Hey Incentive Companies - I'm Not Buying It - I2I

Like the vegetarian who only eats organic beef or the pacifist who only fights other pacifists, incentive companies are playing a little fast and loose with some of the basic tenets of the incentive industry. It's not a new phenomenon - it's been something that's been going on since the early 90's.

I think the nose first entered the tent when gift certificates became part of the incentive arsenal. These seemingly harmless alternatives to point catalogs were simply the first entries in a timeline that reads like the book of Genesis: gift certificates begat gift cards, which begat limited use stored value cards, which begat VISA and MasterCard stored value cards. And now we have PayPal.

CMG - PayPal

The other day Incentive Magazine announced that Carlson Marketing Group -arguable one of the larger incentive players was entering into a relationship with PayPal. From the online article:

"Carlson Marketing has partnered with PayPal to expand its consumer reward options. The deal, announced last week, offers Carlson’s client loyalty and engagement participants the opportunity to exchange accumulated reward points for a dollar amount deposited into their PayPal accounts. The partnership marks PayPal’s first foray as a collaborator in the rewards space."

The deal initially targets the consumer loyalty space but later in the article:

"While the current partnership only encompasses consumer programs, Patty Saari, vice president of engagement & events for Carlson Marketing, mentioned that there is great potential for the PayPal rewards option could be expanded into corporate rewards catalogs as well."

She also added:

"Being able to broaden the sweep of rewards that really are appealing to consumers is the secret sauce here," added Saari. "We've seen a growing need from and request from the consumer base to really have access to a spectrum of rewards that vary from person to person by geographic location, by income brackets, by tastes."

PayPal = Trophy Value?

From the onset, incentive companies have prayed at the alter of trophy value and disassociation from compensation. Don't get me wrong - I'm a member of the church - maybe one of less devoted since I don't believe every possible performance issue can be solved by dumping some points into a participant's account. I do believe that award programs designed to reinforce short-term, behavior-based activities are the way to go. I also believe that awards, separated from compensation, create a less transactional relationship with the performance - less economic and dollar focused.

Economic relationships breed mercenaries - and mercenaries are always willing to move their skills to the highest bidder. Not what I call a good foundation for a "loyalty" program.

The Logic Escapes Me

As I read through the article (here's the release on CMG site) I tried to connect the dots. And I'm having difficulty.

Immediacy of Redemption: CMG makes the argument the PayPal allows for immediacy of redemption. I get that - everyone wants to be able use their award earnings quickly (BTW - so do the incentive companies - the more you redeem the more you have to earn to redeem again.) But in reality the PayPal scenario is a two step process to redemption. Points to PayPal, PayPal to Seller. In most programs with online catalogs it is a one step process - Points to Catalog. How did this new arrangement create more immediacy?

More choice: According to CMG the connection to PayPal creates more options for choice. Okay - sure, you can now use your points online through PayPal connected vendors. That does increase options. However, with Amazon.com in the incentive picture - allowing "point" bank accounts to interface with their online catalog - we pretty much have unlimited choice in awards. Adding the PayPal feature does open a few other doors but how many really? My experience with PayPal is that it is a service used by very small vendors and international store fronts in order to reduce the risk and the fear associated with purchasing on line.

Transferability: This one makes some sense. I have always thought we could improve incentive awards by allowing people to connect others to the award experience. Through PayPal participants can move points into another persons account (if the other person has a PayPal account - I see a benefit for PayPal here.)

International Appeal: This may be the real target in this arrangement. International programs are difficult to manage and coordinate when it comes to redemption - too many rules, taxes, cultural concerns for a single source for redemption. PayPal's international footprint may have value in the future. I'll say this though - Amazon.com has some pretty strong international redemption options and wouldn't be surprised if they weren't working to get that more connected to incentive redemption.

I've taken a long and winding road to get here... but...

Isn't PayPal really a way to convert points to cash?

It seems to me as you follow the trail that started with gift certificates and end up here with PayPal the next announcement we'll hear from an incentive company will be:

"Incentive company partners with Bank to offer Cash as an award - highly desirable, immediate redemption, total flexibility."

C'mon incentive industry - drop the facade and just say - "we will sell you ANYTHING we can make money on and call it an award."

'Cuz frankly - I'm seeing very little difference between the PayPal connection and just handing people $100 bills.

Why not - cut out the middle man and just give them the cash. Think I'm crazy? How do you then explain this quote from CMG (emphasis mine):

“What really makes this partnership exciting and unique is that it not only allows Carlson to offer our clients and their participants an instant cash option within a point program,” added Tracy Bailey, senior product manager, Engagement & Events, Carlson Marketing, “it opens the door for so many other possibilities for us in the incentive industry.”