Should you be Able to Add Cash to an Incentive Award?

Saw another post recently (by our man who loves to hate gift cards) that 60% of people who spend a gift card end up spending in excess of the gift card value. He goes on to say that these folks don’t get something from the gift that you gave them; they get a discount on something from the card you gave them. “There is a difference.” Huh? He seems to infer that this is a bad thing?? Not from our perspective...looks like a great thing to us.

Let’s say that an employee in a rewards program earned a $100 gift card to her favorite shoe store, and store then had a fabulous sale where everything was marked down by 50%. This happens all the time, right? Especially in these economic times! So, she heads off to the store, finds three pairs of shoes that used to cost $100 each, with 50% discount they are now only $50 each. She loves all three pairs so she adds $50 of her own money and happily (probably more like ecstatic) walks out of the store with three terrific pairs of new shoes. Is this a bad thing? Not if you ask my wife or any of my three daughters it isn’t!

To understand this myopic opinion of adding cash (or a credit card) to an award earned is something the traditional merchandise companies fought against for years. There were two reasons for this, one ostensibly because if you allow a participant to add cash to an award they wouldn’t produce the effort necessary to win the award outright. They could under perform and still just add cash to make up the difference. While there may be some minor validity to this line of thought, the industry never produced any empirical evidence to support it. Just the opposite, when you allow some cash to be added to the award it can add to the stretch motivation needed to get to a higher award. I’ll be happy to show you how that can work, just let me know in the comments below.

The second reason is one that no one ever mentioned to a client. The reality was that the incentive companies didn’t want to allow cash added to an award because the value of the award was typically clouded in the smoke and mirrors pricing of award points. You see incentive companies didn’t want to provide the formula necessary to add cash because they would have to divulge the value of the award....and letting someone know they (or their company) were paying exorbitant amounts for awards could cause some real angst to say the least. Incentive companies really didn’t want advertise to the clients that the blender priced in points was double the cost of the same blender you could find down at their favorite store! I know this to be true because it seems I was spending half of my 25 years in the traditional merchandise award industry trying to defend these prices.

So, should you be able to add cash to an incentive award....why not?

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