Incentive marketing

From CEOpedia | Management online

Incentive marketing - this is one of the marketing departments. It is designed to attract as many consumers as possible by offering them samples of the products they can then buy from the trader. In addition, the phenomenon also boils down to offering various gifts or gifts in kind to build positive memories with the brand of the entrepreneur using the method. It also happens that traders support various types of events in order to encourage consumers or to build a good image. These can be industry conferences, student initiatives or simply competitions in shopping malls. The prizes distributed during a given event are varied. These can be any kind of discount coupons or special promotions for the purchase of products using this method of enterprise.

Positive influence on life of consumers

As the research indicates, incentive marketing may have a positive impact on the life of consumers and shape positive attitudes. By promoting healthy products or dietary things. By encouraging them to switch to the products, they are automatically able to change their attitude to exercise and maintain a healthy lifestyle.

Negative influence of incentive marketing

Nevertheless, in times when it is important to achieve specific sales targets and increase the market share of incentive marketing, it is a misused tool. A large proportion of businesses, in particular virtual businesses, use methods that can be perceived negatively by consumers. Especially as annoying, invasive or undesirable.

The above can be observed in particular in the case of people, whom are so called "millenials". Their large-scale use of computer and mobile devices makes them vulnerable to pop-ups or emails spamming their inboxes. They encourage the use of a company's offer without providing any added value in return [1].

While this may have a tangible impact on the company in the short term (in the form of an increase in online business interest), it may have a negative impact in the future. Millennials have it in common that in a very short time they are able to organize and then incite to issue negative online opinions reducing the confidence of the company in the eyes of other, potential consumers [2].

Referral system

Incentive marketing is also one that encourages existing customers to recommend a company's products. In return, they are able to receive benefits such as loyalty cards, cash benefits or non-monetary benefits. Thanks to this, companies are able to receive the right volume of sales, while consumers feel that they gain real value by recommending the products they have tested to their friends. This creates a win-win situation in which the company and consumers benefit.

In principle, the scheme is based on the fact that, for example, by providing a referral link or a specific password tailored to the individual consumer, special points are credited to the referral consumer's account to enable him/her to subsequently exchange his/her marketing and sales activities for specific benefits. The aim is to encourage consumers to build deeper relationships with the brand and engage in the sales process of the company[3]. Above mentioned methods may occur in situations, among other things, such as:

  • Referral links
  • Special coupons
  • Loyalty cards

Examples of Incentive marketing

  • Loyalty programs: Loyalty programs are one of the most commonly used incentive marketing tactics. Loyalty programs provide customers with rewards for making repeated purchases with a particular brand. These rewards can come in the form of discounts, points, coupons, or other incentives.
  • Referral programs: Referral programs are another popular incentive marketing tactic used to drive sales. Referral programs reward customers for referring friends and family to a brand by offering them rewards like discounts, gift cards, or exclusive access to products.
  • Sweepstakes and contests: Sweepstakes and contests are a great way to engage with customers and get them excited about a brand. By offering prizes like gift cards, discounts, or exclusive products, companies can incentivize customers to participate in their sweepstakes or contests.
  • Promotional offers: Promotional offers are a great way to encourage customers to make a purchase. Companies can offer discounts, free shipping, or other incentives to entice customers to purchase their products.

Advantages of Incentive marketing

Incentive marketing can be an effective way for businesses to increase their sales and gain customer loyalty. The advantages of this type of promotion include:

  • Increased visibility: By offering discounts and gifts, businesses can gain more exposure and attract new customers.
  • Increased customer loyalty: Customers who feel appreciated and rewarded for their loyalty will be more likely to come back and shop with the business.
  • Increased sales: By offering incentives, businesses can attract more customers and increase sales.
  • Improved customer satisfaction: Offering rewards and discounts can make customers feel valued and appreciated, leading to increased satisfaction with the business.
  • Increased brand recognition: Incentive marketing can help to build brand recognition and loyalty as customers are more likely to remember the business.

Limitations of Incentive marketing

Incentive marketing can be an effective way of attracting and retaining customer base, however, it is not without its limitations. These include:

  • Cost: The cost associated with incentive marketing can be high, especially when it comes to giving away free products or services to customers. If not managed carefully, these costs can easily outweigh the benefits gained from customer loyalty and engagement.
  • Limited Reach: Incentive marketing campaigns are often targeted at specific consumer segments. This can limit the reach of the campaign and the potential for increased sales and profits.
  • Difficulty Measuring Success: It can be difficult to measure the success of an incentive marketing campaign, as it is difficult to track the number of customers that were actually influenced by the campaign.
  • Unsustainable: Incentive marketing campaigns can be unsustainable in the long-term, due to the costs associated with running them and the limited return on investment.
  • Misused: Incentive marketing campaigns can be easily misused, with customers exploiting the incentives by quickly moving from one promotion to the next. This can lead to negative customer experiences and tarnish the brand’s reputation.

Other approaches related to Incentive marketing

Incentive marketing is not limited to just offering samples and gifts. Other approaches to leveraging this tool include:

  • Promotions and Loyalty Programs - Offering promotions and loyalty programs can be a great way to reward existing customers while also enticing new customers. This can be done through rewards points, special discounts, or exclusive offers that are only available to members.
  • Experiential Marketing - Experiential marketing focuses on creating a memorable, personal experience for the customer. These can be anything from in-person events to virtual activities, like webinars or online games.
  • Influencer Marketing - Influencer marketing leverages the power of social media influencers to spread the word about a product or service. This is done by having influencers post about the product or service on their social media channels, or even by having them create content like reviews, tutorials, or even unboxing videos.

In summary, incentive marketing is a powerful tool that can be used to attract customers by offering samples, gifts, promotions, loyalty programs, experiential marketing activities, and influencer marketing.

Footnotes

  1. ↑ Doherty, N. F., Ellis-Chadwick, F.,(2012), p.843-848
  2. ↑ Taken Smith, K.,(2011), p.489-499
  3. ↑ Berman, B., (2015), p.1-8


Incentive marketing — recommended articles
Buzz marketing — Affinity marketing — Influencer marketing strategy — Below the line advertising — Benefits of social media marketing — Relationship selling — Promotion mix — Types of advertising — Customer benefits

References

Author: Kinga Adamska

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