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February 01, 2016

Working Smart

Is Cash Really King? 5 Unexpected Effects of Tangible Rewards

by Casey LaRocca


Click here to order the February 2016 issue in which this article appeared or click here to download it to your mobile device.


Many companies rely on incentive programs to retain and motivate their salesforce. However, creating an effective incentive program can make a tremendous difference in the success of a salesforce, and in turn, in the success of the entire company.

With that in mind, what is the best way to motivate your salesforce and help them experience joy while doing it? What is the best way to tap into the hearts and minds of your salesforce? The answers to these questions are not only key to your bottom line, but also to the emotional connection to your brand.

Let’s back up. The idea of “sell more, earn more” is fundamental for almost all sales jobs. The more you sell, the more you can deposit into the bank. However, when you ask your salesforce to perform at a higher level, psychological experts have learned that tangible rewards like merchandise and travel are both more motivational and more cost-effective than cash.

Cash Rewards: Why Not?

Cash unquestionably has its place in this world, with bonuses, salary increases, profit sharing, etc. However, the problem is when you reward your salesforce with cash as a special incentive, it gets mixed in with the rest of their money. It then becomes fair game for paying bills or buying groceries, rather than used to “reward” themselves. Giving cash as a gift means there’s no emotional connection, your people become dependent on it and it’s more expensive. Cash costs a lot more to deliver, and historically it has not produced the results companies have expected. Why? The biggest reason is that cash is not memorable. There is no emotional connection to cash in a paycheck. There is no moment to share. Cash rewards are simply deposited and forgotten.

On the other side of the coin, people need to be fairly compensated, but with cash-only incentives, companies are missing out on a huge opportunity to emotionally connect with their salesforce. According to many studies, when people are asked what they most want and need in an incentive program, their answer is cash—almost always. However, statistics and research tell a very different story.

Surprising Impact of Non-Cash Rewards

People are far more motivated to perform at a higher level when offered merchandise or travel as a reward.  Specifically, as discussed in Right Answer, Wrong Questions featured in SalesForceXP, Scott Jeffery, Ph.D., describes that in performance improvement programs, non-cash rewards are two to three times more effective than cash rewards. Why? I have outlined five unexpected reasons.


According to many studies, when people are asked what they most want and need in an incentive program, their answer is cash—almost always. However, statistics and research tell a very different story.


It’s Much More Memorable

Do you remember what your mother, significant other, or best friend, gave you for last year’s birthday? I do. Do you remember where you were and how you were celebrating when you look at that gift today? I do, too. Why does this matter? Human nature. Emotions. Connections. Memories.

Tangible rewards are tied to an emotion, which is then tied to your brand. The reward is memorable and clearly separated from compensation. It creates a bond between your people and your company. It is a similar bond that is created between your mother (or best friend or significant other) when they give you a special gift on your birthday.

Furthermore, as Scott Jeffery describes in From Art to Science: Why Tangible Non-Cash Rewards Are More Rewarding for You and Your Participants, “people are able to visualize and remember tangible items better than cash, and therefore stay more actively engaged with program goals and objectives.” Participants who visualize rewards have greater goal commitment and therefore have much better performance. For example, visualizing a Tiffany’s necklace or an iWatch as a reward inspires and motivates a salesperson to stick to his or her goal.

It Stimulates Conversation, Competition and Comradery

It’s much more acceptable to chat or brag about a tangible reward as opposed to hush-hush conversation around compensation: “Look what I earned from XYZ Company—a new flat screen TV for our living room! Let’s have movie night!” versus “Look! I have an extra $1,000 in my paycheck this month!” There is a trophy value associated with non-cash rewards, which encourages social reinforcement of the company brand that would otherwise be taboo with a cash reward.

It’s Considered Guilt-Free Shopping

Most people feel guilty rewarding themselves before taking care of mundane financial obligations. However, with a tangible incentive reward, the participant views it as a luxury that he or she would not normally justify buying. Furthermore, when a participant is able to validate the reward, it has much more motivational power. It is also much more difficult to attach a monetary value to a non-cash reward when it is earned; therefore, the focus turns to the positive elements associated with earning the reward rather than any negative emotions, such as how much the item cost. As an example, if you have earned a brand-new flat screen TV from your company’s incentive program, positive emotions surrounding the TV flow: The TV will look great in the living room, the picture quality will be so much better, and this would be a great reason to throw a Super Bowl party! Positive emotions rule.

It Provides Flexibility

Cash can become an entitlement; for instance, if your company starts giving bonuses on a regular basis, your employees will start to depend on it, and they are more likely to spend outside of their means. The problem is if your people do not receive a bonus (due to performance, budget cuts, etc.), they could then become bitter. At that point, the incentive program could have the opposite effect and cause negative emotions toward your company and your brand.


Most people feel guilty rewarding themselves before taking care of mundane financial obligations. However, with a tangible incentive reward, the participant views it as a luxury that he or she would not normally justify buying.


Higher Lift in Sales Using Less Budget

Usually, you will get more bang for your buck when you offer tangible rewards: a higher lift in performance (higher sales) using less budget. Why? Perceived value of merchandise and travel is much greater than cash. When you give someone cash, they know exactly what it is worth. However, when people redeem for tangible items, there is a higher perceived value. Not only that, but tangible rewards also cost less per improvement dollar and provide much financial benefit for companies concerned with ROI. On average, “Non-cash incentives provide a 3:1 Return-On-Investment when compared to cash to get the same performance improvement result,” as noted in People, Performance and Pay by Carla S. O’Dell and Jerry McAdams, and The Compensation Handbook by Lance Berger.

Cash, although it plays a very important role in all organizations, should not be the end-all be-all when motivating people. As discussed above, tangible rewards have much more potential to inspire and motivate powerful and lasting improvement, and they will provide a better return on investment. All in all, a balanced approach to rewards, one that includes cash as compensation, and non-cash as an incentive, is likely to be the best solution to retain and motivate your salesforce.


Casey LaRoccaAs a Strategic Account Executive at The Maritz Reward Studio, Casey LaRocca leverages her operational knowledge to create innovative and impactful rewards programs that drive results.