incentive based marketing approach

How CPG brands can benefit from an incentive-based marketing approach

Consumer packaged goods (CPG) sit on shelves amid hundreds (or even thousands) of other products. How do you make your product stand out among the sea of competition? Through the use of incentive-based marketing. Incentive marketing strategies drive shoppers to a particular brand or product, nurture relationships, and drive long-term growth. While incentives are no substitute for good management, a popular product, or top-tier customer service, most CPG brands can see noticeable results from taking an incentive-based marketing approach.

What Incentives Do CPG Brands Use in Marketing?

CPG marketers can use a number of different incentives to entice customers:

  • Rewards points are one of the most commonly used incentives in CPG marketing. Brands can offer customers these points that can be redeemed for a percentage off a product or in the form of a gift card. Some brands have their own in-house rewards programs, while others partner with third-party shopping rewards apps like Shopkick. Users earn rewards points when they shop with partner brands, while the brands benefit from boosted awareness, increased watch-through rates for their videos, and greater brand affinity.  
  • Bonus gifts or bundled packages make shoppers feel they are getting a great value when choosing a brand. Promotions are especially popular during the competitive holiday seasons when every CPG brand wants to be noticed and favored.
  • Contests encourage customers to interact with a brand for the chance to win a desirable prize. Many campaigns tie together in-store product location, purchase with online redemption, and even social media participation. With this method, contests can tie together different channels, driving online shoppers in-store and brick-and-mortar consumers to the brand’s online presence.   
  • Free VIP services are more commonly offered by retail establishments than brands, but in a brand-specific loyalty program, they may include free direct shipping, personal consulting, or access to exclusive products. Often, the “VIP treatment” is offered once top tier loyalists reach a certain qualifying purchase level.
  • Free samples invite newcomers to the brand to give the product a try before they buy. Samples can be included with other purchases (packed as part of a “bonus” pack), handed out at events or in-store, or sent by direct mail.
  • CPG personalization entices customers to stick with a brand based on a “personal relationship” that is formed between the brand and customer. Customers feel like the brand really “knows them” based on past purchase history and tracked data, and will cater to their preferences in the future, providing an elevated level of service. Today’s consumer expects an omnichannel shopping experience that bridges data gaps between in-store, online, and mobile purchasing.

Why an Incentive-Based Marketing Approach?

Now, the “why”—why bother using a lure to draw customers? Wouldn’t your money be best spent on an impressive trade show presentation, a fancy website, or product development instead? Maybe your incentives should go to sales reps instead of customers who may be just one-off buyers anyway? The bottom line is undoubtedly important, but when you take the incentive-based approach, you’ll find there are so many more benefits.

1. Excite new consumers, so they convert to purchase.

taking an incentive based marketing approachAn offer like a contest or a rewards points program is appealing because the brand only has to pay a hard-dollar incentive to a small subset of participants after a time, rather than paying out on every purchase. Also, these incentive programs don’t erode brand value by discounting the price. Best of all, when a loyalty program is used, shoppers say they would “buy more often” and “spend more per purchase” than they would with a brand that has no such incentive in place.

2. Use incentives to target and attract a new demographic.

Branching out to new demographics is one surefire way to see audience growth. Millennials have characteristically been the most difficult group to motivate with incentives. They tend to be skeptical consumers in comparison to other consumer groups. Of consumers ages 39-53, 84% say they are more likely to interact with a brand offering incentives. Similarly, the figure is 79% for those ages 65 and over, and 76% of those ages 18-23. Millennials remain the toughest nut to crack, but still, more than half (68%) are drawn by incentives to determine how they will spend their time and money. Research suggests even higher income prospects respond well to incentives like contests, gamification, and rewards programs.

3. Get positive reviews that drive trust.

Random acts of kindness and rewards work to create a positive brand association with each consumer. With enough positive brand associations, the shopper will begin to form a loyalty toward your brand and will want to share their brand loyalty in the form of a testimonial, review, or referral. Brands can incentivize rewards based on these referrals and reviews to gain even more “social proof” that they are legitimate, trustworthy, and well-liked—the hallmarks of a good reputation.  

Random acts of kindness and rewards work to create a positive brand association with each consumer.

4. Make customers feel valued to earn loyalty.

The right consumer incentive program can make a typical consumer feel special—especially when the incentives are customized. Everyone likes to feel as though they are receiving something “extra” or getting a great deal. A valued customer is more likely to buy from you again and again. Since the cost to acquire a new customer is more than the cost of retention, it is financially beneficial to work towards making your current customers feel valued. Naturally, a tiered program works best; customers who have made the most purchases and shown the most consistent loyalty will receive the most generous rewards.

Incentives are a great way to show prospects and customers you value their business. Even though it comes at a cost, the ROI you receive in return should far outweigh the campaign cost. Your business’ finances, reputation, and worth will all thank you for incorporating incentive-based marketing tactics.  

Shopkick is a popular app your brand can use to offer rewards points as incentives redeemable on gift cards of the shopper’s choice. Read our partners’ success stories and contact us to learn how to take a more incentive-based marketing approach today. 

Image courtesy of fizkes


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Dima Volovik

EVP of Product and Engineering

Dima Volovik is the EVP of Product and Engineering at Trax Retail — Shopkick.

Dima Volovik is the accomplished product and engineering leader who led teams to deliver innovative and commercially successful e-commerce products, marketplaces, and enterprise solutions for Amazon, Comcast, Fandango, and Universal Music. Before joining Trax, Dima was the Director at Amazon, where he led product development and Engineering for Amazon Appstore and Amazon Prime Video, CTO at Fandango, and Paciolan, head of technology at Golf Channel/Golf Now, and Global VP of Direct to Consumer Technology at Universal Music Group. Dima’s expertise includes developing consumer products, marketplaces, and enterprise solutions.

Dima grew up in Baku, Azerbaijan, where he received his MS in Electrical Engineering from Azerbaijan Oil Academy, and he currently resides in Los Angeles, California, with his family.