Why brands should leverage incentive-based marketing strategies

Customer incentives are rewards offered by brands in exchange for the completion of brand-building behaviors. The type of reward may vary from discounts and free gifts to reward points and VIP access to new products. The goal is to actively show that the brand values the customer’s business and is willing to make a generous offer as a “thank you” for their support. 

Conversion to purchase is the most commonly targeted consumer behavior, but incentive-based marketing strategies may also be tailored to: 

  • Solicit personal information like an email address or phone number 
  • Drive loyalty program sign-ups or app downloads 
  • Garner reviews and social media shares
  • Encourage repeat purchases or larger cart sizes
  • Entice shoppers to buy in bulk or purchase bundled items
  • Boost referrals of friends and family 
  • Motivate buyers to upgrade
  • Appease customers after making a mistake
  • Inspire customers to try a new product, flavor, or line

No matter which strategy you choose, offering the right incentive can greatly benefit a brand’s marketing efforts and help achieve the most important business goals required for long-term success.

Benefits of Incentive-Based Marketing Strategies

Incentives are not only methods in which to draw new audiences, but they also lie at the heart of loyalty programs. The case for creating, sustaining, and even ramping up a loyalty program is evidenced by the fact that 40% of revenue comes from returning or repeat purchasers. Though loyal buyers represent the minority of the entire customer base (only 8% of all website visitors), they shop more frequently and spend more money than newcomers. Just a 5% increase in customer retention can boost profits up by 95%. Most importantly, brands that offer rewards are building lifetime value and expressing their desire to provide their customers with a positive shopping experience.

Below are five key benefits of implementing incentive-based marketing strategies: 

1. Incentives Are Necessary to Compete in Today’s Market.

As of the last Incentive Federation tally, 84% of U.S. businesses were using non-cash incentives. American companies are spending $90 billion per year on non-cash rewards. These impressive statistics provide social proof of incentives’ effectiveness in marketing applications. Amazon found only 7% of consumers could not be swayed to a brand after receiving an incentivized offer. The majority of certain categories’ customers—such as retail, digital goods, food and beverage—have come to expect rewards as part of their routine shopping interactions.

2. Incentives Boost Conversion Rates.

Previous customers who have signed up for a rewards program are primed and ready to purchase. The chance of selling to an existing customer is 60-70%, compared to 5-20% for a new customer. Other research has indicated that loyal customers convert 4x faster. In terms of value, one loyal returning customer is worth five new ones. Amazon found 50% of shoppers purchase 1-3 more times after receiving an incentive, and 10% go on to make 10 or more purchases.

Despite this, expanding the target market is a common business goal when scaling up, and even new customers can be persuaded by incentive-based marketing when done right. For instance, when Barilla teamed up with Shopkick to increase awareness around their new pasta product, Shopkick created a campaign that engaged consumers throughout the entire purchase journey, offering reward points (“kicks”) to mobile shoppers for interacting with the brand both at home and in-store. 50% of the shoppers who viewed the pasta-maker’s promotional in-app video converted to purchase, and there was a 68% lift in future purchase intent. Of course, there are many factors that determine a shopper’s decision to buy, but one survey found Millennial shoppers were 70% more likely to buy from brands offering a loyalty program. 

3. Incentives Generate Reviews and Referrals.

Positive reviews are crucial to the success of businesses these days, considering 90% of shoppers read at least one review before making a purchase. After receiving a brand incentive, 75% made another purchase, 50% discussed their experience with others (referrals!), at least 35% left a positive review, and 15% shared details on social media. Brands can also tie rewards directly to reviews or referral business to further surprise and delight shoppers, whether it’s their first purchase or one-hundredth. Although reviews are extremely valuable when establishing an initial customer connection, incentives have the power to redirect traffic off these third-party review sites to the brand’s website. After receiving a reward, more than half of customers say the brand’s website would be their first stop for information on future purchases—well over twice the number of people who said they’d consult a consumer review site.

4. Incentives Drive Engagement and Cultivate Long-Term Brand Loyalty.

Rewards transform the way shoppers interact with brands. When consumers feel valued and rewarded, they are more inclined to “give back” to a company by engaging directly with the brand. After receiving a reward, 70% visit the brand’s retail locations, 40% follow them on social media, 35% go on to view other branded content, 30% subscribe to a newsletter, and 15% attend branded events. 

5. Incentives Make it Easier to Collect Data and Personalize Content.

Group of peers draw on white board with markers, drawing the connection between customer loyalty and incentive based marketing strategies.Increasing opportunities for customer interactions are beneficial to brands because they allow for the collection of insightful consumer data that can be used to better personalize content and optimize the shopping experience. Typically, a shopper may be wary to give out personal information, such as demographic-related details, address, phone number, email address, or preferences. However, when incentivized to do so, 87% of loyalty members and more than 50% of general consumers don’t think twice about it because they know providing this information will result in a reward, tailored recommendations, and better customer service. Brands can target landing pages, advertisements, and email communications based on information solicited from consumers. These personalized offers are more well-received than generic sales offers made to everyone. 

Which Type of Incentive Should Brands Offer?

Research conducted by Blackhawk Network found that younger, mobile-using Americans overwhelmingly prefer digital incentives like gift cards and prepaid Visa or Mastercards. 

  • Nearly three-quarters of those surveyed said they were “highly satisfied” with receiving digital incentives as a payment, reward, or rebate. 
  • 63% of respondents preferred these digital incentives so they could receive and use their rewards quickly, making purchases online. 
  • Over 80% of shoppers “completely” or “somewhat” agree that digital incentives would make them more likely to buy from the brand in the future or recommend the brand to others. 
  • More than half of shoppers said they’d consider a brand they’ve never purchased from before if a digital incentive were offered. 

Offering a digital incentive is affordable, easy, and effective when brands partner with an existing mobile marketing platform that millions of consumers are already using daily.  

Shopkick is a mobile rewards platform where active users earn kicks on their mobile devices. Kicks are earned by browsing branded lookbook or video content, scanning barcodes in-aisle, and making online or offline purchases. These kicks can then be redeemed for a wide selection of gift cards of the shopper’s choosing. In return, partnering brands experience greater conversions and incremental purchases, an increase in future purchase intent, and sustained loyalty

Interested in learning more about how you can utilize a Shopkick partnership as one of your incentive-based marketing strategies? Read our brand success stories or contact us to further explore the benefits of partnering with Shopkick. 

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Shopkick is the fun and easy way to earn free gift cards for the shopping you already do. Download the app now!

Why brands should leverage incentive-based marketing strategies



Shopkick is the fun and easy way to earn free gift cards for the shopping you already do. Download the app now!

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