What is a Points-Based Employee Loyalty and Rewards System?

You’ve likely seen how consumer loyalty programs — like airline miles, credit card rewards, or Starbucks Stars — keep customers engaged by offering points for purchases that can be redeemed for future benefits. Maybe you have a credit card that offers different points and rewards based on whether you’re buying groceries, meals, gasoline, or travel. There are airline mile point-based programs that reward you with travel miles every time you fly using your airline credit card. Starbucks has Stars, which you earn with every purchase, and you can ultimately redeem your Stars for purchases in the future. Many retailers give you “cash” for future purchases based on what you spend in a single shopping trip, in-store or online.

These points-based loyalty programs have been around for decades, proving their effectiveness in building long-term engagement and encouraging repeat behavior. From airline miles to credit card rewards, these systems have mastered the art of motivating customers by offering tangible incentives for their loyalty. 

But what if the same approach were applied in the workplace? Instead of rewarding spending, companies could use a similar structure to recognize and motivate employees, where the "currency" isn't dollars spent but effort, achievements, and contributions. By translating these time-tested principles into employee rewards programs, organizations can foster a culture of recognition, drive performance, and strengthen workplace loyalty.

Points-based employee loyalty and rewards vs. traditional employee loyalty and rewards

Employers implement an employee loyalty and rewards program to recognize and encourage employees to stay in their jobs. 

Two primary types of employee rewards and incentive programs exist: traditional rewards and points-based.

Traditional rewards programs typically focus on tangible incentives, such as gift cards, additional time off, and performance-based bonuses, to foster employee engagement and loyalty. 

Points-based systems emphasize flexibility and personalization. Similar to consumer-based programs, they allow employees to accumulate points for various types of rewards. When employees accumulate a certain number of points, they can be redeemed for a reward of their choice, such as tangible goods, stocks, or experiences, a much more personalized approach than traditional programs.

Key differences between traditional and points-based rewards

With traditional employee rewards programs, HR and/or an employee’s immediate supervisor are responsible for recognizing and rewarding employees based on some action they’ve performed. Recognition tends to be event-driven, relying on a specific employee action that the supervisor must observe and respond to. This type of reward system is typically a one-time event, without any ongoing employee engagement. It often rewards a manager’s favorite employees, rather than being fair and objective. They are often “use it or lose it” types of rewards with an expiration date.

Alternatively, points-based rewards are often gamified to engage employees continuously over time. Employees constantly accumulate points, enabling an ongoing recognition process. A significant difference with a points-based system is that it allows for personalized rewards, including long-term investment rewards like stocks, which increase employees' sense of value and appreciation. Instead of receiving a random gift card, employees can choose rewards that reflect their individual preferences.

According to SHRM, “Employee recognition rewards work best when they are customized, timely and fun.” One employee may want company swag, whereas another might want an experience to share with their family, such as theme park tickets. More personally meaningful rewards increase employee engagement, loyalty, and retention because employees feel more valued and appreciated. The range of rewards in a points-based system ensures that there is something for everyone, from gift cards and merchandise to travel experiences, financial products, events, and even charitable contributions.

How does a points-based loyalty and rewards system promote productivity and loyalty?

Points-based loyalty and rewards systems promote productivity and increase loyalty in the following ways:

• They boost motivation in ways that traditional loyalty and rewards programs can’t because they lack ongoing employee engagement. One-off rewards don’t focus on continuous engagement, so they don’t lend themselves to sustained motivation like points-based rewards. When employees can earn and redeem points, they see their work contributions continuously recognized, increasing their motivation to continue building their points balance.

• They foster a positive workplace culture where employees feel their contributions matter, creating a culture of recognition that can lead to higher retention rates. When employees can redeem their points for something personalized, they feel appreciated by receiving something they genuinely want, in addition to their paycheck.

• They improve retention by making employees feel valued, which in turn enhances employee satisfaction. One-off rewards don’t have the same effect, especially when everyone receives the same gift card as a reward. 

Key benefits of a points-based loyalty and rewards program for employers

Employees aren’t the only ones who benefit from a points-based loyalty and rewards program. Employers benefit as well, and these programs typically require minimal management oversight when implemented correctly.

Employers benefit in the following ways:

• Increased employee engagement and satisfaction, which result in a happier workplace where employees genuinely enjoy coming to work. 

• Better morale and collaboration result from employees’ psychological need for recognition being continuously met, leading to increased engagement and motivation.

• Improved performance metrics and achievement of organizational goals result from point-based loyalty and rewards systems, which motivate employees to set and achieve goals for a reward they actually want. A positive work environment leads to improved on-the-job performance.

• A cost-effective retention strategy reduces turnover and its associated costs, thereby increasing the organization’s bottom line and enhancing its overall success.

Implementing a points-based loyalty and rewards program is a win-win for employees and employers because both ultimately get what they want.

Best practices for implementing a points-based loyalty and rewards program

If the flexibility and personalized approach of a points-based loyalty and rewards program appeal to your organization, here are some tips to maximize the program for employees and your organization.

1. Offer diverse, personalized rewards, including ones that align with long-term goals
   
   Rewards should reinforce your company’s mission, vision and objectives. If financial wellness is a benefit you care about for employees, be sure to include financial products that employees can obtain with their points. These might include shares of stock in Amazon or the employee’s company, or a contribution to a 529 plan. Salt offers these types of financial rewards that employees might otherwise be unable to acquire.
   
   If your organization values corporate social responsibility, redeeming points for a contribution to an employee’s favorite non-profit might be a suitable reward for some. 
   
   Because employees are motivated by different rewards, one of the benefits of implementing a points-based program is that it allows for a variety of rewards, ranging from gift cards to experiences that employees might not otherwise have access to. A custom-curated reward catalog can increase engagement and offer something for everyone.
   
   

2. Ensure transparency and fairness in point allocation.
   
   The solution you choose to implement needs to be transparent and fair, and clearly define how an employee earns points. It’s best if employees can manage earning and saving their points independently, with no manager intervention. Employees should have access to an app or digital dashboard that displays their goals, points earned, and overall progress in real-time.
   
   

3. Use technology platforms to manage and streamline the program.
   
   Implement a digital platform that enables your employees to earn and redeem points without requiring administrative oversight, particularly when you have a dispersed workforce. Employees should be able to earn, track, and redeem points in a user-friendly app designed for mobile devices. Salt has a fantastic app that employees love and engage with daily through a user-friendly, comprehensive dashboard.
   
   Points-based loyalty and rewards systems mirror the experiences your employees encounter in the consumer environment, such as airline miles and credit card points. Earning the points is a reward in itself, apart from actually redeeming them. The numerous benefits to employees, from employee engagement to redeeming points for rewards they might not easily afford otherwise, provide continuous motivation and increase productivity. A happy and engaged workforce is less likely to leave, reducing turnover — a win for employers.

Want to learn more about how Chime can help you implement a points-based loyalty and rewards program for your employees? Schedule a demo today!