Andrew Solomon | Marketing Director | Achievement Awards Group | mail me |
Different kinds of rewards have different behavioural pros and cons. However, when used together, they can produce outstanding results.
Almost all employee engagement, channel incentive and customer loyalty programs include some form of tangible, extrinsic reward. While there is a vast middle ground, in general, there are two kinds of rewards. These are micro and macro rewards.
Each type has its own distinct advantages and pitfalls. They are good for some things, but less effective in other ways. The real question is not which is better. Rather, it is how to use the two together to maximise the potential of rewards for both program participants and businesses. As a result, many organisations are now examining the combined impact of micro and macro rewards to strengthen loyalty and long-term engagement.
Marvellous micro
Micro rewards are small. They can be more frequent and are usually easier to obtain or earn. In addition, they can influence behaviour change through immediate gratification. For example, when an employee shows great values-aligned behaviour, that behaviour can be recognised with a small cash reward or a sleep-in day.
Distribution channel partners can also receive a small cash incentive for each sale. Customers might receive a discount for joining a loyalty program, a discount for purchasing a product, or a freebie after their fifth purchase.
Micro rewards are short-term motivators. They encourage people to show immediate behaviours or make on-the-spot decisions. Yet, balance is necessary. Over time, they can lose impact if overused. In that case, they become routine, expected and unexciting.
The concept of “hedonic adaptation” explains this. It refers to the process by which people adjust to events or stimuli that trigger emotional responses. As a result, positive experiences quickly lose their novelty.
From a customer’s perspective, there is also the risk of churn. Competitors can easily offer similar or more novel rewards. In these cases, any loyalty built up through micro and macro rewards is shallow. This shows that micro-rewards can initiate engagement or loyalty, but they are less successful at sustaining it. At least, not on their own.
Magic macro
Macro rewards are larger and more valuable. They are more expensive, harder to obtain and given less frequently.
For example, I know someone who worked at a company that gave quarterly employee awards. She won one of them. It was a high-end Bluetooth speaker, which she still uses nearly a decade later. Although she no longer works at that company, she remains an advocate. She often recommends their products to others.
In the context of channel partners, incentive travel is a strong example of a macro reward. It is often awarded to top performers. Consider motor car dealerships. Salespeople might be incentivised with a trip to a Grand Prix. For any motorhead, this once-in-a-lifetime opportunity would certainly encourage more sales, assuming sales are the criterion.
Repeat customers at such dealerships might also be rewarded. For example, they may receive invitations to exclusive events, new car launches or a week-long trial of a new model. Macro rewards are meaningful because of their size, rarity, or personalisation. As a result, they leave a strong emotional and lasting impression on recipients.
Motivating long-term goals
The Incentive Research Foundation observed the following: “Emotionally compelling rewards hit the mind harder, are remembered longer and influence the internal brand the most. Bland rewards, on the other hand, are labelled for deletion and sent to the brain’s ’shredder’.”
Macro rewards are especially effective at motivating long-term goals. If you want that Bluetooth speaker, the trip to Monaco, or the first chance to drive a new model, you know what to do. You must be an engaged employee, a high-performing channel partner, or a loyal customer. This leads to extremely high engagement over time.
Of course, like micro rewards, macro rewards also have disadvantages. Sometimes a reward feels too big, too far away, or too difficult to obtain. In those cases, people may not even try. Here, the macro reward becomes demotivating, which is the opposite of what was intended.
Macro rewards can also be too narrow or too unlikely. For example, if there is only one grand prize, many people will not try at all. Counterintuitively, a very large reward can attract fewer participants.
Get the best from micro and macro rewards
The best approach is to combine micro and macro rewards. Micro rewards are excellent at initiating desired behaviours among employees, channel partners, or customers. They start engagement. In addition, they help sustain engagement while participants work toward the larger macro reward.
For example, employees could be incentivised with escalating monthly, quarterly and yearly rewards. Channel partners could receive small cash incentives after every ten sales. The best performers could then be rewarded with a holiday. Customers could earn points for purchases until they accumulate enough for the Bluetooth speaker.
Micro and macro rewards provide initiative and acknowledge consistency. Macro rewards, meanwhile, mark milestones and special achievements. In summary, it is not a choice between one or the other. Instead, the question is how to combine both for maximum returns.
