Corporate incentives: How to choose, launch, and measure rewards that work
By Abby Quillen●9 min. read●Sep 23, 2026
Successful company leaders understand the power of corporate rewards. Nearly all the top-performing companies (99%) surveyed in the IRF 2026 Trends Report reported strong executive support for their reward and recognition programs.
That support isn’t surprising. When corporate incentives are designed well, they can help drive performance, change behavior, encourage participation, or create a strong culture. But incentives only work when you match them to your audience and goals.
In this guide, you’ll learn how to choose the right corporate incentives, set up your program, handle taxes and logistics, and measure results, so you can create an effective program that actually drives behavior.
Key takeaways
Incentives work across audiences. Well-designed rewards can lift performance and retention for employees, sales teams, customers, partners, and survey respondents.
Lead with the goal. Define the business result, then tie rewards to a specific, measurable behavior recipients can control.
Match rewards to your recipients. Monetary options lead in our own data (PayPal, virtual prepaid Visa cards, and bank transfers), but preferences vary by age and location, so offering choice often works best.
Measure and adjust. Track participation, redemption, performance KPIs, ROI, and recipient feedback to improve the program over time.
What are corporate incentives?
Corporate incentives are structured rewards that businesses offer to various types of people to achieve specific goals. They can be monetary, such as cash or gift cards, or non-monetary, such as experiences or discounts. These rewards are often tied to performance, tenure, or specific actions such as customer referrals.
Who corporate incentives are for
Corporate incentives can help your business achieve your goals with the following groups:
Individual employees: One study shows incentives can improve performance even among individuals with strong intrinsic motivation who are doing complex cognitive work. Rewards can also motivate employees to stay with a company. In fact, employees who received high-quality recognition were 45% less likely to have left their jobs two years later, according to a Gallup study.
Teams: In one field experiment, offering team incentives lifted revenue by 12%, and a portion of the positive effect persisted for two weeks after the incentives ended.
Sales professionals: Monetary incentives significantly enhanced short-term motivation and sales outcomes, especially among junior and mid-level sales employees, in a study.
Customers: Nearly three-quarters (72%) of consumers in a Deloitte survey said customer loyalty programs make them more likely to spend with their preferred brand, and 56% said they spend more because of a loyalty program.
Business partners: Manufacturers and distributors often work together as business partners. Research indicates manufacturers that reward their distributors boost the distributors’ commitment to the company.
Survey recipients: A systematic review of studies showed that monetary incentives can increase survey response rates.
6 types of corporate incentives
For incentives to be successful, they must be meaningful to the recipients you’re sending them to. Consider a mix of the following types of incentives, all of which can be part of a successful corporate incentive program. Many of these were Tremendous’ recipients' most preferred incentive options in a recent review of redemption data by state.
1. Digital wallet payments
What are they? These payouts transfer funds into the recipient’s digital wallet app such as PayPal, Venmo, or Cash App.
What the data says: PayPal was the top monetary incentive option for the U.S. at 33.75% of total redemptions made.
2. Prepaid cards
What are they? Prepaid cards, such as prepaid Visa cards, allow recipients to shop almost anywhere the payment network is accepted.
What the data says: Virtual Prepaid Visa cards were the top gift card option in our data, accounting for 31.12% of redeemed dollars.
3. Gift cards
What are they? Brand-specific retailer cards allow recipients to shop at only one retailer (or sometimes a handful of related retailers). They work best when you can match them to recipients’ individual preferences.
What the data says: The top brand-specific gift card in our data was Amazon.com, accounting for 13.87% of dollars redeemed.
4. Cash
What is it? Direct bank transfers allow companies to add cash directly to a recipient’s bank account.
What the data says: About 14.5% of redeemed dollars went toward a bank transfer.
5. Merchandise
What is it? Whether it's gift bags, swag, wearables, or other goods, merchandise can be a great way to reward people, as long as you match it with your audience so it feels meaningful.
What the data says: Merchandise accounts for 25% of rewards sent in North America in 2025, according to the Incentive Research Foundation. Top merchandise rewards include clothing (61%), food gifts (55%), and electronics (53%).
6. Experiences
What are they? These rewards can include travel vouchers, sports or concert tickets, spa retreats, cooking classes, fitness memberships, or other experiences.
What the data says: Research suggests that spending on experiences enhances social connection more than spending on possessions. By the same logic, experiential rewards may have a lasting impact on recipients. Three in 10 people in one study said they prefer to receive experiences as gifts rather than physical objects.
How to choose the right reward for your audience
The key to sending effective incentives is to understand your recipients’ needs and preferences, which can vary by age and location. In a 2026 Tremendous survey, we found that recipients across age groups prefer monetary rewards, with digital wallets being a clear leader for most age groups. However, some differences emerged between age groups. Recipients who were 25 to 34 preferred bank transfers, and notably, no one in that age group preferred gift cards.
If you’re sending global rewards, not all options are available in every region. It’s important to understand each market where you plan to send rewards. An incentive platform that specializes in tailoring payout choices, languages, and currencies to global recipients can make the process easier.
Even within one country, reward preferences vary. For example, according to our state data cited above, virtual prepaid Visa cards accounted for the majority of dollars redeemed in 40 states, but not in all. Michigan redeemed more on bank transfers, and PayPal was the most popular option (by dollars redeemed) in Wyoming, Nebraska, and six other states.
How to choose a prepaid card for corporate incentives
With the popularity of prepaid cards, it makes sense to include them in your reward mix. Consider these factors when selecting one.
Geographic availability: A card that works well for U.S. recipients may not be available internationally.
Flexibility: General-purpose prepaid cards allow recipients to shop in a variety of retail locations, whereas brand-specific cards limit recipients to one retailer.
Fees and terms: Make sure you understand the fee structure and know whether a card will charge recipients monthly, transaction, ATM, inactivity, or other fees. Also, check whether it has an expiration date or any redemption rules.
How to set up a corporate incentive program, step by step
Follow this structured approach to create an effective program:
1. Define the goal, and identify the behavior that will drive it
First, determine the measurable business result you’re trying to achieve. Then, identify which specific, measurable behavior will contribute to that result. Make sure the behavior is something your reward recipients can actually control.
An example goal for a sales team may be: “Increase sales revenue by 15% in the next quarter.” The measurable behavior may be: “Increase the number of qualified sales opportunities created by each rep by 20%.”
2. Set eligibility and criteria
Decide who will be eligible to receive the reward. Your recipients could be a sales team of 20 people, a 10,000-person employee pool, or all of your customers.
Once you know your audience, determine the criteria, timeline, and structure for receiving rewards. Be specific. In the sales rep example above, the program may run through Q3 and Q4, during which sales reps need to generate at least 20 qualified opportunities that aren’t already in the pipeline per month to qualify.
3. Pick rewards and budget
Now it’s time to get into the details. How much will you invest in your program, and which rewards will work best for your specific audience? To determine your budget, consider the outcome you hope to achieve. If a 15% increase in sales revenue is likely to bring in a certain amount of additional revenue then determine how much of that revenue you’re willing to spend on the incentive program.
To choose rewards, consider what motivates your audience. Sales teams may be more motivated by immediate, tangible rewards, whereas customers may respond well to discounts or freebies. Make sure the rewards feel special. For employees, a $25 cash bonus may be useful, but it may not feel as personable or memorable as a thoughtful experiential gift or even a gift card to a retailer they love. The key is to consider the recipients’ preferences.
4. Choose a delivery method
If recipients work within the same building, it may make sense to distribute physical cards or merchandise. If recipients are distributed across different time zones or countries, virtual cards or monetary options may be better rewards. Depending on your program goals, giving your recipients a choice of rewards may be the best option.
5. Communicate the program
Plan an announcement for the launch of your program, create a clear communication strategy, and train your managers with the information and tools they need to execute the program well. Set up a way for recipients to share their experience and concerns, so communication can go both ways.
Taxes, compliance, and logistics
Taxes and compliance may not be as fun as choosing rewards, but they’re a critical part of designing an effective incentive program. Getting these details right starts with understanding who you’re rewarding and what you need to track.
Manage program logistics
For a corporate incentive program, it’s important to know whether your recipients are employees, contractors, partners, or customers, as tax and reporting requirements vary. Once you’ve identified your recipients, set up systems to keep tax and compliance information organized. You’ll need systems to:
Document program rules and eligibility
Collect the information required to report applicable payments to the IRS
Track rewards for tax reporting purposes
Handle international payments, currencies, and tax reporting requirements
Plan for tax and compliance
With those systems in place, you can turn to the specific tax and compliance rules that apply to your program. It’s important to understand the following:
Cash and cash-equivalent rules
Generally speaking, the IRS considers cash-equivalent gifts given to W-2 employees (including gift cards) as taxable income. Even small cash-equivalent rewards are likely taxable and should be included in employee wages and reported on Form W-2, Wage and Tax Statement.
Low-value, non-cash gifts may qualify as de minimis fringe benefits, which are not taxable. Plus, other exceptions may apply to your situation. Refer to the IRS’s Employer’s Tax Guide to Fringe Benefits (Publication 15-B) for details.
W-2 vs. 1099 obligations
Employees and independent contractors are subject to different tax rules and reporting requirements. If you’re rewarding a person that isn’t your employee, their reward is not subject to employee payroll taxes. But you may have reporting obligations, and the recipient may owe taxes on the payment. Depending on the nature of the reward, you may need to collect Form W-9 and report payments on Form 1099-MISC or Form 1099-NEC. Consult IRS documentation or your tax professional for specific guidance.
International considerations
If your program rewards participants in other countries, make sure you also understand the tax and reporting requirements in each location.
Disclaimer: Tremendous can't provide tax or legal advice. While we've covered the basics here, you should run your corporate incentive plans past your company's tax advisors to be sure you’re running your program in a way that’s fully compliant and optimized for your situation.
Examples of successful corporate incentives
Ready to start building your program? These real-world examples show how companies can use incentives to achieve different goals, from attracting new customers to increasing event registrations and recognizing performance.
Rewarding new customers: Spot Pet Insurance offers first-time customers in certain states a $25 Visa gift card after two months of holding an active account in good standing. The program serves as a key differentiator for them in the crowded pet insurance market and gives customers an additional reason to choose and stay with the company.
Driving event registrations and survey responses: FUSION Performance Group, a full-service events organization, sends incentives for event registrations and survey participation, which has helped them more than double their sales. They allow recipients to select from a variety of rewards, or they get creative and develop memorable custom incentives for certain events. For a western-themed event, they gave recipients a gift card to have a custom hat made.
Recognizing employee performance: Tri Source International, a global outsourcing company, sends employees spot bonuses throughout the year. These impromptu bonuses allow managers to quickly recognize employees for good performance, rather than waiting for an annual bonus. Tri Source often embraces the power of choice by letting their employees select their own award.
How to measure whether your program is working
Once you’ve set up your program with a clear goal in mind, it’s time to track its performance to make sure it’s working. By regularly reviewing your program, you can make improvements and design more successful incentive campaigns in the future. Consider monitoring the following metrics:
Participation and redemption: Track how many people take part in the program and redeem their rewards.
Performance metrics: Track relevant KPIs to measure whether the program is achieving its goals. Depending on your program, you may want to track sales performance, employee retention, customer loyalty, or other metrics.
Return on investment: Compare the financial outcomes you’ve achieved so far with the costs of the program.
Feedback: Take regular surveys of incentive recipients to gauge their experience with the program.
Start building your corporate incentive program
A successful corporate incentive program starts with a clear business goal and a specific behavior you want to encourage. By choosing the right rewards and establishing well-defined criteria and processes, you’ll design corporate incentives that motivate your employees, customers, partners, or survey participants and help you achieve measurable results.
