Loyalty & Incentive
Program Usage Strategies

Loyalty & Incentive Program Usage Strategies

Loyalty Programs and Incentive Programs are commonly used by creative agencies across the world to alter customer behavior. Though sometimes the differences between the two concepts can become blurred within the elements of the marketing mix, both are effective for increasing brand loyalty and customer retention.

    • Incentive Programs are typically designed to create further awareness of your brand and draw customers in to increase sales.
    • Loyalty Programs are usually more long-term and focus on rewarding customers for their repeat purchases and engagement – resulting in loyal customers and brand advocates.

According to research by Virtual Incentives, while price was the most important factor, 75% of customers value brands that offer incentives and loyalty programs. When choosing a company to buy from, 28% of people said customer incentives were a decisive factor.

75% of customers value brands that offer incentives and loyalty programs.*

Learn & Earn Customers

Loyalty and Incentive Programs both analyze user data based on purchase history to provide a more personalized experience. This helps to better understand the Customer Journey, teaching you what your customers want and what motivates them to act. This knowledge can then help you encourage customers to purchase more, often by providing personalized customer services, like recommendations based on past behaviors.

Incentives are now such a common and successful practice, it’s to the point that customers expect to receive communications and incentives for their business. A survey by Vibe found 61% of consumers only enable mobile push notifications for loyalty program incentives.

So creative advertising agencies should consider both elements of the marketing mix to open new doors for communication with customers and help generate loyalty among the target market.

4 Types of Incentives

There are many types of incentives, but we recommend focusing on these four to help ad agencies drive leads for products and services. Your starting point is doing everything you can to understand your target audience as much as possible, and then segment that audience accordingly.

This will greatly aid your incentive program when you’re looking to provide a personal customer experience. In turn, this will also boost customer satisfaction and loyalty.

The best offer may vary between traditionalists, Baby Boomers, Gen X, Millennials and Gen Z.

  1. Coupons and discounts in exchange for an email address:
    Key consumer user – Traditionalist and Baby Boomers
    • First-party data is essential. Gathering email addresses should be the top priority of all lead-generation efforts. This is especially true in a world where cookies are becoming less reliable.
    • This first-party data provides many benefits. It can be used to disperse incentives, and it also enables a deeper understanding of customer demographics and psychographics. This allows for more personalized email content with each touch, which in turn builds trust.
  2. Free new product trials:
    All consumer targets
    • This incentive has been around for a long time, and it’s effective because trial is the most powerful factor in purchase and loyalty … provided the product meets expectations.
    • Free product trials are a great way to save money. These trials can be combined with other offers, such as "buy one, get one free.”
    • There are many successful strategies for free trials. Just like coupons, each trial should be linked to collecting first-party data.
    • Incentives to encourage purchases include:
      • Buy one, get one free (BOGO)
      • A free bonus item with an offer
      • A free upgrade with purchase
      • Discounts or coupons
      • Sweepstakes where each purchase earns a customer entry.
  3. Referrals:
    Millennials and Gen Z
    • When the main goal is to build a lead funnel using first-party data, referral incentives are another useful approach. People generally trust their peers more than any product messaging.
    • Referrals have given birth to influencers who tout themselves as “experts” on social media to recommend products, and influencer marketing has seen significant growth in the past two years. Influencer marketing should be part of any lead generation marketing mix, especially when targeting millennials.
    • Referral incentives help sweeten the deal and give customers a reason to let their friends know about the brand. The double-sided referral is also an incentive option where both the referrer and the referred friend get a reward. This can also help drive customer acquisition as well as customer feedback.
    • Referral marketing incentive examples:
      • Discounts
      • Store credits
      • Free products
      • Branded swag
      • Cash payments
  4. Informational Incentives:
    B2B target, building the lead funnel
    • Marketing agencies must stay ahead of industry trends and cultural changes, as these could significantly (and suddenly) affect our campaign strategies. We need to understand them in order to be successful.
    • It is essential to focus on creating various types of content that are relevant to different target business segments. Marketing agencies should strive to be thought leaders and informed content creators.
    • Marketing agencies provide this content to gain the trust of their reader/follower, which is part of the cultivation plan.
    • Examples of B2B informational incentives:
      • eBooks
      • Whitepapers
      • Videos
      • Other informational documents (e.g., infographics) that share thought leadership

Marketing Incentives Already Waiting for You

  • Dunkin’ Donuts’ Dunkin Rewards. With almost five million members of the loyalty program, this chain knows everything about incentives. They encourage their customers to buy more to get bonuses for every dollar spent. Later bonuses can be used to get free beverages on their shopping trips.
  • Sephora’s Beauty Insider. This is a loyalty program that makes up to 80% of Sephora’s total sales each year. Sephora rewards customers with bonus points for each purchase. They can then use these points to redeem gift cards and limited-edition items.
  • Google Chrome rewards users for bug reports. If they find a report to be valuable and contain a reliable exploit, they might reward the submitter up to $15,000.
  • Apple's Apple Card rewards users for every purchase they make with Apple products. Customers can earn points for every purchase and then redeem those points for iTunes credit, Apple Store gift cards or other rewards.
  • Amazon Prime members can also enjoy exclusive benefits. Whether Prime members purchase to get free two-day shipping or access to Prime Video, the other is an added perk, along with Prime Music and even discounts on certain items.
  • My Panera is free to join, and customers can earn free items after a certain number of purchases, along with longer term perks, like a free month of Panera coffee.

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