What is an incentive program and why are powerful
What is an incentive program?
An incentive program is a strategic use of goals and rewards designed to motivate desired behavior from 1 or more people, regardless of whether they are a customer, employee, or channel partner. The main function is to align organizational objectives to people’s actions. Even though there are variations of incentive solutions available, the principles behind them are based on years of behavioral incentivization research.
How do incentives work?
An incentive works by establishing a goal or criteria that are required to be met in order for the action(s) to be rewarded. The underlying principle of an incentive will stay the same but the incentive itself may vary depending on who it is intended for (i.e., customers, employees, or channel partners).
To give you some context, let me describe a scenario to you. Imagine that you are the owner of a clothing store and you have created a customer incentive program to boost sales. You have created a sales incentive for each customer enrolled in your program that rewards them with a $10 gift card for every purchase made over $80. So in this scenario, you are incentivizing a sales behavior and creating a goal that the customer is required to meet in order to be rewarded. When the goal is met, a reward is given to them.
By providing a reward (in this case, the $10 gift card) for each purchase over $80, you are conditioning your customers to make larger purchases. This is a psychological principle known as Operant Conditioning and is just one of the breakthroughs of behavioral incentivization research.
Alternatively, if you were looking to increase repeat sales, you could build an incentive that required a customer to make at least 3 purchases of more than $30 within 30 days to qualify for a $20 gift card.
There are a lot of different behaviors that can be incentivized. We have created a Periodic Table of Behavior Elements to help illustrate which behaviors can be incentivized to benefit every aspect of your company.