Rewards work. They always have. They are mutually beneficial for both customer and brand, or both employee and business. When a company makes an impact on the recipient, that will ultimately be reciprocated with appreciation and loyalty.
But are there certain rewards that work best? How are rewards changing? And do different generations have different preferences? Here are some insights from recent research.
Insight 1: There’s younger hunger for rewards
The Incentive Research Foundation (IRF) 2024 Trends Report1 noted that incentive programs and rewards are important and successful tools for retaining employees at all career stages, but particularly so for early career workers, who tend to change jobs more frequently. In fact, they found that after compensation, rewards and incentives were the next most effective ways to build loyalty.
Insight 2: Cash is kinger than ever
The IRF’s 2023 survey report, Generational Expectations of Incentives2, found that the most preferred form of reward – for all ages and income levels – is cash.
A quick disclaimer: by “cash,” we don’t literally mean “cash.” In fact, we discourage it. Money is a short-term motivator, and what it’s spent on is quickly forgotten. On the other hand, points or rewards with a cash value, which can be accumulated and redeemed, for example via a debit card, are more significant and memorable.
What’s interesting is that in South Africa those rewards are used, more and more, to supplement an income, and to buy essentials like groceries, petrol and data. That represents a change from twenty or thirty years ago when rewards, which were often things like appliances, were more aspirational. But it is an economic shift rather than a generational one – and reflects the value of helping people make ends meet, especially in difficult economic times.
Insight 3: Travel is universal
The IRF found that, after cash-value rewards, travel is the next most preferred reward – also across generations, but especially among younger workers. This is in line with younger generations’ general preference for experiences.
Of course, the price tag of travel makes it more suitable in certain contexts. For example, it’s especially successful as an incentive, and especially for sales people.
Are there generational differences in travel preferences? Well, small ones, perhaps. Older generations may prefer more predictable destination holidays, like resorts, while younger generations may be more willing to explore or go on adventures. Younger generations are also more keen to incorporate charitable or pro-social elements into their travel – for example planting trees or volunteering on development programs – and these kinds of rewards are good for businesses as they can support environmental, social and governance (ESG) goals.
Insight 4: Everyone’s chuffed with choice
Perhaps one of the reasons why cash value rewards are the most desirable is that they give the recipients choice.
“That is true across generations,” Natasha Olivier, Reward and Fulfilment Director at Achievement Awards Group, says. “Why? Because choice is agency – autonomy – which, according to self-determination theory, is a basic psychological need.”
Technology has really enabled and expanded the opportunities to give people choice. Of course, choice itself isn’t new. What is new is the mechanics. People used to redeem their rewards off a catalogue. Now it’s off an app, which can carry exponentially more options. And where do those choices get dispatched from? It used to be a warehouse full of toasters, washing machines and sports equipment. Now it’s from an almost infinite number of suppliers and partners – online.
Greater choice has been enabled by technology, but that technology is also driven by the demands of younger generations. Some older employees and customers may not be as comfortable engaging on apps, but marketers don’t want to alienate younger and future customers. So, apps are where it’s at.
