An incentive that relies on non-redemption is a risky strategy.

The Guardian’s Capital Letters is a great place to discover tales of investment scams, corporate greed, shameful customer service, and unsustainable business practices.

From a recent edition comes another tale of woe:

“I am struggling to get my cash back from a contract with The Mobile Outlet. I signed up last September for a £35-a-month deal which will provide my money back if I claim cashbacks according to their rules. I sent off bills in January by recorded delivery, and a second lot in April. But despite phone calls and letters, I have got nowhere. Can you help?”

As Tony Levene replies:

“As with many of the other companies operating “free calls by voucher redemption” promotions, The Mobile Outlet is bust. The cashback model failed to work – it needed more than 70% of customers to forget to redeem (these would be thrown off the scheme) to be successful, but most set their phones to send reminders to themselves so it slipped few minds.”

Trying to operate a business on the basis of non-redemption is a risky strategy, and one that puts your objectives at odds with that of your customers.

We have seen that non-redemption is the dark secret of the voucher industry, with non-redemption rates as high as 30% putting money straight into the pockets of retailers and voucher companies. For many voucher companies much of their profits stems from non-redemption. However, requiring 70% is an insane business model that proved unsustainable, especially if the process of redemption is straightforward.

At IncentiveDirect, using our SweepBack technology, any unspent points are recirculated back to the clients, who can then redistribute them to others, or use it to fund other incentive activity such as surveys or product knowledge tests.

Computer games, which offer a myriad of rewards and targets through points scored, levels completed, etc are an interesting simulacrum of many incentive campaigns.

Are your users trying to ‘game’ your incentive activity?

My kids have recently spotted a way to ‘gold farm’ in Lego Star Wars. In a double score zone, they have discovered that ‘killing’ the other player yields more points (‘studs’) to the killer than are lost by the killed (In Lego Star Wars, characters aren’t actually killed, but break apart into their bricks, and then reform, less a few points).

So my children will now often spend hours taking it in turns to ‘kill’ each other, in order to increase their combined points total, which can be used to ‘buy’ additional characters and various options. “We need 200,000 points to buy Boba Fett.” they tell me. To them, it’s a worthwhile investment of their time. Whereas I, if I catch them, turn off the Playstation and kick them outside to get some fresh air.

Other games also offer small rewards for those willing to invest the time to carry out repetitive tasks, such as carrying gold in World of Warcraft. This has led to a real world economy where cash-rich time-poor Westerners can pay Chinese labourers to ‘farm gold’ for them, to earn in-game currency.

Are your users going through the motions? Are they farming gold, or ‘Saving up for Boba Fett’, metaphorically speaking? When planning an incentive campaign, it’s important to make sure that users are not just going through the same old motions each month, and winning the same amount of points?

It’s good practice to give your incentive a shake up once in a while, to move the goalposts, and start prioritising new behaviours and rewarding new activities. This helps to prevent users trying to ‘game’ the system – trying to find how to win rewards for the least effort.

For Supervisors, don’t keep rewarding the same behaviours, month in, month out. Any incentive campaign needs to keep evolving, tweaking the parameters, and setting new targets.

Rewarding users for repeating the same old tasks can result in users treading water, and stick to the same safe habits rather than reaching out for bigger gains and bigger rewards.