The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

Reward Points

Reward points have become ubiquitous in retail, hospitality, finance, and various other sectors, offering a mutually beneficial avenue for both consumers and businesses. But what exactly are reward points, and why do they matter?

What are reward points?

Reward points are a form of incentive offered by businesses to encourage customer loyalty. Customers earn these points by making purchases or engaging in specified activities, such as signing up for a membership, referring friends, or participating in promotions.

Accumulated points can typically be redeemed for discounts, free products, gift cards, or other benefits offered by the business.

Listen, recognize, award, and retain your employees with our Employee engagement software

What are the benefits of using reward points?

Using reward points can offer several benefits to customers.

Firstly, they can save money by redeeming points for discounts or free products.
Secondly, reward points programs can enhance the overall shopping experience by providing incentives for continued engagement with the brand.
Additionally, these programs often offer exclusive perks, such as early access to sales or special events, to loyal customers.

What are some common types of reward points programs?

There are various types of reward points programs offered by businesses. Some common examples include:

Points-based programs: Customers earn points for every purchase, which can be redeemed for discounts or free items.
Tiered programs: Customers progress through different membership tiers based on their level of engagement or spending, unlocking increasingly valuable rewards as they advance.‍
Co-branded credit card programs: Customers earn points by using a co-branded credit card for purchases, with points redeemable for rewards offered by both the credit card issuer and the partner business.

How do reward points programs work?

Reward points programs typically involve customers signing up for a membership or loyalty program with a business. Once enrolled, customers earn points through various activities, such as making purchases, completing surveys, or interacting with the brand on social media.

These points are then accumulated in the customer's account and can be redeemed for rewards according to the program's terms and conditions.

How do businesses benefit from reward points programs?

Businesses benefit from reward points programs in several ways:

Customer loyalty: Reward points programs incentivize customers to make repeat purchases in order to accumulate points. This builds customer loyalty as individuals are more likely to return to a business where they can earn rewards.
‍Increased sales: Customers may spend more in order to earn points or reach a certain threshold for rewards. This can lead to increased sales volume and higher revenue for the business.
‍Data collection and customer insights: Reward programs often require customers to sign up, providing the business with valuable data such as demographics, purchasing behavior, and preferences. This data can be used to tailor marketing efforts and improve product offerings.
‍Word-of-mouth marketing: Satisfied customers who benefit from reward programs are likely to spread positive word-of-mouth about the business, attracting new customers and further enhancing loyalty among existing ones.
‍Competitive advantage: Offering a reward points program can differentiate a business from its competitors and attract customers who value loyalty rewards.
‍Inventory management: Businesses can use data from reward programs to better forecast demand and manage inventory, ensuring they have the right products in stock to meet customer demand.
‍Cross-selling and upselling opportunities: Reward programs can be used to promote related products or encourage customers to upgrade to higher-priced items in order to earn more points.
‍Feedback mechanism: Reward programs provide a platform for customers to provide feedback, which can be invaluable for businesses looking to improve their products and services.

Can reward points expire?

Yes, reward points can expire based on the policies set by the business. Some businesses may impose expiration dates on points to encourage customers to redeem them within a certain timeframe. It's important for customers to be aware of the expiration policy to make the most of their accumulated points.

How can small businesses set up an effective reward points program for employees?

Small businesses can establish an effective reward points program by following these steps:
‍

Define goals and objectives: Clearly outline the purpose of the rewards program. Determine whether the focus is on improving employee morale, increasing productivity, or enhancing retention.

Choose reward criteria: Identify the behaviors and achievements that will be rewarded. This could include performance metrics, attendance, teamwork, or contributions to company culture.

Select reward types: Decide on the types of rewards that will be offered. Consider a mix of monetary rewards (like gift cards or bonuses) and non-monetary rewards (like extra time off, recognition in company meetings, or personalized gifts).

Establish a points system: Create a points-based system where employees earn points for specific actions or achievements. Clearly communicate how points can be earned and what rewards they can be redeemed for.

Implement technology solutions: Utilize employee rewards software or platforms that can help manage the program efficiently. These tools can streamline the process of tracking points, issuing rewards, and gathering feedback.

Communicate the program: Ensure that all employees are aware of the rewards program and understand how it works. Use various communication channels, such as team meetings, emails, and internal newsletters, to promote the program.

Encourage participation: Foster a culture of recognition by encouraging employees to recognize their peers. This can be facilitated through social recognition features in the rewards platform or informal shout-outs during meetings.

Monitor and adjust: Regularly assess the program's effectiveness by gathering feedback from employees and tracking engagement metrics. Be open to making adjustments based on employee preferences and program performance.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

eNPS:

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

Promoters
Employees who have responded positively or agreed.
Detractors
Employees who have reacted negatively or disagreed.
Passives
Employees who have stayed neutral with their responses.

Can reward points be transferred or gifted to others?

In some cases, businesses may allow customers to transfer or gift their reward points to others. However, this feature is not universal and is subject to the terms and conditions of the specific loyalty program. Customers should review the program rules to determine if point transfers are permitted.

How to create a reward points program for employees?

Creating a reward points program for employees involves several key steps:
‍

Identify objectives: Determine the primary goals of the program, such as increasing employee engagement, improving productivity, or boosting morale. Clear objectives will guide the program's design and implementation.

Define reward criteria: Specify the behaviors and achievements that will earn employees points. This could include meeting performance targets, demonstrating teamwork, or contributing to company culture.

Establish a points system: Create a clear and straightforward points system. Define how many points employees will earn for specific actions and how those points can be redeemed for rewards.

Select rewards: Choose a variety of rewards that appeal to employees. Consider both monetary rewards (like gift cards or bonuses) and non-monetary rewards (like extra vacation days, recognition events, or personalized gifts).

Implement technology: Use a rewards platform or software to manage the program. This will help streamline the process of tracking points, issuing rewards, and collecting feedback from employees.

Communicate the program: Clearly communicate the details of the rewards program to all employees. Use multiple channels to ensure everyone understands how the program works and what they can earn.

Encourage participation: Foster a culture of recognition by encouraging employees to recognize their peers. This can be facilitated through social recognition features in the rewards platform or informal recognition during meetings.

Gather feedback: Regularly solicit feedback from employees to assess the program's effectiveness. Use surveys or informal discussions to understand what employees value most and what improvements can be made.

Monitor and evaluate: Continuously track the program's performance using key performance indicators (KPIs) such as participation rates, employee satisfaction, and overall engagement levels. Adjust the program as needed based on this data.

Do reward points have monetary value?

Reward points can have monetary value depending on how they are redeemed. For example, if a customer can redeem 100 points for a $10 discount, each point would have a value of $0.10. However, the actual value of reward points can vary based on the redemption options available and any restrictions imposed by the business.

‍

Which are the top companies providing reward points programs for employees?

Here are some of the programs that have proven effective:
‍

Asana: Asana has implemented a robust employee reward points program that focuses on celebrating achievements through various channels. They offer "thank you" points that employees can give to one another, which can be redeemed for rewards such as gift cards or experiences. This peer-to-peer recognition fosters a supportive work environment and encourages employees to acknowledge each other's contributions.

Caribou Coffee: Caribou Coffee has an employee reward points program that includes "Caribou Points," which employees earn for various achievements and milestones. These points can be redeemed for rewards such as gift cards, merchandise, or experiences. The program encourages employees to engage in friendly competition and fosters a sense of community within the company.

Zappos: Zappos is known for its strong company culture and employee recognition programs. They have a "Zollars" system, where employees earn points for providing excellent customer service or going above and beyond in their roles. These Zollars can be redeemed for various rewards, including gift cards and experiences, promoting a culture of recognition and appreciation.

Salesforce: Salesforce utilizes a reward points recognition program called "Ohana Culture," which emphasizes family and community within the workplace. Employees can recognize their peers through a points system that can be redeemed for various rewards, such as travel experiences or gift cards. This program fosters a collaborative environment and encourages employees to support one another.

What are the best reward points programs for employees?

Some of the best reward points programs for employees include:

Performance-based points programs: In these programs, employees earn points based on their performance metrics, such as achieving sales targets, completing projects on time, or exceeding productivity goals. These programs are highly effective as they directly link rewards to performance, motivating employees to excel in their roles.

Peer-to-peer recognition programs: These programs empower employees to recognize and reward each other for positive behaviors and contributions. Points can be awarded for collaboration, innovation, or going above and beyond in supporting colleagues. This fosters a culture of recognition and strengthens team dynamics.

Wellness incentive programs: These programs reward employees for engaging in healthy behaviors, such as participating in fitness challenges, attending health screenings, or achieving personal wellness goals. Points earned through wellness activities can be redeemed for health-related rewards, contributing to employee well-being.

Milestone and service anniversary programs: Recognizing employees for their years of service or significant milestones with the company is an effective way to boost loyalty. Employees earn points for reaching certain anniversaries, which they can then redeem as rewards. This type of program highlights the company’s appreciation for long-term commitment.

Learning and development rewards programs: These programs incentivize employees to engage in continuous learning and professional development. Employees can earn points for completing courses, attending workshops, or earning certifications. This not only enhances their skills but also aligns with the company’s growth objectives.

Quick Links

Employee Engagement solutions

Blog

Ebooks & Guides

Glossaries

View All Integrations

Videos

Rewards