The Winning Power of Non-Cash Rewards in B2B Incentive Programs

In our society, it’s a given fact that cash is possibly the strongest motivator. We all show up to work and do our jobs in exchange for financial compensation, which satisfies the basest levels of Maslow’s Hierarchy of Needs.

You’d be forgiven for expecting this to be true when it comes to B2B incentive programs. Cash can be a powerful motivator, or are non-cash rewards the winner in incentivising change in behaviour in these customers?

To start, let’s break down the strengths of a cash reward:

  • Simple to understand.
  • Easy to distribute.
  • Universal value.

Simplicity and versatility are the underlying principles in why cash works as a reward – we all need it, we all know how to use it, and it’s accepted everywhere. When it comes to programs with a broad spectrum of customers to consider, there are few better ways to hit all targets than cash.

This is where the difference comes in with B2B loyalty programs. The B2B sphere is generally made up of fewer customers and has more personalised relationships come into consideration. The relationship between businesses and their channel partners is closer and provides more insight into what they want.

With the additional insight in mind, the second factor to break down is the difference between compensation and incentives. Compensation is used to attract and retain a certain calibre of distribution partners and have them deliver on business objectives. Compensation becomes taken for granted as the agreement continues and is ‘the norm’ for delivering on those objectives. This means that rearranging the agreement becomes difficult, and reducing or removing is nearly impossible.

With compensation fully understood, now it’s time to explain incentives and why they have a stronger impact on B2B strategic programs.

Why Non-Cash Rewards Win in B2B Incentive Programs

Firstly, cash is easily spent on household expenses and will not have a lasting emotional impact on the customer. By providing an incentive or reward, the customer does not have the issue of guilt or conflict around how the cash is spent and instead can have the incentive or reward considered as being earned.

This eliminates any negative association with the brand and instead allows the customer to feel excited about their accomplishments whenever they reflect on the incentive. This creates a psychological connection between your organisation and the customer’s sense of well-being and creates an emotional trigger toward your brand.

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The power of non-cash rewards in incentivising change in behaviour is undeniable.

This is referred to as “trophy value” and is a powerful tool in any B2B strategy. The customer sees the incentive as something they achieved and will speak about it fondly with anyone who sees the reward or asks about the incentive that they received. This creates positive word-of-mouth in addition to cementing your business in a positive light in their mind.

With B2B relationships, these are ongoing and more personal, due to factors such as sales and support teams providing regular conversation touchpoints. By giving your customers triggers for positive sentiments that they keep around them, it keeps the brand front-of-mind in a positive light, ensuring that you’ll always be the first one they think of when it comes time to purchase again.

Incentive programs serve as powerful customer retention tools and create brand advocates out of your loyal customers, psychological aspects that cash can’t match.

Non-Cash Rewards – Scientifically Backed!

Scientifically, these results have also been qualified as accurate. In an experiment from 2003 (Jeffrey, Scott. 2003. “Theory of Tangible Rewards.” Private conference), the University of Chicago staff were offered cash, non-cash, and verbal rewards to improve their work speed and accuracy. The group that chose cash rewards performed 14.6% better than the group that received verbal praise, but the non-cash group performed 38.6% better than the verbal praise group.

Considering the issues, it’s clear that non-cash rewards have clear advantages over cash rewards within certain circumstances. That doesn’t mean that cash is always an inferior reward, but instead non-cash rewards have a higher ceiling to reach through knowledge of your industry and audience.

With programs like our Engagement Loyalty Model, you can gain that knowledge on your customers, segment them into persona cohorts, and create tailored communications highlighting specific rewards and incentive measures that best speak to the way they would prefer to be motivated. The model also provides ways to best utilise the conversation touchpoints that are available within the program, and how to best incentivise change in behaviour.

So, when it comes to your brand, back a winner and use non-cash rewards.

Ready to turn your B2B customers into winners?

If you’re ready to step up your rewards offering and get the most out of your program participants, reach out today to book a demo and find out what we can do for your brand.

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