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Cash vs Blended Incentive Spend. Which is Better?

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An ADR market research client is spending large amounts of cash funds on loyalty reward projects and programs and is looking to cut their costs to be more efficient and competitive.  Overall, the client is running two different programs: Program 1 includes several projects and programs that deliver reward incentives to participating panelists with a points-based mixed reward product marketplace.  Program 2, which also includes several projects and programs similar to Program 1 but delivers cash based reward incentives to participating panelists Program 2, is the largest of the programs and has the highest costs overall.

Program 2 is only offering physical prepaid cards, virtual prepaid cards, and checks.  All of which are cash based.  The end users of this program are engaged at least once per month and sometimes as many as five times per month.  Each time, the end user is offered a sum of money to complete the task.  Since each end user is getting rewarded time and time again, the end user is habitually choosing one of the three rewards and has generated a habit in how they handle those funds.  It is unusual that these rewards are being used for anything other than for paying bills or other daily trivial purposes.

The overall challenge is to evaluate the cost of the products for each program, the way the rewards are distributed, and see where savings on products can be applied.  With the introduction of games into the incentive programs, we can examine both scenarios and determine which one is going to present the best method to drive behavior, drive retention, and improve cost efficiencies.




The solution is to move the client's end user to the points program from the cash redemption program.

We begin by connecting with a single point of integration (SSO) to the client's existing system asset ensuring no disruption of user experience.  Enable technology microservices that populate reward marketplace with incentive products based on survey program running and respondent demographics. We keep the cash-based products readily available to the respondent; this comes across as an enhancement to the end user rather than just a change. Add in another product grouping to the reward marketplace of instant win drawings providing chances at top brand merchandise to burn off and reduce point liability and provide the client with reporting and analytics in real-time so that they can make survey and incentive program adjustments quickly. 

The panelist will now be allowed to “Bank” their points, resulting in them setting goals to earn higher valued rewards that they can look at and want to allow for lower costs due to product cost vs. cash costs.  The points program also provides a broader range for how end users can earn points.  Rather than doing x, y, and z to earn a reward, they can earn points by completing x, y, and z but get bonus points for completing them by X time frame.  In the existing programs, there is an approximate 26% difference in cost between the cash-based program and points-based program.  This has demonstrated itself several times across several clients in different situations.  We watched client’s move to a blended-reward program closely with an expected savings of nearly 21% even though considering the majority of users were being indoctrinated in cash.  Regardless, the savings expected, based on last year’s numbers should be between $825,000 and $850,000.  This is not including transaction costs savings as well as extending retention and active engagements while lowering enrollment costs.


Between the two types of programs, it is significantly more cost effective to utilize points with an open series of incentives.  When provided direction as to what incentives are presented to the end user, those suggestions are highly utilized making point-based programs much more efficient and cost saving in all areas: product costs, product transactions, gamification, and of course, management and required staffing to manage.

In the case study, the first improvement was the addition of targeted products to be included as part of the selection therefore offering an alternative to cash which resulted in a 6.7% savings in costs.  When gamification was added, an additional 14% in savings was introduced bringing the total savings to just over 20%.  Gamification also has a large impact on the liability generated by having unspent pins or points in a program by providing added opportunities to burn off the points or PINs in such a way as to be a true value to the company and a lot of fun to the end user.

All told, we see programs that begin with open selections and games that are easy to look at, access, and use will show between 24% and 28% better cost outlay per person than cash based reward programs. 

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Company profile

All Digital Rewards

Scottsdale, Arizona, United States of America
Telephone: 866-415-7703
About All Digital Rewards: Reward management software, prepaid/gift cards, check, PayPal, merchandise fulfillment, sweepstakes, customer support and direct mail services.