Marketing is about so much more than turning a prospect into a sale: it is about getting inside the mind of the consumer, and turning an indifferent, disinterested person into a loyal, long-term customer who is passionate about your brand.
Incentives are one of the most effective ways of doing this – but only when they are done correctly. Think of a voucher that offers the recipient money off a gym membership: perfect for the fitness fanatic and fans of healthy eating; useless at best for the bon viveur or oenophile who’d much rather receive a deal on a case of fine wine.
Deloitte’s CMO survey found that, in almost four in ten companies, marketing departments are responsible for leading revenue growth. For these organisations, marketing budgets represent as much as 15 percent of a company’s total budget, and so it’s vital that departments can be confident that every strand of marketing activity is driving growth objectives. There’s no room for dead weight.
This is especially important for brands selling through various distribution channels. A huge chunk of marketing spend is thrown at advertising campaigns, PR programmes and digital marketing initiatives, all of which are aimed at driving footfall into stores and visitors onto retail websites. However, for many brands, the missing piece of the puzzle may be at the point of purchase, when many customers are tempted away from their chosen brand for another product accompanied by a gift with purchase or a cash reward.
So instead of seeing incentives as a loss leader, marketers should consider the full range of benefits, both short- and long-term, that properly-run rewards programmes can bring to their brand. Here are my top five ways in which incentives can help you to unlock more revenues:
1. Steal Market Share
Our recent survey of 1,000 UK adults showed that 75 percent of British consumers admit to being swayed on a final purchase decision from one brand to another by the right reward or incentive. This speaks to the skyrocketing of consumer expectations. Brands are no longer purely competing on product quality or great service. The consumer is king – and they know it. They want and expect much more from the companies they do business with.
Forward-thinking marketers looking to steal market share from competitors will pick up on this trend towards the more demanding consumer and prioritise a rewards scheme to incentivise purchases. Failing to do so risks alienating the three-quarters of consumers who say they research cash rewards or incentives ahead of making a purchase.
2. Tip The Scales
There are so many factors which influence purchasing decisions beyond price and quality. These include brand perception and loyalty, excellent customer service, additional extras, transparent return policies, online reviews – and, of course, rewards and incentives.
Receiving a good incentive is among the most powerful reasons why consumers decide to buy , with 30 percent of people admitting that the right deal would prompt them to buy a product of lower quality and 33 percent to buy a more expensive product. By all means, strive to get the right price point for your product, but don’t ignore the power of rewards and incentives in making that all-important purchase.
3. Build Brand Loyalty
Which is more important to your brand – sales or customers? Most marketers (all, we’d hope) would say the latter, and this is where rewards are so important. More than four in five consumers say that cash rewards and incentives have a positive impact on their relationship with a brand.
Again, this goes to the heart of people’s perception of a brand. Of course price and quality are important, but ultimately loyalty is built on that most ineffable of factors – emotion. Consumers buy products because they like them, but they are loyal to brands that make them feel good. This is where the right reward or incentive programme can build a positive opinion into a lasting relationship.
4. Create Brand Advocates
When asked what would make them more likely to discuss a purchase with a friend, almost one in four UK adults said a free gift or cash incentive. Furthermore, 68 percent said they would be more likely to post a product review if it meant receiving a cash incentive.
Compare that against the 3% of those who say they would discuss an ad campaign, positive sales experience (12%) or packaging (2%).
Any marketer knows that their own message only goes so far in shaping wider perception about their brand. The most powerful advocacy comes from disinterested recommendations – the fabled “word of mouth”. Customer advocacy can yield significant benefits throughout the sales process. Our research shows is that the right reward and incentive doesn’t just generate a sale, it creates a customer : someone who will champion your brand to a whole range of prospective purchasers.
5. Higher Margins
The final benefit of rewards and incentives programmes is that they enable brands to charge higher prices for their product. Our research found that over a third of customers say that they have bought a product that was slightly more expensive than other options because it had a cash reward or incentive for purchase.
This is not an argument for price gouging, but rather a recognition that you don’t need to follow a race to bargain basement prices in order to win customers. Incentive schemes enable a brand to have the confidence to charge a fair market price for their goods and services, and rely on an excellent rewards scheme to give the edge on competitors whose business model depends on taking a financial hit by lowering their prices.
The case for incentives should be plain, but it’s important to remember that these all depend on the rewards scheme being relevant and valuable to each customer. This is where many brands are failing, with over a third of UK consumers saying they had been put off taking advantage of an incentive or gift with purchase because of complexity – or because they think it’s a scam. So remember, marketers, to keep your goal in sight: offer your customers clear and meaningful rewards, and you’ll be rewarded with the long-term revenues you deserve.