How Does a Reward Points Program Work?

How Does a Reward Points Program Work?

Nichole Gunn

reward points program

A reward points program is a method of rewarding people for certain behaviors using virtual currency, i.e. reward points. Reward recipients can then exchange their points for items in an online rewards catalog. These programs can be used for a variety of reasons in business environments, from motivating employees and increasing sales to building customer loyalty.

Why Reward Points?

You might ask, “Why points? Don’t salary and cash rewards accomplish the same thing?” A good question with some very interesting answers! Here’s what Scott Jeffries and Victoria Schaffer found in a study called The Motivational Properties of Tangible Incentives:


If the recipient values the reward but would never purchase it because they view it as too much of a luxury, the opportunity to earn it as a reward for hard work provides a way to obtain the reward without violating their standards of justification.

Social reinforcement

People enjoy recognition for their hard work and achievements, but they don’t necessarily want to brag about themselves. Because non-cash rewards are highly visible, the recipient can show off their achievements without looking boastful.


Because a cash bonus is earned as part of the job, recipients are likely to mentally combined the bonus with their income. A recipient may see a cash bonus as simply as “more salary.”


Recipients can cognitively alter the perceived value of a non-cash reward. If the recipient worked hard to achieve the reward, their emotional investment will increase the reward’s value, bringing their beliefs in line with their actions.

Because non-cash rewards can carry this additional emotional and psychological weight, they can be seen as more valuable than cash. This makes non-cash rewards more cost effective because you have to keep increasing cash to achieve the same emotional/psychological reaction.

How Are Reward Points Programs Used?

A reward points program can be used to achieve various results. Here are some examples of how corporate reward points programs can be used:

Reward Points Programs for Employees

Reward with points for various actions and milestones is a great way to engage and motivate employees. Here are some examples:

  • Mark hire anniversaries and birthdays.

    Joining an employee in their celebrations and milestones forges a stronger bond with employees and make them feel like part of the corporate family.

  • Build corporate culture.

    Use points to highlight and reward behaviors that define your corporate culture. Your culture is just a slogan on a wall or a website until employees start embodying and driving that culture, after all.

  • Reward workers for their employee referrals.

    When it comes to hiring new employees, those referred by employees are more likely to be hired than those from external sources. Rewarding employees for making hire referrals can save time in the hiring process and result in better performance.

  • Reward top performers.

    Thirty-six percent of employees say that lack of recognition is their top reason for leaving their jobs. Reward your top performers for their hard work and excellence so you can retain your top talent and make it clear how much you value them.

Reward Points Programs for Customers

A customer reward points program helps you build stronger customer loyalty by offering rewards that are personal and relevant. This improves sentiment toward you and gives customers more reasons to choose you over the competition. A few examples:

  • Reward for multiple or repeat purchases.

    In addition to (or in place of) promotions such as the classic BOGO, offer limited-time opportunities to get 2X or 3X bonus points for purchasing certain products. This has the potential to be more cost-effective than traditional discounts and sales.

  • Motivate customers to schedule aftermarket services or submit warranty registrations.

    It can be difficult to track customers down for the aftermarket and product warranties that improve and safeguard their long-term product experience. Offering customers reward points for doing so can be just the incentive they need to act.

  • Reward customers for submitting feedback, testimonials, and/or reviews.

    Customer data is some of the most valuable information to fuel your sales and marketing strategies. Reward points allow you to offer customers something valuable to them in exchange for their information.

  • Increase customer retention rate.

    Even long-term customers can develop a wandering eye, especially when social listening tools increasingly allow marketers to hone in on customers when they’re at key decision-making moments. Show your appreciation to customers in order to improve retention and loyalty.

Reward Points Programs for Sales Teams

Most companies rely on a sales team to get their product into customers’ hands. With this direct link to a business’ revenue growth, sales teams are often under a lot of pressure and scrutiny. But, just like everyone else, they can burn out and get discouraged. A sales reward program can help buoy salespeople’s spirits and drive them to optimum performance, while engaging and educating them. Here’s how:

  • Reward sales contest winners with points.

    Many salespeople are driven by recognition and achievement. That’s why contests, especially those with public sales leaderboards and plenty of spotlight, can be one of the most effective ways to drive sales motivation and performance.

  • Reward positive interactions with customers.

    Sometimes, building long-term customer loyalty is about more than selling. Especially in businesses such as insurance sales, you want to make sure that information and ethics come first in customer dealings. Reward salespeople for diligent follow-up and positive, educational interactions with customers.

  • Reward salespeople for submitting sales and customer data.

    Salespeople are usually in the best position to get information about sales and customers. Reward them for scheduling aftermarket services or submitting warranty registrations, gathering feedback, or completing customer profiles.

Reward Points Programs for Channel Partners

For business-to-business (B2B) companies who go to market via distribution channel, channel partners are essential to their revenue. Rather than relying on the business of hundreds or millions of customers, they work with a handful of dealers, distributors, or other third-party resellers to get their product to the end-consumer. Channel partner relationships are absolutely crucial to a B2B company’s success. Here are a few ways a channel partner rewards program can help boost those partnerships, making them more lucrative and mutually beneficial:

  • Bring in more sales and customer data.

    In channel sales, the manufacturer often has no link to the end-consumer. This causes serious gaps in sales and customer data. Reward your channel partners for submitting data in the form of warranty registrations, invoices, receipts, surveys, and more.

  • Retain VIP channel partners.

    Just as a customer loyalty program can reward and retain customers, a reward points program for channel partners can boost loyalty and emotional investment. Reward points programs allow channel partner participants to earn high-value items such as event tickets, air travel, and hotel accommodations—extraordinary rewards on par with the channel partner’s extraordinary importance!

  • Gain the competitive edge.

    B2B companies are often limited in how much their products can vary from the competition’s in terms of design and function. Safety and regulation policies dictate the standards in industries such as HVAC, medical devices, and insurance, for example. That’s when reward-earning opportunities can make all the difference in whether a channel partner does business with you.

  • Make the channel partner experience more meaningful and personal.

    It’s not always easy to make a B2B purchase something that’s emotional and personally relevant. Nonetheless, personal value is very important to B2B buyers. When they receive reward points from you, they can spend those points on things that have great personal and emotional significance to them. That creates a strong, meaningful bond with channel partners.

A reward points program can help your company achieve various goals and objectives. With a single online rewards program, you can run multiple initiatives for different departments, organizations, teams, channel partners, etc. This helps you align efforts across all parts of your organization, which leads to accelerated growth and improved processes and strategies.