The 8 Secret Signals that Your Rewards & Recognition Partner Is Wasting Your Budget

Rewards

September 1, 2023

Garrett Genest

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X min

5 min

There’s a dark side to the R&R industry.

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When it comes to today's recognition and rewards (R&R) vendor landscape, there are a few dark corners that demand our attention. We did some detective work to uncover the secrets behind the scenes for you. Join us as we reveal 8 sneaky signs that your rewards and recognition partner could be quietly taking more from your budget than you realize, and discover how to navigate this complex world with clarity.  

1. Over-Emphasis on Rewards

Many of the most prominent R&R vendors started as companies that sold awards such as plaques, rings, and the proverbial gold watch. Today, while most of these vendors have migrated to offering a software solution, their business models are still based on selling rewards.

Because of this, many vendors design their software to maximize the redemption of rewards versus encouraging meaningful recognition and building employee engagement. As a result, system usage may look good because employees want to redeem their points, but the actual impact on your workplace culture remains questionable.

We've designed the Kudos platform to maximize meaningful recognition and everything from how recognition looks on your Kudos wall, to the way that users are nudged to take action reflects these choices.

2. Poor Controls to Prevent Gaming the System

One common reason why businesses switch to Kudos is that our platform has built-in, automatic controls to prevent users from gaming the system. When users game the system, they may attempt to cheat by sending all of their rewards points to one person in exchange for the same. This is a costly problem for many businesses, and one that many R&R vendors avoid fixing because they earn big bucks on all the rewards redeemed.

For clients that use rewards, Kudos includes a safeguard which we affectionately call the "too much love rule." This safeguard prevents users from abusing the system - if a user has sent more than a certain number of recognition with points to another user, any further recognition sent will be sent without points.

3. “Usage-based” Pricing

Usage-based pricing sounds excellent in theory, however in the R&R industry, this typically looks like the vendor taking a higher fee on rewards and reward redemptions. In most cases, if you do the math on usage-based pricing, it will only save you money if your organization has extremely low usage. If your organization has average or above average usage, you could end up spending thousands or hundreds of thousands of dollars more than you would for a flat, price-per-user pricing model. Not to mention, you don’t want any deterrents to participation.

At Kudos, we offer flexibility around how we price our product based on our clients’ needs – but our most popular pricing model is flat monthly, per-user pricing.

4. Gaps in Your Detailed Reporting

Some vendors limit your oversight into things like rewards redemptions, opting instead to only provide generalized company-wide summaries. Naturally, this limits your ability to identify areas where rewards redemptions might indicate a problem, or to gain insight into things that require addressing.

Here at Kudos, since our business model is not designed to maximize your spend on rewards, we have nothing to hide when it comes to your analytics and reporting.

5. Variable Points Per Message

Some vendors allow employees to choose how many points to send with a recognition message. This can cause recognition messages in an organization to be sent with inflated numbers of points, costing your organization a lot of money over the long term.

A well-known multi-national business recently shared a story with us about how they struggled with employees sending minor recognition to dozens of their team members with $50 worth of points to each person which caused them massive budget headaches.

In Kudos, recognition messages are calibrated with pre-defined points amounts at four different levels of recognition (Thank You, Good Job, Impressive, and Exceptional). This model ensures that employees send the right amount of points for the type of recognition sent.

6. Rewards Are Not Optional

While you may be looking for an R&R partner that offers rewards, it’s always a good idea to find out if your partner will require you to use rewards, or if rewards are optional. If rewards are a mandatory part of their program, then the items listed above should be on your radar.

Kudos is one of the few R&R vendors that does not require clients to make use of rewards. Rewards are popular and they can support and effective recognition program, but they aren't for every business.

7. Too Attractive Low Pricing with Hidden Costs

Unfortunately, the R&R industry has many players that will offer attractive, extremely low monthly costs in an attempt to secure you as a customer. Don’t be fooled; these vendors are going to make their money somehow, and offering you a low per-user price is often a signal that a vendor will make more money off of your organization through things like rewards redemptions, required add-ons, charging fees for support or software upgrades, etc. Beyond that, be wary of steep renewals. Implementing R&R software takes time and requires change management – you don’t want to face switching vendors due to higher fees at renewal and have to restart the process.

Kudos clients enjoy straightforward and transparent pricing. For a low monthly per user flat rate, our clients always have access to the latest platform updates along with user and admin support.

8. Large Pre-purchase Points Quantities

Some vendors may require you to purchase excessively large quantities of points up-front – in some cases, millions of dollars worth of points. These points are then used as rewards are redeemed in the years ahead. This approach is often a signal that your vendor makes their money by selling you rewards and committing you to a minimum reward spend.

This approach locks your organization in for the long term, making it very hard for you to switch to another vendor. If you do decide to switch to a new R&R vendor, your old vendor will simply keep the remaining points balance.

Kudos provides its clients with a high degree of flexibility around funding rewards programs. Whether you want to purchase a smaller amount of points upfront, or buy years worth of points up front, that decision is yours to make.

9. BONUS Other Costs

Watch out for vendors that charge for things like support calls, software version upgrades, or even maintaining your R&R software on a monthly basis. Most vendors enable clients to use the most up-to-date version of their apps without any additional charges and offer support as part of the subscription, but not all do – so be sure to ask the questions to know what you’re getting into.

Partnering with Kudos means no hidden costs.

As we wrap up this journey through the world of recognition and rewards, one thing is clear: being informed is essential. The subtle details we've uncovered show just how important it is to make careful choices when picking a rewards and recognition partner. The balance between rewards and true appreciation can shape your workplace in meaningful ways. With this newfound knowledge, you're ready to create genuine, impactful employee recognition that truly makes a difference. Remember, behind every recognition message lies a chance to inspire, motivate, and uplift, and it's up to you to make the most of that opportunity.

Your Employees will LOVE Kudos!

Your Employees will LOVE Kudos!

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About Kudos

Kudos is an employee engagement, culture, and analytics platform, that harnesses the power of peer-to-peer recognition, values reinforcement, and open communication to help organizations boost employee engagement, reduce turnover, improve culture, and drive productivity and performance. Kudos uses unique proprietary methodologies to deliver essential people analytics on culture, performance, equity, and inclusion, providing organizations with deep insights and a clear understanding of their workforce.

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