Incentive programs — 21 ways to incentivize employees, customers and participants
If you’re not using incentive programs, you’re leaving revenue and business growth on the table. Here's why.
- What is an incentive program?
- Why are incentives powerful motivators?
- To which areas of your business can you implement an incentive plan?
- 7 incentive programs for employees, partners and vendors
- 8 marketing incentives for attracting and retaining customers
- 6 incentive programs for attracting and engaging research participants
Businesses that intend to compete in the modern world must use every tool at their disposal. Incentive programs have proven effective at optimizing everything from employee engagement and productivity to generating high-value sales leads to increasing survey results.
In this article, you'll learn:
- What an incentive program is
- Why incentive programs are so effective
- 21 ways to incentivize every aspect of your business
Let’s dig in.
What is an incentive program?
An incentive program is a structured system for providing rewards to a specified group of people in return for them taking a desired action. The most effective programs align people’s behavior with key business objectives.
Incentive schemes often consist of a few key elements:
- A goal or series of goals
- An incentive — a reward for completing the goal(s)
- Recipients — a person or group of people tasked with achieving the goal(s)
- Rules stipulating how the recipients can earn the incentive by completing the goal(s)
- A timeframe within which to complete the goal(s)
- A budget for incentives
Incentives can come in two forms:
- Monetary incentives — including cash, gift cards or prepaid cards (like Visa® prepaid cards)
- Non-monetary incentives — including swag, praise and appreciation, gifts, travel, merchandise, experiences, promotions, professional development
Why are incentives powerful motivators?
People are more likely to behave in a desired way if they’re rewarded with an incentive, according to a behavioral science theory called Incentive Theory in Motivation.
The reward could be:
- Positive — a gift, praise or money
- Negative — scold or discipline
Over time, people are nudged toward making decisions that benefit them (via the positive reward) and away from actions resulting in a negative outcome. If you think practically in your life, you’ll see examples of incentives everywhere. They’re often so subtle and commonplace that you might overlook the fact that they’re incentives. For instance:
- Parents promising their child dessert if she finishes her veggies
- A boss discussing a promotion contingent on end-of-year results
- A delinquent teen being threatened with school suspension if he doesn’t behave
- A car rental company offering a 10% discount if you leave a positive review
For the purposes of this article, we’ll focus on positive reinforcement — meaning incentives that reward a preferred outcome. When you apply this concept to your business goals, you’ll start to see many clever ways to guide people to take action. The best part: the outcomes can be mutually beneficial to your business and the recipient.
To which areas of your business can you implement an incentive plan?
In theory, you can create an incentive plan for any area of your business. Think of an incentive program as an investment in a specific outcome. The goal is to maximize that return on investment. Depending on what the desired outcome is, how you maximize ROI can come in various forms.
In the remainder of the article, you’ll see incentive programs broken down into three categories:
- Incentive programs for employees, partners and vendors
- Marketing incentive programs for attracting and retaining customers
- Incentive programs for attracting and engaging research participants
For each program, we’ll explain the goal and types of incentives commonly offered.
7 incentive programs for employees, partners and vendors
When you’re constructing a comprehensive incentive system for your company, it’s wise to think of all the various groups vital to business success and growth. This should include employees internally:
- Your overall workforce
- Your sales people
And you should consider the people your business interfaces with externally:
Note: Incentives for customers are covered in the marketing incentives section below.
Let’s begin by walking through incentive programs for your employees. Then we’ll dissect how to implement programs across your supply chain.
1. Employee incentives
Employee enthusiasm, engagement and productivity wane over time, and the motivational appeal of their base compensation can lose power. A formal incentive compensation plan can boost morale and motivate employees. Businesses often provide:
- Referral programs for hiring
- Professional development
- Equity incentive plans
- Bonuses and raises
- Health and wellness-focussed incentives
- One-off gift cards
2. Sales incentives
Sales incentives are often merit-based incentive payment systems that incrementally increase rewards based on how much value an employee generates for the company. The incentives can be both monetary and other — ranging from discounts at local retailers to event tickets. Companies often use:
- Cash bonuses
- Extra PTO
- Subscription boxes
- Activity-based rewards
- Product prizes
3. Sales program incentive funds (SPIFFs) and rebates
Sales program incentive funds (SPIFFs) and rebates are two types of short-term incentive plans. They’re often geared toward increasing sales of a particular product or service — perhaps a high-margin service or a product where you have too much inventory.
A company might use a rebate program to incentivize consumers to purchase the company’s goods or services. Buy this product, and we’ll give you 10% back.
The rebate could be:
- Digital and instantaneous
- Contingent on customers completing some action (like a mail-in rebate)
SPIFFs are campaigns designed to incentivize a business’ sales force to sell a particular product or service. A common example of a SPIFF is a Fall sales drive designed to boost end-of-year sales. Restaurants use SPIFFs by having employees compete to see who can earn the highest check average, or who can sell the most top-shelf margaritas. For SPIFF programs, incentives can vary, including:
- A temporary increase in sales commission
- An additional cash bonus for achieving a certain sales target
- A contest where the top performers win a prize
Pro tip: Figure out what your recipients like, need or desire. Tailor your incentives accordingly. If the reward isn’t appealing, people won’t be motivated.
4. Channel incentives
Many companies rely on a complex chain of wholesalers, distributors and manufacturers. Providing the right incentives to channel partners can build stronger partnerships that elevate your company to preferred client status. Channel incentive programs act similarly to incentive programs for employees, but they (financially) reward vendors for helping produce desired outcomes. These programs include:
- Channel sales incentives
- Channel SPIFFs
- Channel rebates
- Loyalty incentives
- Training incentives
5. Dealer incentives
Dealer incentives are a subset in the broader range of channel incentives. The best example of dealer incentives is found in business partnerships between car manufacturers and car dealerships. A manufacturer might reduce the price of a particular model for a dealership to sell additional units. The dealership, in turn, can charge the end customer the same price — increasing their profits. It’s a great way of steering dealer behavior without reducing profits in the long run. The most common dealer incentives are:
- Volume-based discounts
- Factory-to-dealer incentives
- Tiered cash payments
6. Contractor loyalty incentives
Companies that manufacture building materials and construction equipment often utilize contractor loyalty programs. Someone building a property hires contractors to handle the construction. When contractors recommend a specific brand of building material or construction equipment, they're compensated from the manufacturer. Manufacturers might offer:
- Volume-based compensation
- Product training incentives
- Referral bonuses
- Rewards for engagement
7. Value-added reseller (VAR) incentives
Value-added resellers (VARs) bundle the products or services of a single manufacturer with other desired goods and sell that “package” to the end customer. For example, certain appliances can be bundled with installation services — increasing their value in the process. If you run a manufacturing company, VARs are an opportunity to sell additional units. A manufacturer might incentivize VARs by offering discounts for bulk product purchases.
Benefits of incentive plans for employees, partners and vendors
Why, as a business leader, should you care about incentive programs?
Engaged employees are 18% more productive and 23% more profitable, according to Gallup.
An employee who gets a bonus (or some other tangible benefit) might be inspired to work a little harder, to get the extra sale. On the vendor side, building mutually beneficial partnerships can help ensure vendors are acting in your company’s best interest. When implemented effectively, the benefits of these strategies can build upon each other to fuel business growth. These incentive programs help:
- Emphasize employee wellness
- Increase employee engagement and productivity
- Improve team collaboration and culture
- Bolster partner satisfaction and advocacy
- Support top-line and bottom-line growth
8 marketing incentives for attracting and retaining customers
Marketing incentives are crucial for building relationships with the target customers and retaining them over the long term. Businesses can use incentives to optimize every aspect of their marketing funnel, including:
- Events and webinar registrations
- Sales lead generation at events
- Event sponsorships
- Lead generation
- Sales meetings
- Customer acquisition
- Customer loyalty
- Customer advocacy
1. Event and webinar registration incentives
Getting people to attend an in-person or digital event is challenging. If someone is looking at your event, they’re already mildly interested. An incentive can push them to act immediately. For example, you could:
- Provide discounted pricing for early sign ups.
- Offer a gift card to upon registration.
- Offer discounts on other products or services.
2. Sales lead generation at events
Events and webinars are often used as lead generation tools. Just by signing up, you’ve probably gathered some amount of information about attendees. While you have this captive audience, savvy marketers can:
- Gather additional contact information
- Qualify leads
- Schedule discovery calls
By offering gifts, prizes, gift cards and monetary incentives for providing information. The most rudimentary information gathering is having a representative at a booth that attendees can speak with. Or you can try more subtle tactics that provide a reward (or be entered into a raffle) after completion of a:
- Product demo
3. Event sponsorship incentives
You can land high-dollar event sponsorships through the use of incentives. For instance, you can:
- Sell sponsors access to use lead generation incentives on your attendees
- Sell sponsors your attendee list and the information you’ve collected
For the right sponsor, this could be a huge lead generation and brand-building opportunity that’s worth the cost of an event sponsorship.
4. Lead generation incentives
We mentioned event lead generation techniques above. But that’s just the tip of the iceberg. One classic lead generation incentive is offering downloadable content in exchange for an email address. Other lead generation incentive strategies include:
- Subscriptions to email newsletters
- Contests and raffles
- Donations to charity for completing a form
- Partner and cross pollinate marketing materials with a non-competitor targeting the same audience
- Discounts and coupons for new visitors
- No-cost trial periods
5. Sales meeting incentives
You now have leads in your pipeline, but you need to qualify the leads. This often comes in the form of a discovery call. However, it can be challenging to get prospects to schedule that first call.
For high-value prospects, it’s wise to implement some form of incentive. This could be as simple as saying, “Take my call, and I’ll give you a $50 Amazon gift card.” Or, you can get creative and send a small gift inside a lock box to a prospect’s office. Attach a note explaining what’s inside and that you’ll provide the code to unlock it during your call.
6. Customer acquisition incentive strategies
The goal of customer acquisition incentives is to close the deal. Customers could receive:
- Limited time sign-up discounts
- A discount for first-time purchases
- Volume-based discounts
- A gift card upon purchase
7. Customer loyalty incentives
Once you’ve acquired customers, you want to keep them around.
Many retailers will offer discounts to lure customers to their store or website and then place high-margin products adjacent to the discounted products in the hopes you buy it too. They might also enroll customers into a rewards program. Collect enough points (by buying products) and you’ll get a discount.
In the background, the savviest retailers analyze customer buying patterns and send coupons for products they’re interested in. Some even predict what individual consumers will want in the future.
Examples of customer incentive programs include:
- Point-based incentive systems
- Loyalty cards
8. Customer advocacy incentives
The pinnacle of marketing is turning customers into brand advocates. Word-of-mouth marketing is exceptionally powerful because people are often driven by social proof. If all your friends, family, colleagues and neighbors evangelize the same product, chances are you’ll try it out.
You can turn customers into advocates by offering incentives for:
- Customer referrals
- Positives reviews
Benefits of marketing incentives
Marketing incentives should land you business over competitors. A program that costs a nominal sum upfront can lower long-term customer acquisition costs.
Once someone is a customer, rewards and loyalty programs can help drive customer retention (and increase the life-time value of their patronage).
A strong marketing incentive program should:
- Increase lead generation
- Improve conversion rates for marketing initiatives
- Lower customer acquisition costs
- Increase life-time value of each customer
- Provide your business with a strategic advantage over competitors
6 incentive programs for attracting and engaging research participants
Research is everywhere, whether you realize it or not.
- Think about the last time you filled out a survey.
- If you’re based in the United States, every 10 years you partake in the census.
- Perhaps you’ve participated in clinical research.
With exception for the U.S. census (which is mandated by law), most research participants don’t participate out of the goodness of their hearts. They’re incentivized. Some of the most common types of research include:
- Consumer or market research
- User experience (UX) research
- University research
- Clinical research
In this section, we’ll break down research incentives programs into:
- Incentives to recruit survey participants
- Incentives to increase survey response rates
- Consumer and market research incentive programs
- User experience research incentive programs
- University research incentive programs
- Clinical research incentive programs
1. Incentives to recruit participants for surveys and polls
The quality of survey results relies on obtaining a sufficient number of participants and representative sampling of the overall population. To solve this problem, researchers employ a variety of incentives to encourage participation, including:
- Gift cards
It’s common practice to provide a small upfront payment (~$2) to participants just for agreeing to help with the research. There are also various companies who professionally assemble panels of people for research.
2. Incentives to increase survey and poll response rates
In certain scenarios, you may recruit people to take the survey, but you administer the survey at a later date. Or, perhaps your survey asks a lot of questions, and you notice people are giving up before finishing it. In cases like these, you’ll need incentives to increase survey response rates. The simplest incentive is offering a reward (that’s more sizable than your sign-up reward) upon completion.
3. Consumer and market research incentives
Companies across the world use consumer and market research to understand the business landscape and consumer behavior in their respective industries. Consumer and market research could come in the form of:
- Focus groups
- Trends from observed data
Monetary incentives, gift cards and prepaid cards are most common for this type of research.
4. User experience (UX) research incentive programs
UX research is widely used in technology companies to:
- Test hypotheses about the product
- Understand how end users interact with the product
- Discover user needs, desires, pain points and issues
- Beta test new features and products
The participants in this type of research are highly coveted by the companies conducting the research. They’re the company’s super users, after all. Incentives for these types of programs tend to be:
- Gift cards
- Prepaid cards
And the rewards tend to be in higher denominations than other types of incentives.
5. University research incentive programs
Universities conduct a variety of research across many disciplines. How they structure incentives for their research can vary significantly depending on:
- University rules and regulations
- State and local laws
- Ethical concerns
- Stipulations appended to grant money
Common incentives for this type of research include:
- Cash payments
- Gift cards and prepaid cards
- Course credit (for university students)
6. Clinical research incentive programs
Clinical research encompasses a variety of types of research. Per the U.S. Food and Drug Administration, this includes:
- Treatment research — to test new types of medication, surgery, medical devices and therapies
- Prevention research — to prevent disorders from developing or returning
- Diagnostic research — to better identify a particular disorder or condition
- Screening research — to find ways to detect certain disorders or health conditions
- Quality of life research — to improve quality of life for those with a chronic illness
- Genetic studies — to understand how genes and illnesses may be related
- Epidemiological studies — to identify the patterns, causes and control of disorders in groups of people
Incentives for clinical research can include:
- Exclusive access to experiment treatments
- Access to medical care that may otherwise be costly
- Monetary incentives
- Gift cards
- Prepaid cards
Benefits of research incentives
An effective research incentive program should simplify and streamline the research process — no matter which type of research you’re conducting. When done well, these benefits include:
- Attracting research participants
- Increasing participation and engagement in the research
- Decreased manual outreach for recruiting participants
- Research that adds value to your organization
There are an array of incentive systems you can implement to drive better business outcomes. For instance:
- Improve employee wellness, engagement, collaboration and productivity
- Increase customer acquisitions, loyalty and retention
- Strengthen relationships with vendors, manufacturers and other partners
- Simplify and streamline research participation and recruiting
- Drive higher company revenue and profitability