively.

What are Customer Incentive Programs?

Customer incentive programs are rewards and payment strategies that businesses use to encourage desired behaviors. Incentives may include rebates, discounts in certain spend categories, loyalty programs and other types of rewards.

The goal behind such incentives is typically to improve customer retention and engagement, drive more sales and increase positive actions such as referrals. When customers feel valued and rewarded, they may be more likely to choose your business over a competitor.

Benefits of Customer Incentive Programs

Like employees, consumers often respond positively to receiving rewards and incentives—leading to significant business advantages. While customer incentive programs may look a bit different than incentives for employees and sales teams, they have a similar purpose: to boost engagement and loyalty. Here's how consumer incentive programs could benefit your business:

Acquire New Customers

Incentive programs could help your business attract new customers by offering a more compelling value proposition. Beyond drawing in potential customers, incentive programs can drive referrals. According to research from Onbe, 94% of consumers would recommend a brand to a friend following a great incentive experience.

Increase Sales Revenue

Not only do incentives drive primary purchases, but they may increase consumers' overall spend and keep them coming back. The majority of respondents (93%) in Onbe's study said they would be more willing to make an additional purchase with a company after receiving a reward-based incentive.

Improve Customer Satisfaction

Existing customers may feel more valued and appreciated after receiving an incentive. But not all promotions are equally impactful. In Onbe's study, consumers strongly preferred rewards-based incentives such as rebates to discount-based incentives like coupons.

Customer Incentive Program Examples

Several different kinds of consumer incentive programs can help drive customer acquisition and loyalty, influence customer behavior and boost engagement. Examples include

Customer loyalty programs

These programs reward customers for repeat business, such as by awarding points that can be put toward further purchases, providing special discounts or offering perks such as free shipping.

Referral programs

Referral programs reward customers for referring friends to your business. For example, your customer might receive a monetary reward or discount when a friend makes a purchase.

Rebate programs

Rebates are payouts that customers receive after making a purchase. They serve as a purchase incentive, but unlike an upfront discount, they offer opportunities for driving further engagement and spend-back.

Consumer incentive programs

Incentives are payouts intended to inspire action, whether it's making a purchase, taking a test drive, engaging in energy-efficient behaviors or joining wellness programs.  

Best Practices for Implementing an Incentive Program

Create an Incentive Plan

Incentive programs require a clear and well-defined understanding of the organization’s goals for a successful program. Whether it's motivating your sales reps to reach their targets, improving employee retention or driving customer loyalty, it's key to have measurable objectives before implementing the program.

Partner with an Incentive Program Provider

Implementing and administering incentive programs can be a complex process. Businesses are responsible for everything from fraud risk to compliance considerations when distributing cash rewards. So, it often pays off to outsource your programs to the experts.

An incentive provider such as Onbe may offer turnkey or customizable solutions to get you to market quickly, without the steep investment of time and resources required to develop an in-house solution. Additionally, working with a third party may unlock capabilities such as modern payout options, built-in fraud prevention tools and more seamless experiences for sales teams, employees or consumers.

Offer Incentive Choice

According to Onbe's incentive research, over one-third of consumers did not get to choose how they received their most recent incentive. However, in our Payouts Landscape Report, we found that choice is a top priority for most Americans when receiving a payout from a brand.

That's why the most effective employee incentive programs cater to different employees’ needs and preferences. Consider using a mix of monetary and non-monetary rewards, such as social recognition, bonuses, and benefits.

The same goes for customer incentives. A modern incentive solution can accommodate various preferences to provide consumers with the payment methods and spending options they're looking for, from digital to traditional choices.

Creating a Winning Incentive Strategy

Employee incentive programs are a powerful tool for boosting employee motivation and well-being, while customer incentive programs can help drive revenue, loyalty and referrals. By understanding the benefits and types of incentive programs, organizations will be better equipped to create effective programs for their team members and get more value out of their investment in incentives.

Looking for incentive ideas and turnkey payment solutions to make your program a success? Talk to the experts at Onbe. We have over 25 years of experience developing payment experiences that get results. Learn more about our incentive solutions.