Want to motivate your personnel? Increase customer sales? Give your members an incentive by developing a loyalty or incentive program for your employees or customers.

An incentive program, or loyalty program, is a promotion where a sponsor rewards its customers or employees for making repeated purchases or sales. An incentive program allows you to reward every participant that meets a certain pre-determined threshold, such as a predetermined number of purchases or sales.

The most common example of this is shown in the airline industry, where the airlines are awarding their customer miles for every mile flown. These frequent flyer programs allow customers to exchange their miles for flights, upgrades or even special bonuses.

Today we see many forms of incentive programs - from Subway sandwich cards to credit card loyalty programs - that each provide sponsors with a marketing tool that also increases customer and employee loyalty. However, these programs are not always easy to administer.

In order to avoid the lottery laws, sponsors of incentive or loyalty programs must ensure that there is not any random component, or chance, involved in the promotion. Thus, the sponsor must ensure that the incentive is given consistently to all participants who achieve the predetermined criteria.

The downside to this is that you must have enough incentives to provide one to each participant who meets the predetermined criteria. This can make incentive programs more expensive to administer.

In addition, sponsors should ensure they are protected contractually. Not only should ensure that your customers or employees understand what goals they have to reach and how they can reach them, but you should also make sure you are clear about any restrictions.

Do only certain purchases count toward the incentive? Do you plan on terminating the program after a certain period? What happens if you award a prize that turns out being defective? Program terms that are comprehensive will protect you from these possible issues.

For more information, contact:

Sarah Bruno
202.775.5760
bruno.sarah@arentfox.com

Anthony Lupo
202-857-6353
lupo.anthony@arentfox.com