One of the things that I find most interesting – but also challenging –about the incentive and recognition industry is the wide variety of available economic “levers” that can be deployed for effective program design. I commented on one aspect of this in a previous post entitled Balancing Meaningful Budgets and Measurable Expectations.
A recent experience highlighted another aspect of the pros and cons of having a variety of economic levers, this time in the context of pricing parameters, budget constraints and program objectives. When these particular factors are carefully and thoughtfully aligned, the result is a program design that yields benefits for sponsor, program participant and solution provider (like QIC) alike. It is a beautiful thing when all the moving parts are in sync.
But when one or more of these levers is misaligned, the program typically does not move in sync. And that can lead to dissatisfaction and disillusionment for at least one (and typically more) of the vested parties.
Let’s consider an example of program design that may help provide some clarity. Assume that a program sponsoring client is a quick-serve restaurant chain, and that it desires to recognize its associates for displaying behaviors that contribute to repeat customer visits. In designing this program, the sponsor and the solution provider should discuss approximately how much a repeat customer is worth and how many repeat visits would be expected as a result of desired associate behaviors.
This type of assessment can be difficult, but it is essential for at least two reasons.
- It helps establish a budgeted investment per associate for the recognition program that is sustainable and affordable.
- It helps set the benchmark for assessing success (or lack thereof) for the program.
While the need to specify these economic levers may seem obvious, I’m sure that our readers won’t be surprised to find that it isn’t done as rigorously as it should be. As much as I hesitate to admit it, we’ve even encountered situations when a sponsoring client has told us that “the program didn’t work” – even though we collectively never defined what constituted success.
Once again visiting the recognition program example outlined above, let’s assume that the client and the solution provider did do a good job aligning investment and objectives. So far, so good. However, that essential first step is not enough. It’s also important to select the billing model that is right for the program design and participant demographics.
In this particular case, the client’s industry probably has a fairly high turnover rate. This means that there is a good possibility that a significant number of associates will leave the sponsoring client with unredeemed points still in their participant accounts. If the client is at all concerned about investing in program points that will never be redeemed, a bill-on-issuance (BOI) model – one in which the program points are paid for upon deposit in the participant account – is probably not the best billing model. A bill-on-redemption model (BOR) – in which the points are paid for when redeemed – may be more palatable to the client.
That being said, a significant balance of unredeemed points is not necessarily a bad thing – as long as the client understands that that is not an indication of the program’s success or failure. In fact, many clients prefer to make the program investment when the desired behaviors are exhibited. In such an instance, the BOI model may be exactly correct.
In summary, it’s important to know that solution providers like QIC can help you design a recognition or incentive program with critically-evaluated and fully-considered economic levers. But you should also be aware that doing so requires asking – and answering – a number of challenging questions.
