The Power of Rewards
Incentivization in Marketing
How many of you live with a messy flatmate/ family member?
I have lived with my flatmate for six years and have never seen her clean her room once. After gathering some courage over time, I finally asked her for a reason. Does she not like neat things? Was she just lazy? Should I clean for her?
Do you want to know the reason why she didn’t clean? Drumrolls, please; it turns out she was waiting for her mom to offer her a reward to clean her room! Since she was a kid, her mom used to negotiate a deal with her where she always got a reward after cleaning her room. So guess what we do now? I bake her favourite oatmeal raisin cookies every time I want her to clean her room. Simple right?!
Although paying someone to clean their own surroundings sounds like a bizarre concept, it’s not a rare one. Not only cleaning but attaching a reward to any given behaviour is a well-known concept. This concept is known as Incentivisation. Not only rewards but attaching punishments or penalties for failing to do the said behaviour is also an aspect of incentivisation.
In most cases, incentives turn out to be powerful tools to motivate people to take a specific action. Think about it. Haven’t almost anyone and everyone used this concept? For example, when our parents bought that bicycle when we performed well, our schools awarded rank holders or offices with performance-based bonuses.
However, sometimes incentives can backfire and might decrease motivation instead of increasing it. For example, my flatmate, who was always rewarded for cleaning her room, is only motivated to get the reward and not really to clean her own space. When people are only motivated by incentives, they lose interest in work with no incentive attached and often do not keep up the behaviour once the incentive is gone. By employing incentivisation too often, we may be making ourselves less passionate, less creative, and less engaged with our work. This is where using incentives in the right manner comes in.
If used correctly, incentivisation can work wonders in marketing. Incentive marketing can be a powerful tool for companies. Moreover, it is an effective tactic used by companies everywhere. According to the Incentive Marketing Association, in America alone businesses spend around USD 76.9 billion annually on incentives - including merchandise and gift cards.
So, how do you do it exactly? How do you use incentives in marketing? From using a loyalty program to special offers to one-off promotions, businesses have put a lot of effort into incentivising customers to purchase their products/ services. Here are some straightforward yet effective incentive marketing ideas you can pick and choose from for your customers -
Loyalty programs - Loyalty programs are a prime example. Such incentives are a staple of all kinds of businesses, for the simple reason that they work really well. At the most basic level, a card that you can get stamped to give you a free coffee or haircut is a loyalty program, as is anything that incentivises customers to stick with a brand by providing some form of reward. The reason these programs are effective is that people like to feel appreciated. They enjoy thinking that companies are grateful for their custom and they value excellent customer experience.
Referral bonuses for signing up family and friends - Another common marketing incentive is a referral bonus to bring in new customers. This arrangement is a win-win for firms and customers alike and is particularly effective with affiliate marketing. That’s definitely how you should sell it to consumers if you do implement the idea. Referral programs work particularly well for e-commerce websites and other online businesses. Such firms can make it straightforward for customers to recommend them. They can also track whether those referred do go on to become paying customers. Reviews and other kinds of word of mouth marketing, too, are influential in the digital world.
Early access to new items and sales - If you release new lines or run special offers, you may want to provide them to loyal customers before anyone else. That’s another tried and true form of incentive marketing. It’s a method often employed in the entertainment and leisure industry. Think about the last time you saw tickets for a concert or gig go on sale. You probably noticed that some people could buy them first. That might have included members of the fan club, users of a particular sponsor’s product, and others. This is a great incentive marketing idea to consider. You give up very little and could still get abundant rewards. By giving some customers early access to products or promos, you create a sense of urgency. That’s an excellent way to boost sales. On top of that, you’re still rewarding loyal customers and aiding retention.
Special features for premium membership - This is a slightly different way of rewarding your most loyal customers. Of course, they have to pay for their heightened membership level, but the benefits are worth it. That’s especially true for those most regular users of your product or service. Amazon Prime is the highest-profile example of this kind of marketing incentive.
Sweepstakes and contests for free merchandise - Incentive marketing isn’t all about inspiring people to buy from your brand. Sometimes, a successful marketing incentive helps you gather new leads and info. Sweepstakes and contests are highly effective techniques in this regard. Many firms use giveaways to persuade people to give them their email addresses or fill in a short survey. The former gives your brand a new channel through which to reach potential customers. The latter provides potentially invaluable detail on your target audience. Sweepstakes and contests are easy for even smaller businesses to run. You can appear generous, after all, without breaking the bank. One very desirable prize will delight entrants to your competition. It doesn’t, though, have to make much of a dent in your budget.
Incentive marketing is a potentially lucrative avenue for any brand to explore. That’s whether you want to find new customers or reinvigorate those you already have. This strand of marketing excels in aiding both customer acquisition and retention. Contests, referral bonuses, and loyalty programs, after all, have universal appeal.
Although all the ideas mentioned above are great, you don’t have to implement all of them necessarily. Just pick what seems like the best one for you at this point!
Some quick takeaways -
The concept of attaching a reward to any given behaviour is known as Incentivisation.
Not only rewards but attaching punishments or penalties for failing to do the said behaviour is also an aspect of incentivisation.
Incentives turn out to be powerful tools to motivate people to take a specific action; however, sometimes, they can backfire.
Incentivisation can also be used in marketing to find new customers or reinvigorate those you already have