Should You Rethink Your Incentivization Plan?

A person rethinking their incentivization plan while laying on a track.


All retailers know the importance of providing incentives to their audience. But if you’re not careful, your approach may end up hurting your business

Matt Duczeminski

January 30 2020

Providing rewards and incentives to customers can be an effective way of spurring brand awareness, engagement, and loyalty amongst your target audience—but results are never guaranteed. What’s more, even if your incentives boost engagement and sales numbers, this doesn’t necessarily equate to positive results for your business.

How can this be? Some possibilities:

  • Your customers are merely taking advantage of your incentivized offers—and aren’t as loyal as they seem
  • Your incentives aren’t doing much to improve your overall customer experience
  • Your incentivization plan is causing your profit margin to shrink

If any of these situations pertain to your business, you’ll need to react swiftly. With that in mind, let’s take a look at key warning signs that might indicate trouble with your incentivization plan.

Your Incentives Generate Too Few Participants

Today’s consumer is more likely to do business with brands that offer incentives than those that don’t. At the same time, offering just any incentive won’t be enough to spur engagement. You must provide value to your target audience to get them on board. If the incentives you offer don’t present a sufficient trade-off for customers, they’ll have no reason to pay attention to them at all.

Even if your audience sees the value of your offer, they still might not take advantage if doing so proves too difficult or irritating. According to HelloWorld’s 2019 Loyalty Barometer Report, 54% of consumers dislike waiting too long to earn a reward, and 39% lose interest when it’s too difficult to earn an incentive. Moreover, a 2019 Harris Poll found that modern consumers are hesitant to engage incentivized offers that require them to provide too much information or take excessive steps to redeem a reward. When offering incentives to your customers, try to have a solid idea what they’re looking for and what lengths they’re prepared to go to achieve it.

Action Plan

  • Ensure that your audience sees value in your incentives
  • Create incentives that nurture your audience further down the sales funnel
  • Ensure customers can access/receive the incentive with little effort

How to build your customer model

Your Incentives Generate Too Little Engagement

According to a 2019 report by Bond, the average consumer belongs to around fourteen loyalty programs—but actively participates in only six or seven. More important than the number of customers who register for your offers is the extent to which they engage. To assess the effectiveness of your incentivization plan, you’ll want to look into the ratio of one-time reward redeemers to ongoing participants, customer feedback and survey data, and the LTV of loyal customers compared to your one-time or average customers.

Action Plan

  • Ensure that any value meets your audience’s evolving expectations
  • Create specific incentives and reward tiers for different audience personas
  • Implement a dynamic reward system that allows you to further personalize your incentives

Your Incentives Don’t Have Much Impact on CX

The incentives you offer your customers aren’t isolated from the rest of their journey; they’re part of their overall experience with the brand. It’s easy to think of your loyalty program or other incentivized offers as an addendum to the customer experience. But this outlook misses the point: customers should engage with your incentives to experience everything your brand has to offer.

Take Starbucks, for example. The coffee giant is well-known for providing a top-notch experience to its customers—with its loyalty program serving as a main draw. The incentive program isn’t seen as something extra, but as an integral part of the overall Starbucks experience.

Action Plan

  • Analyze and assess audience engagement with your incentive program over time
  • Survey customers who do and don’t engage to understand how their experiences differ
  • Determine how to improve your incentive program as a way of enhancing CX

Your Incentives Don’t Have Much Impact on Your Bottom Line

The goal with incentives is to create ones that are valuable enough to inspire engagement, but not so drastic as to be more trouble than they’re worth. Focus on offering dynamic and personalized incentives. This way, you’ll prevent your brand from giving away too much without guaranteeing gains on your end.

Action Plan

  • Avoid a one-size-fits-all approach to incentivization
  • Be intentional and strategic when developing your specific incentives
  • Revisit and tweak your incentives over time to continue making any effort worth the while for your business

Wrapping Up

As with all areas of business, providing incentives must be strategic to keep your audience engaged and your business thriving. When both your customers and your company stand to benefit from your incentivization plan, you’ll have created a win-win situation that will only become stronger as time goes on.

This article was originally published by our friends at PostFunnel.

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