Cash

Though cash remains a popular choice as a reward for sales performance, those in the know have long understood that non-cash incentives typically do a much better job of driving performance. So why is this? In a new white paper titled, “The Benefits of Tangible Non-Monetary Incentives,” Scott Jeffrey, an assistant professor in the Department of Management Sciences at Canada’s University of Waterloo, offers four specific reasons why cash doesn’t measure up to merchandise and travel incentives.

1. Visualization. Participants can visualize a non-cash reward, which in turn generates emotional anticipation and creates a value that outstrips the cash equivalent.

2. Separation. Non-cash rewards are viewed as above and beyond salespeople’s compensation, whereas cash is frequently just lumped in with existing compensation.

3. Justification. Winners receiving a free DVD player will feel no guilt about enjoying and using the product, but they may be reluctant to spend a cash reward on an equivalent purchase that they might view as frivolous.

4. Social reinforcement. This is another term for trophy value – the sense of accomplishment winners feel when receiving something tangible, as well as the link that reward represents between the award and the company.