Not All Rewards Are Created Equal: Designing Rewards That Are Worth the Effort

Two rewards may cost an organisation exactly the same amount, yet generate completely different levels of motivation, engagement and long-term impact.

That is because organisations tend to look at what a reward costs, while participants respond to what the reward means to them.

This difference between financial cost and perceived value is where reward strategy becomes much more important than simply choosing something that fits the budget.

The reward is part of the behaviour strategy

Rewards are often treated as one of the first decisions in program design.

A business decides it wants to offer gift cards, merchandise, cash or travel, then builds the program around that decision. In our experience, this is the wrong way around.

The first questions should be:

• What business outcome are we trying to achieve?
• Which specific behaviour needs to change?
• Who are we asking to change it?
• How difficult is that change?
• How frequently should participants be recognised?
• What would make the effort feel worthwhile?

Only then should the reward be selected.

If the objective is to encourage a simple, short-term action, a smaller and more immediate reward may be appropriate. If the business is asking participants to significantly increase sales, change established purchasing behaviour or strengthen their commitment to a brand, the reward needs to carry greater meaning and aspiration.

The reward must feel proportionate to the effort required.

As we discussed during the webinar, asking someone to achieve significant growth in return for a reward they do not value is unlikely to change their behaviour. The issue is not necessarily that the reward is inexpensive. The issue is that it does not feel worth the effort.

Cash is valuable, but it has a particular job to do

Cash is simple, flexible and familiar. In some programs, it is exactly the right reward.

However, convenience should not automatically be mistaken for motivational impact.

Cash can easily become absorbed into everyday spending. Once it has gone towards bills, groceries or routine purchases, the connection between the reward, the achievement and the organisation that provided it can quickly weaken.

A well-chosen experience, piece of merchandise or travel reward can operate differently. It may be something the participant wants but would struggle to justify buying for themselves. This gives the reward a significance beyond its purchase price.

The Incentive Research Foundation describes this as part of the lasting “trophy value” that well-designed non-cash rewards can create. Its research also highlights how emotion, context and mental shortcuts influence motivation alongside the financial value of a reward.

This does not mean cash is ineffective. It means cash should be selected deliberately for the role it needs to perform, rather than becoming the default because it is easy to administer.

A reward creates value at more than one moment

A reward does not only create value when it is received.

The strongest rewards can influence behaviour across several stages:

1. Anticipation

Participants can picture themselves earning the reward. The clearer and more desirable that picture becomes, the more motivational energy the reward can create during the program.

2. Achievement

Earning the reward provides recognition. It becomes evidence of what the participant accomplished, rather than simply another transaction.

3. Experience

The participant enjoys the reward itself, whether that is an item, a personal experience or a group trip.

4. Memory

A memorable reward can remain connected to the achievement long after it has been delivered.

5. Advocacy

Some rewards create stories that participants share with colleagues, customers, friends or family. This can extend the visibility and emotional impact of the program beyond the individual recipient.

This is a major reason why a reward’s motivational value cannot be understood by looking at its cost alone. A $1,000 payment and a $1,000 experience may be financially equal, but they may not produce the same anticipation, recognition or memory.

Aspirational does not have to mean extravagant

There is a tendency to associate aspirational rewards only with major international trips or high-value prizes.

But aspiration is personal.

For one participant, it might be access to an experience they would not normally purchase. For another, it might be premium merchandise connected to an interest. For someone else, it could be recognition, status, choice or the opportunity to share a reward with their family.

The question is not simply, “Is this reward expensive enough?”

The better question is, “Will this audience consider the reward meaningful enough to change what they do?”

That requires an understanding of the audience rather than relying on leadership preferences or assumptions. Participant insight, previous redemption behaviour, segmentation and ongoing feedback can all help organisations evaluate what their audience genuinely values.

More choice is not always a better strategy

Choice is important because participants are not all motivated by the same things. But providing an enormous reward catalogue is not automatically the same as providing a strong reward proposition.

Too little choice can make a program irrelevant to parts of the audience. Too much choice can make the program difficult to understand and remove the focus from the rewards the business wants participants to aspire towards.

The right approach is often curated choice.

This could mean offering different reward categories at different performance levels, introducing new options over time or combining frequently earned rewards with a smaller number of highly aspirational rewards.

Variety is particularly important where frequent non-cash rewards are used. IRF-reviewed research suggests that repeatedly offering a limited selection can reduce its emotional impact as participants become accustomed to it. Changing the mix and introducing novelty can help maintain interest.

Different people may need different reasons to participate

One of the limitations of a single reward category is that it assumes the audience is equally motivated.

In reality, a successful incentive program may need to engage:

• Established top performers who value status and exclusive experiences.
• The “movable middle” who need to believe the next level is achievable.
• New participants who require early reinforcement.
• Occasional participants who need a stronger reason to engage.
• Different demographic or socioeconomic groups with different priorities.

This does not mean every individual needs a completely personalised program. It means the reward structure should recognise that relevance, accessibility and aspiration perform different roles.

Status might motivate one group. Choice could improve relevance for another. Frequent rewards may help reinforce an emerging behaviour, while a significant experience may provide the aspiration required for a more difficult objective.

The strongest programs use a reward mix

The real decision is rarely cash or gift cards or merchandise or experiences or travel.

It is about understanding the role each can play.

A well-designed reward mix might use:

• Points or smaller rewards to reinforce progress.
• Merchandise or experiences to create emotional value.
• Recognition and status to make achievement visible.
• Choice to improve personal relevance.
• Travel or premium experiences to create aspiration and long-term recall.
• Cash where flexibility and immediate utility are central to the objective.

The mix should reflect the audience, the difficulty of the target behaviour, the program duration and the commercial value of the intended outcome.

Importantly, the mix should not remain static. Reward performance should be reviewed alongside participation, behaviour change, business outcomes and participant feedback. The objective is not simply to determine which rewards were redeemed. It is to understand which rewards helped move the behaviour the program was created to influence.

Start with the objective, not the catalogue

The key takeaway from our webinar remains simple:

Do not choose the reward before defining the objective and target behaviour.

Start with what the business needs to achieve. Understand whose behaviour needs to change and what level of effort is required. Then build a reward mix that makes that effort feel worthwhile.

Because while two rewards may have the same price, they rarely create the same value.

And ultimately, the most effective reward is not necessarily the easiest one to purchase or administer. It is the one that helps create the outcome the program was designed to deliver.