Micro Rewards - The Future of Rewards

You might well ask why are Micro-Rewards – the Future of Rewards?
Rewards are already well-established as a powerful motivator of human behavior both in personal and commercial situations. Used correctly and proportionately they can improve engagement, increase satisfaction, and both encourage brand loyalty and also employee productivity.

However, not all rewards are created equal. Some rewards are more effective than others, depending on the context, the goal, the timing, and the recipient demographic. Micro-rewards, specifically, have been gaining popularity in recent years, especially in the FMCG sector.  So, what are micro-rewards and why are micro-rewards the future of rewards?

What are micro-rewards?

Micro rewards are small, affordable, and ideally highly personalized rewards that are awarded for specific actions or achievements such as a purchase, completion of a short survey or task, email opt-in etc. They can be anything from a digital badge, a sticker, a discount coupon, a music track or eBook, a thank-you note, or a smiley face.

what are micro-rewards

Growth of Micro-rewards

According to recent industry reports, the global market size for micro-rewards was estimated at $1.2 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 12.4% from 2021 to 2026, reaching $2.4 billion by 2026. The report also found that micro-rewards accounted for 8% of the total reward market sector in 2020 and are projected to increase to 10% by 2026.

The report attributed the growth of micro-rewards to several factors, such as the rise of remote work, the need for more frequent and flexible recognition, the demand for more personalized and diverse rewards, and the influence of generational preferences. The report also identified some key trends and best practices for implementing micro-rewards, such as aligning them with organizational values and goals, leveraging technology and data, empowering managers, and peers to give and receive micro-rewards, and measuring their impact and return on investment.

Advantages of Micro-Rewards

Micro rewards have several advantages over traditional rewards, such as points, miles, bonuses, prizes, or trophies. Here are some of the reasons why micro rewards are the future of rewards:

Micro rewards are timelier – they can be awarded immediately after the desired behavior or task is completed, creating stronger association and reinforcement. Versus traditional rewards which often lag the event being rewarded, reducing impact and perceived value.

Micro rewards are more relevant -they are tailored to the individual’s preferences, needs, and goals. They should reflect the person’s interests, values, and personality. Traditional rewards such as collecting Airmiles or room points are often perceived as demanding, complex generic, and worse old-hat or irrelevant, which makes them less meaningful and appealing to wider demographics such as Gen Y and Z. (See our post on “How Generations see rewards and incentives”)

Micro rewards can be awarded more frequently – due to their simplicity and affordable they can be awarded with high frequency without destroying budgets, providing constant feedback and recognition, while boosting the recipient’s self-esteem, confidence, and motivation. They can also create a sense of progress and achievement, which encourages ongoing effort and commitment.  The traditional approach of awarding points over time disconnects the event from the reward and tends to make it less satisfying and motivating.

Micro rewards are more affordable. They are low-cost (sub-$5) or no-cost, which makes them easy to implement and sustain. They also avoid the pitfalls of extrinsic motivation, such as entitlement, dependency, or diminishing returns. Traditional rewards are often expensive or limited, which makes them difficult to maintain and scale.

Micro-rewards: complement traditional rewards

Micro-rewards won’t totally replace traditional rewards, such as those frequently used in loyalty programs, but can complement and enhance their effectiveness. Micro-rewards can be used to reward any type of behavior, goal, or task, such as completing a skills course, achieving a work-related goal, an exercise or wellness task, completing a survey or feedback form, or simply making a purchase. They can be applied in any setting or domain, such as education, business, health, finance, or social good.

Here at Reward the World™, we see micro-rewards as the future of rewards as they are more readily aligned to the modern world and evolving human behavior. By their very nature, they can be more responsive to the changing needs and expectations of people who want more autonomy, flexibility, personalization, and feedback. They are also compatible with emerging technologies and platforms that enable more data-driven, gamified, and socialized experiences.

If you are interested in exploring how Micro-rewards can help your current of future activities, why not book a chat with our CEO? You may be surprised by how a small reward can make a big difference.