Many companies try to establish differentiation in their markets or take a running leap at their sales goals by starting an online corporate rewards program for employees, channel partners or customers. Reward programs can increase sales, loyalty or performances by up to 44%, if implemented well—who wouldn’t want to see that kind of growth?
Let’s say you’re one of these ambitious companies who wants to change your status quo with an online corporate rewards program. You partner with a stellar program provider who has exactly the kind of online rewards software to meet your needs. You decide to purchase the program’s currency—i.e. the online rewards points your participants will earn and redeem in the rewards catalog—as it’s spent. In other words, you’re not on the hook for the cost of reward points until participants actually use them. Many businesses begin their company rewards programs with a pay-on-redemption model in the beginning, since redemption rates may be initially slow as participants adopt the program.
But wait! What if your participants redeem way more points than you anticipated? As they spent their points like it’s going out of style and the reward cost keeps rising, it may seem like you’ve bitten off more than you can chew, budget-wise. Don’t worry—if your reward strategy is solid, this won’t be an issue.
A successful reward strategy welcomes high redemption rates.
A high rewards redemption rate should never be a bad thing. If you implement your corporate rewards program strategically, you have nowhere to go but up. Here’s what we mean by “implemented strategically”:
The rewards program is easy for participants to understand.
Keep the program simple in the beginning, and make sure participants understand the program’s rules, purpose and value proposition. It’s always easier to increase the program, expanding qualifying promotions and participant vs. trying to backtrack and put the “genie” back in the “bottle.”
Behaviors that earn reward points are based on well-defined goals.
There’s one very simple way to avoid a redemption rate that seems costly. Don’t offer rewards for behaviors that aren’t worth the cost of those rewards. It’s incredibly important to set specific, strategic program goals. The behaviors you reward should be beyond your participants’ average performance or purchase habits, and should:
- improve profit margin
- expand market share
- motivate sales teams to reach your company goals
- or build customer loyalty and retention.
You’re using the right billing model.
Maybe your program is already simple and rewarding the right behaviors, but the Accounting department or the program’s overseeing department doesn’t want to foot the program bill whenever participants redeem reward points. You can choose an issuance billing model so that you pay for the cost of reward points when they’re issued to participants. That makes it easier to plan your budget ahead of schedule.
You’re tracking and measuring the progress of the rewards program.
You need to be able to quantify the reward program’s impact to prove the cost of rewards is justified. The online rewards software you use should come with exportable reports and analytics that help you track and measure performance.
The most efficient way to measure program success is by comparison. Compare the performance or purchase activity of a program participant group to a non-participating group. This way, you can show the program had a positive impact on those participating. Even if your overall revenue suffered during particular timeframes, you prove a positive impact.
If you properly prep your online corporate rewards program, high redemption rates mean one thing: success! Follow the above guidelines to implement a program that only makes you more money the more your participants redeem.
We would love to connect!