An incentive based program primarily gives customers more perks and benefits in order to get greater engagement. While the conventional structure emphasizes on rewarding customers with every purchase they make, with an incentive based program, customers are rewarded when they cross or achieve a certain milestone.
To understand and evaluate what is good for your business, it is imperative to understand that a thin line separates loyalty programs from incentive based programs. Though both of these types are widely used in the marketing world, loyalty programs and the incentives offered by them are usually meant for your existing customers, an incentive based program on the other hand doesn’t particularly aim on granting exclusive rewards to loyal members only. This kind of program targets everyone from one time buyers to loyal advocates, and follows the scheme of rewarding a customer, new or old, only if he or she qualifies on the pre-set rules, the directive being the same for everyone. Brands tend to offer both cash and non-cash based incentives for crossing a milestone.
Benefits of an Incentive Based Program
With ongoing thorough research and extensive studies, it is safe to conclude that incentive based programs are quite effective in boosting sales and business growth as it generally hypes up the overall customer base into getting an opportunity to get preferential treatment in the form of a reward, directly from the brand.
- Incentive Based Programs help in the ultimate growth of your business by boosting sales and profit- When a business usually runs their incentive program, a noticeable change in the company’s revenue and sales is observed as customers automatically get enticed when offered with valuable and exclusive gifts.
- Helps in the development of an emotional bond between the customer and the business- It also gives customers reasons to prioritize your brand over other brands. With rewarding customers on achieving every little milestone, the brand effectively shows its customers their importance and value to the business and this motivates them to keep coming back for repeated business. Customers are often seen spending more when brands promote such incentives in the form of cash and non-cash based rewards. Some of the rewards include cashback schemes, paid holidays, cruise tickets, etc.
- Incentive based programs are highly effective in changing your customers’ buying behavior- An incentive based loyalty program plays a massive role in altering the buying behavior of customers in a positive way. When buyers know that they will be rewarded on achieving a target or reaching a milestone, they will be more inclined towards changing their behavior.
Top Brands that have an Incentive Based Program-
- Sephora- To identify Sephora’s tiered based incentive program as commendable will be an understatement, when the brand incentivizes customers with every dollar that they spend. And the silver lining to these rewards bring, customers can choose how to spend their rewards and what exactly to claim, sparing the multinational brand from segmenting rewards for different customer groups. Popularly known as the points reward program, Sephora’s incentive based program is unconventional and appreciated to the point where 80% of the retail giant’s annual sales is contributed by the members of the program.
- Starbucks- If debated over customer convenience and extravagant customer service, Starbucks will most certainly take the prize home. This US based chain of Coffeehouses doesn’t only give customers the privilege of one-stop-shop purchases and orders to redeem instant incentives, but the brand also collects extensive customer data that eventually helps in the formulation of the most effective strategies. Brilliantly analyzing customer behavior, Starbucks has come up with the Starbucks App that has changed the game for the world’s largest coffeehouse chain as it didn’t only efficiently guarantee systematic utility and accessibility, but also helped the customers redeem rewards in no time.
- Amazon Prime- The king of e-commerce stores has pulled off major incentive based programs that have gradually served as an example to other businesses that are trying to implement similar programs to bring profit, boost engagement and motivate more customers to buy frequently. The retail king did a commendable job mostly by prioritizing customers by noticing their feedback and implementing changes to provide them with a seamless shopping experience. Understanding that the competition will only get fierce, the brand had introduced incentives that were widely available to the huge customer base. Keeping the incentives simple yet impactable have always been Amazon’s signature- for example free shipping for first time buyers and for orders above a certain amount, exclusive rewards for free trial period in the brand’s OTT platform, free game contents, early access to Prime Reading, free eBooks, etc.
For over 10 years, Annex Cloud has been the worldwide leader in technology and service solutions that transform customer loyalty experiences for organizations, extending valued customer engagements, and tracking valuable customer information for marking strategic decisions. Powered by the comprehensive and scalable Loyalty Experience Manager™ solution suite, Annex Cloud customers capture and use zero and first party data to seamlessly deliver hyper-personalized experiences across the entire customer journey – from awareness to purchase to retention, loyalty and advocacy. Our experienced loyalty strategists work closely with brands to formulate their loyalty program strategy and incentives by creating a tailored experience. The company is recognized by industry respected organizations like Gartner and Forrester and integrates with over 100 market-leading technologies. Get in touch with us today!