Loyalty programs, just in the retail space have grown exponentially over the last 5 years. Research reports in 2014 showed the average loyalty programs per household in the US was a whopping – 22. So the questions now is, what makes reward programs so popular? Can innovation succeed through such loyalty and reward programs? Looking at the Starbucks, Barnes & Noble's trend, you would acknowledge innovation, munificence, and a very thorough understanding of customer needs, as the drivers behind their customer loyalty success.

However, does generosity as entities in themselves in form of direct cash backs, discount cards, fancy accessories and luxury getaways drive innovation? Probably not, but make it a systems approach, with one factor driving the other and open the idea to a large target audience, and you might have just hit the sweet spot of innovation and success.

Rewards and loyalty programs stimulate and encourage people to innovate, collaborate, learn and share their expertise on a subject. So understanding when and how to reward your end user is key. In fact, it is the end user who gives a few new innovative ideas and as we stated in our previous post, Gamification is one such mechanism.

To make rewards and loyalty programs innovative it's imperative that these should be in alignment with the strategic objectives of the firm. Creation of new initiatives to help unlock the current problems or find the next best idea is one example. The selection of an idea based on common criteria and then funding the idea in order to make it a reality would perhaps work. Another possibility is the formulation of new workshops to brainstorm and conceptualize new ideas. This would help identify top potential with innovation thinking capabilities and allow them to grow with the organization.

Open innovation has a distinct characteristic that most people innovating or helping here are not money driven if they have a market competitive pay package. They are happier and motivated if they feel valued, recognized and have an opportunity to learn and share knowledge. Our Enterprise innovation suite helps in a unique way here, monitoring all users dynamically and providing analytics on all user and system activity. Creating leaderboards and templates for campaign and loyalty programs helps with recognition, encouraging communication, builds trust and creating an interactive innovation community.

The purpose is to share ideas and solutions openly. This increases the possibility of having disruptive ideas and rethink reward programs. As a consequence employers and contributors are acknowledged at the same time. Rewards and recognition stat from the idea process, and should be carried over the entire innovation lifecycle all the way to the implementation of idea if it happens. The idea is to garner support and generate the "hype" for participation in future campaigns.

Finally, rewards and recognition together help promote innovation through meaningful contributions. Rewards provide the means and recognition that provides the platform for a sustained innovative culture. Such programs send a strong and clear message to customers, employees and the network involved that their contributions valued theby bringing results for the innovation initiative.