Why rewards are better incentives?

Have you started 2020 with a clear plan on how you are going to drive business and foster better relations with your dealer partners and sales network?

This time of the year is key for businesses as it’s time to set the tone for the year ahead in terms of sales and marketing activities.

All sorts of incentives are on the table for discussion. However, something to think about is that money is often used as a way to entice re-sellers, dealers and channel partners to keep them engaged whilst driving business and it’s not always right.

Manufacturers and vendors often offer discounts, rebates, marketing dollars, and other bonuses to support their network to sell or recommend their products. Such financial benefits are usually part of the incentives offered. Nevertheless, is money the best way to engage those people who drive business?



Here are some reasons as to why offering money is less effective as an engagement and incentive strategy when we compare it to rewards.

Why rewards are better incentives than money?


A monetary benefit comes with a business relationship. It is expected and it offers nothing different to what commissions offer, or the margin partners can draw from your product, plus every vendor or manufacturer offer financial benefits as part of the relationship structure. In short, money is just considered as income and if your partners are not drawing the required income to do business with you, then incentive offers shouldn’t be in the table yet.

Loss of value

When you offer, say $200 as an incentive, people will think of paying invoices, utilities and other daily expenses with that money. But a reward such as a piece of merchandise with an RRP higher than $200 and purchased for even less will have a much higher value in perception. This makes people think of “what can I do to get that reward?”.


Likewise, when you offer cash people focus on the money rather than on thinking about the objectives of the incentive. Feeling valued and rewarded for achieving things is far more motivating than just being paid for the job. When people feel valued, they concentrate on the work rather than the money.

Trophy value

When was the last time that someone showed you their bank account or pay-check? But… when someone wins an award, not only they will tell everyone they know, but many will join the celebration and show how proud they are. Rewards make you feel important and part of the group that is rewarding you. Winners of rewards, therefore, are engaged as they feel part of the success and successful themselves.

Low impact

A financial benefit is often transferred into a bank account. Just as any rebate, commission or discount, it is just a transaction. Rewards, on the other hand, are presented, they feel good and provide winners with bragging rights, they are remembered, and the effects are motivation, engagement, commitment, loyalty… and more.

In this context, we can say that money is not a tangible incentive that engages incentive participants.

Money incentives can immediately become part of the business outgoings and an accounting matter. If offered to a person, it is most likely that it will be used to pay utilities and other personal expenses and for many, it’s like playing catch up with salary.

Offering a range of tangible incentives like merchandise or travel incentives can have a greater impact on your relationship with re-sellers, distributors and channel partners.

Taking the time to think about what’s enticing and select the right reward for the individuals that will participate in your incentive program demonstrates that your business has a strong interest in them and want to engage with them individually. It shows your commitment to their business.

Offering incentives like point-based programs that enable participants to redeem a reward gift after collecting a set number of points over time is also enticing. Participants can select the reward they want and focus on it as they set it as a goal to achieve.

These reward programs build a community and make participants feel connected to the manufacturer or vendor on an emotional level rather than feeling they are just reselling or moving product for a large corporation. The sports lover will feel highly appreciated after being rewarded with a set of golf clubs, while the technology geek will feel engaged after redeeming the latest mobile phone model.

When thinking of incentives for your re-sellers, dealers or channel partners, consider investing in targeted rewards or point programs rather than giving out money to drive engagement.



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