Factional Warfare should reward LP.
Some things:

Losing battles for one side reduces the payout of LP you get from that side, up to a maximum of -75%

Winning battles for one side increases the payout of LP you get from that side, up to a maximum of +75%

If you win a battle for lets say, the Gallente, then fighting for the Caldari gives you reduced LP payout, and vice versa, up to -75%

You don't get ISK in a FW match, just LP(?)

So fighting for one side is more lucrative, but you have to actually win for it to be more lucrative.

Now, what will we do with that LP?
Well, I was thinking, what would make players REALLY want to play FW?

And then I was thinking: "Hmm, EVE has factional gear, why not Dust?"
Factional Gear = Better than prototype, worse than officer

By playing around, let's say, 10 matches?
You get enough LP to buy a set of Factional Gear. (Set being 10 items)

To buy that set, you also need ISK.
I was thinking around 2 million, that puts the price of that gear at 200,000 ISK a pop. (That's not a weapon or suit, that's just the gear like shield extenders or damage modifiers)
So assuming you get 200,000 ISK a match, that will require you to play 30 matches (20 for ISK, 10 for LP) to get 10 of a specific factional item.

Now, what about weapons and suits?
That will cost you double everything, to get 5 of those.
800k a pop, and 20 FW matches.