An incentive program is a strategic use of goals and rewards designed to motivate desired behavior from one 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.
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.
Ultimately, there are 4 different types of incentive programs which focus on key areas of a business. That being said. researching incentive programs make your head spin with the amount of different names or terminology being used. For example, you may see some references to incentive programs while other websites say reward programs or loyalty programs. We categorize all the different programs out there into 4 main categories:
Incentive programs for channel partners – Enhance partner performance using rebates, MDF rewards, and other incentives. Incentivizing channel partners for promoting and selling your product or service which will drive higher revenue at a lower cost.
Loyalty programs for customers – Reward customers with branded merchandise and custom rewards for their engagement with your brand as well as their continual purchases of your products or services.
Incentive programs for employees – Boost employee performance using incentives for sales teams and contact center staff. For example, build out incentives to reward your sales team to provide an accurate and timely sales forecast, or even reward contact center employees for closing support tickets faster.
Incentive programs for B2B eCommerce buyers – Experience increased sales from your eCommerce investments by rewarding customers for not just their orders, but activity on your site as well.
The question “Do incentive programs work?” is an extremely valid question considering it is a long-term investment of your time and money. There have been numerous studies that have shown how effective an incentive program is. We will cover a few of the major statistics that show the benefits.
Consumer loyalty program statistics
Channel incentive program statistics
Employee program statistics
Once you have established who your incentive program will be for (customers, employees, channel partners, or a mixture of all), the planning process involves 6 areas of focus to fully flesh out your program to ensure success.
Not every customer, employee, and channel partner will be the same. You may find a specific area that needs improvement as opposed to an entire user base. Target specific members based on criteria like levels/tiers, region, certifications, or past performance to ensure you are truly targeting the right group.
Behaviors
Select behaviors that not only encourage the completion of your objective, but the behaviors that drive them — for example, if you want your channel partners to sell more of your product, you would incentivize the behaviors that lead up to the sale. That means rewarding them for watching training videos, bringing in additional leads as even sales funnel objectives like giving a product demo.
Incentive Rules
An incentive needs clear guidelines to establish when an objective has been reached or not. Use criteria to create simple or complex incentive rules that define how your members can accomplish their goals as well as how they are rewarded.
Communications
Automate and customize your communications with your program participants — for program strategy, eligibility requirements, goal progress and attainment, help & support, feedback requests, and more. For example, if you have a customer that has just been enrolled within your program, you can send out an automatic welcome message that will direct them to the most popular incentives within your program. Furthermore, as they progress through various incentives, notifications can be sent to give updates on their progress as well as special promotions like double points on their birthday.
Rewarding
For each incentive that is completed, a reward is provided, which could come in many forms including points, rebates, MDF, virtual currencies – to create a truly rewarding incentive plan.
Analytics
Lastly, it is critical to any incentive program that you identify the who, what, how, and why of program performance. This will enable insights such as your program return of investment (ROI), how much money you have spent on rewards, and which incentives are producing the best results. Furthermore, the analytics will help with critical decision-making to change up your incentive strategy or double down on what is working.
Designing and managing an incentive program can be challenging, especially when you need to translate high‑level business goals into specific, measurable behaviors that deserve rewards.
An incentive program is a strategic use of goals and rewards designed to motivate desired behavior and the research shows it is a critical component in reaching the highest level of performance and revenue. If you are looking into an incentive program and would like to get started, follow the link below to set up a 15-minute meeting with our team so we can answer any of your questions or even give you a demo of our incentive solution.
An incentive program is a strategic use of goals and rewards designed to motivate desired behavior from one or more people, such as customers, employees, or channel partners, by aligning organizational objectives with people’s actions.
An incentive program works by establishing a goal or specific criteria that must be met for an action to be rewarded; when participants meet that goal, they receive the predefined reward.
Incentive programs are important because they provide a structured way for businesses to influence behavior—such as driving higher purchase values or increasing purchase frequency - so that everyday actions from customers, employees, or partners support broader business objectives.
Incentive programs can be aimed at customers, employees, or channel partners, with the same underlying structure of goals and rewards but tailored to each audience.
This article illustrates a customer incentive program in a clothing store that offers a 10‑dollar gift card for every purchase over 80 dollars, and another program that rewards customers with a 20‑dollar gift card if they make at least three purchases above 30 dollars within 30 days.
Incentive programs motivate behavior by using rewards to reinforce specific actions, effectively “conditioning” people to repeat behaviors that help them earn those rewards, an approach grounded in the psychological principle of Operant Conditioning.
There are several: points, rebates, MDF, virtual currencies or gift cards, demonstrating how monetary or value‑based incentives can be tied directly to the completion of specific behaviors or goals.
Yes, the same core principles of goals and rewards can be applied to customers, employees, and channel partners, indicating that well‑designed programs can be effective across different groups when tailored to their context.
To design an effective incentive program, you define the behavior you want to incentivize, establish clear and measurable criteria (such as spend thresholds or number of purchases within a timeframe), and connect those criteria to a meaningful reward that is delivered when the goal is met.
Key elements include a clearly defined goal or behavior, explicit criteria for earning the reward, and a compelling reward that reinforces the desired action, all grounded in behavioral incentivization principles like Operant Conditioning.
