The ABCs of Reward Programs

Reward stores, point stores, incentive stores – these are all different names for what is essentially a web site where people go to redeem something to get something cool. Most often that “something” is an alternative currency – points, “bucks” or what have you – and the “something else” is a product like a shirt or a bluetooth speaker or a travel mug.

Reward stores might look confusing at first. They’re not exactly company stores, because they often have high-end, “gift” products available (like electronics and brand name products). Those products are also called “incentive” products, thus the terms reward store and incentive program are often used interchangeably. Ultimately, a reward program typically consists of:

  • Reward Currency: If you have a points or mileage credit card, you’re already familiar with this. You get something that is not cash, that you can use to buy something else.
  • Currency Banking: Reward programs often dish out currency over time, so it’s important to able to accumulate the currency and save it up over time so you can buy the things you want to buy.
  • Small Order Fulfillment: Most reward stores send out just a product or two at a time. These may come from fulfillment houses, your in-house inventory, or some drop-ship program. But you’ll rarely see an order of more than a unit or two.

However, the common thread frays when looking at the typical product selection of a reward store. There is no “typical” product selection, because reward stores often serve different needs. A company store generally sells branded apparel and promotional products, with an emphasis on branded.But a reward store might have premium, unbranded items as well.

It’s not uncommon to see a branded golf shirt, a branded pen and an expensive, unbranded music player or set of headphones in a reward store. Sometimes you have to go beyond branded promotional items in order to entice employees to earn points.

And reward stores are primarily about earning the rewards in some form. Here are some of the most common ones we run across:

Safety Programs: Reward stores are a great match for safety programs, where the longer employees go without accidents (or complete milestones like training), the more points they collect.

Employee Recognition: This is a broad category, encompassing everything from job performance to just helping out your co-workers. Some companies allow employees nominate fellow employees for rewards, while others have managers hand them out.

Performance: Similar to recognition, performance programs reward employees for meeting specific performance goals or metrics.

Product Mix

As mentioned above, reward stores may contain all sorts of products, but it generally boils down to these two categories:

High-Value Branded Products: We don’t recommend stocking your reward store with $0.75 branded pens, though you can try that if you really want to. Instead, most branded products in a reward store will be, well, rewards – higher-end apparel, trendy travel tumblers and outdoor and sports gear (also known as “retail” products, though that distinction is not always meaningful). It’s true that some reward stores are just slightly nicer company stores, but if you want to motivate employees to earn rewards, you need to make the products rewarding.

Incentive Products: Incentive products can really be anything you want them to be, but they are typically unbranded premium items – digital cameras, music players, gourmet foods, cookware or anything else that your employees will find appealing. There are fulfillment companies that specialize in these products and stock them for quick shipment.

Quite often, reward stores have a mix of the above. Because of that, it’s good to use an e-commerce platform that can split orders and send the fulfillment requests to their appropriate vendors. For instance, you might stock the branded products in your own warehouse, but the incentive products get fulfilled entirely by a third party provider. Your store should be able to route the requests as needed.

Payment

Payment in reward stores could be an accounting lesson unto itself. Part of the reason reward stores exist in the first place is to use an alternative currency to buy things. You might be wondering: What exactly is the point of that?

If you want people to accumulate small, incremental rewards for something bigger – say, five awards of 10 points each over six months, so they can buy something worth 50 points – you need to give them some way of tracking that. So, why not just tell them they have 50 dollars saved up? Two reasons:

  • Value perception:: Points, bucks, etc. affect value perception. If you say a pair of headphones is $50 in your store but your employee sees it at Amazon (remember, incentive products are often just regular retail products) for $30, they’ll wonder why they have to pay that much money when they’re being rewarded. Points allow you to avoid retail price comparisons.
  • Liability/accounting: When you give people real money to spend (like a gift card), you may have to keep track of it as a liability in some form. By using currency that has no actual cash value, you have quite a bit more freedom – you can expire it or adjust its value as much as you like, and (depending on what your accountant tells you) you may not have to treat it as a cash liability.

No payment stores: There are some reward stores that have no payment at all. These stores don’t accumulate points, and they are most often single-purpose stores with just a few products in them. Every employee gets one gift and then they’re done. These are often holiday or event-based stores, and while the redeemed gift may technically be a “reward,” we usually lump these in with so-called “pop up” or flash stores, since they are often only available for a short period of time.

There is one other wrinkle in reward store payment that may or may not apply to your store: Point equivalency. Picture this: Your employee has collected 95 points and they really want a 100-point gift. They don’t have an opportunity to get more points anytime soon. What can they do?

In many reward stores, they can make up the difference with their own money, by paying the balance with a credit card. This requires a cash equivalence for the point values, which of course can defeat the purpose of avoiding retail price comparisons.

But, in most situations an employee just wants to make up a small shortfall, and allowing them to do that with a credit card won’t blow up your value perception. With some reward stores, you can even set a minimum percentage of the order to be paid with points, so that employees are still encouraged to earn points.

Adding Value

As a distributor, you can add a lot of value to a reward program. First of all, many companies don’t really understand the ins and outs of these programs, so your expertise can help guide them to the right solution.

It’s important to remember that reward stores exist to accomplish a goal: A safety reward store should result in a safer workplace; a recognition store should result in better performance or improved morale.

It sounds obvious, but don’t forget to ask: What’s the goal of the program?

Your value really comes into play with product selection. Company stores often sell similar goods year after year. With a reward store, you need to be in touch with the most desirable promo and retail products. Unlike a company store where employees are often required to buy a shirt or hat, a reward store needs to be enticing. Your skills as a merchandise expert are key.

A reward program can be more challenging than a vanilla company store, but the rewards (see what we did there?) are often worth it. You build better lock-in with your customer, and product prices are often much less important than the features of the store and your expert management of the program.

Ready for more?

Here are some resources you might find helpful:

  • ABCs of Company Stores: All the knowledge and training you need to get started with company stores.
  • eBlox Blog: 10+ years of Identity Marketing magazine articles, in-depth feature discussions and more.
  • SAGE Blog: Great general resources on promotional products and technology.
  • Counselor: ASI’s online magazine for ad specialty industry professionals.
  • PromoCorner: Articles, videos and news for the industry.
  • Resource Center: Lots of educational materials, presentations, videos and general training stuff to help you sell and manage company stores.