Incentive marketing is all about using rewards to motivate people to take specific actions that drive revenue. It's a strategy that revenue marketers employ to encourage customers and prospects to engage in behaviors that benefit the business, such as making a purchase, referring others, or increasing brand loyalty.
The idea is simple: by offering incentives like discounts, freebies, or special privileges, you can inspire people to take action. It taps into our natural desire for rewards and the feeling of getting something valuable in return for our efforts.
This article will cover the fundamentals of how to motivate your customers to buy with incentives, including:
- The benefits of incentive marketing
- Setting revenue growth goals
- Choosing the right incentives
- Measuring and evaluating results
- Incentive marketing case studies
Benefits of incentive marketing
For revenue marketers, incentive marketing is a powerful tool to boost sales, increase customer loyalty, and drive revenue growth.
By strategically designing incentive programs like loyalty programs, referral campaigns, or limited-time promotions, you can motivate your target audience to make more purchases and become loyal advocates for your brand.
So, in a nutshell, incentive marketing is about using rewards to incentivize customers to take actions that directly impact your revenue. It's a smart approach for revenue marketers to engage customers, drive sales, and achieve business success.
Setting revenue growth goals
When you're setting revenue goals for your incentive marketing efforts, it's important to focus on what you want to achieve and make sure they align with your overall incentive strategy.
Think about the specific revenue outcomes you're aiming for, whether it's boosting overall sales, targeting specific products or services, or generating revenue from a particular customer group. Keep your goals realistic, considering factors like:
- Past performance,
- Market conditions, and
- The costs involved in running incentive programs.
To track your progress, keep an eye on key performance indicators (KPIs) that are relevant to your incentive marketing.
These could include metrics like how much it costs to acquire customers, conversion rates, or the average value of orders. Experiment with different incentive strategies, messages, and offers to see what works best for driving revenue.
And don't forget to evaluate the return on investment (ROI) by comparing the revenue generated with the costs incurred. This analysis will help you fine-tune your approach and make informed decisions for future incentive marketing initiatives.
Choosing the right incentives
With incentive marketing, you want to ensure you’re creating the most value possible. This will help to motivate your customers to purchase from your brand, and in turn, improve your return on investment (ROI). So, when it comes to choosing the right incentive for your business, there are six key things to consider.
Understand your target audience
No matter how much you market an incentive campaign, if your audience doesn’t care about what you’re offering, they’re not buying.
So, it’s crucial to have a deep understanding of your target audience’s demographics, psychographics, and purchasing behavior. This will give you a significantly improved idea of what incentives will, and won’t, work.
For example, if you're targeting tech-savvy millennials, digital incentives like exclusive access to online content or early product releases may be appealing. On the other hand, if your audience consists of busy professionals, time-saving incentives such as priority customer service or concierge assistance might be more relevant.
Make sure your incentives are relevant
Similar to the first point, you want to make sure the incentives you offer are relevant to your audience and align with their interests. They need to provide value and be desirable enough to inspire action.
For example, if you’re targeting health-conscious customers, you’d likely want to offer incentives like free wellness products or additional access to certain features when signing up for gym memberships.
If your audience is price-sensitive, then things like discounts, special promotions, or coupons could incentivize them to make a purchase. It doesn’t always have to be big, but there is always something that would increase that motivation.
Some incentives you might want to consider are:
- Buy one get one free offer: Buying more for less can always be a motivating factor, especially if it’s a product they already enjoy.
- Referral rewards: “Share this link with a friend and you’ll both get 15% off.”
- Loyalty rewards: Loyalty cards work well. They keep the card, collect stamps, and get $10 off their next purchase. This keeps them coming back for more.
- Membership rewards: Like the gym membership idea, they get discounts or exclusive access to certain features of your business when they have a membership.
Provide choice or customization where possible
On the previous points, it can be difficult to pin down exactly what your customers want if you have a large consumer base with different segments and demographics. So, sometimes it’s best to offer customization and give your target audience options to customize their incentives where possible.
For example, if you’re a B2B business, you may offer customizable purchase packages, allowing customers to tailor their purchase based on their company’s specific needs and budget. If you’re a B2C, you could offer a choice of free samples, allowing customers to select products that match their preferences.
Offering a more personalized approach to this also improves your relationship with the customer, encouraging them to return because you’re listening to their individual wants and needs.
Think about the customer lifecycle
Different incentives may work differently depending on where your audience stands within their own customer journey. One incentive isn’t going to work for attracting new customers, retaining existing ones, and re-engaging dormant ones. If it does… give us the next lottery numbers, please!
So, ensure you’re tailoring your incentives to address specific stages of the customer lifecycle to maximize their impact.
For example, to attract new customers, you could offer a welcome gift or a “first-purchase” discount. For existing customers, loyalty programs with tiered rewards or exclusive access to certain benefits can foster repeat purchases. And for re-engaging dormant customers, offering these personalized incentives based on their previous interactions could be effective.
Gamify wherever you can
In a world of increased competition and decreased attention spans, gamification is the way to go. Including a sense of fun and achievement in your campaign can be a great way of enhancing engagement and motivation within your target audience.
For example, you can create a points-based system where your customers can earn points for each purchase which then unlocks rewards like discounts or levels. This can be a great way of encouraging them to complete more purchases to earn more points for a greater sense of satisfaction and achievement.
Test and iterate your campaign
With any marketing campaign, it’s essential to experiment to gauge its effectiveness. Otherwise, you’re rolling out campaigns that you have no idea will actually work, and potentially wasting a lot of money.
Consider conducting A/B testing or pilot programs to assess which incentives are driving the desired behavior and outcome. Ensure that you’re continuously gathering feedback and analyzing your results to refine your offer based on real-world, first-hand data.
Measuring and evaluating results
By taking a data-driven approach and continuously improving, you can measure success, identify areas for enhancement, and achieve better results with your incentive marketing efforts.
When measuring and evaluating your incentive marketing…
- Start by defining metrics aligned with your goals, such as sales revenue or ROI.
- Utilize data analytics to track participant engagement, redemption rates, and feedback.
- Compare incremental revenue during the incentive period to baseline revenue without incentives to assess their impact.
- Conduct A/B testing to experiment with different strategies.
- Gather participant feedback and calculate ROI by comparing costs and revenue.
- Benchmark against industry standards and competitors for perspective.
- Continuously analyze data, learn, and make adjustments to optimize future campaigns.
Incentive marketing case studies
Below, we’ve included two case studies of incentive marketing, one for B2C and one for B2B, to give you an idea of how creatively incentive marketing can be applied in real-life situations.
B2C incentive marketing case study
McDonald's Monopoly is an incentive marketing campaign that has been offered across the world since 1987. It's a highly successful promotional campaign that incentivizes customers to make purchases in order to collect game pieces and win prizes.
It involves Monopoly-themed game pieces linked to the various food and drink products McDonald’s has, with each representing a property or a potential prize. Customers are encouraged to collect specific sets of properties to win cash prizes, free food items, or even larger rewards like cars or vacations.
This incentive marketing strategy serves multiple purposes:
- Increasing sales: It creates a sense of excitement and urgency, motivating customers to make multiple purchases to collect game pieces and increase their chances of winning.
- Customer engagement: The campaign encourages customer participation and engagement by tapping into the popular Monopoly game concept, fostering a sense of fun.
- Repeat visits: Customers are incentivized to return to McDonald's repeatedly during the promotion period to maximize their chances of obtaining winning game pieces.
- Brand loyalty and awareness: It cultivates brand loyalty and keeps the company top-of-mind for consumers, who may actively seek out McDonald's during the promotion.
- Word-of-mouth marketing: The campaign generates buzz and encourages customers to share their excitement with friends and family, creating additional exposure and potential new customers.
McDonald's Monopoly has been running successfully for many years, attracting a large customer base and driving increased sales and revenue for the company. It exemplifies how incentive marketing strategies can effectively boost customer engagement, loyalty, and sales in the fast-food industry.
B2B incentive marketing case study
IBM Partner Plus
The IBM Partner Plus program is designed to motivate and incentivize IBM's business partners to increase their sales and drive revenue growth.
The IBM Partner Plus program includes various incentives and benefits, such as:
- Competitive incentives
- Insider programs
- Enhanced support
They have a tiered system, made up of Silver, Gold, and Platinum tiers that the partner can automatically move up to after meeting certain established criteria. As they move up the tiers, they access more benefits. Plus, they have a badge system where they can give partners the opportunity to demonstrate their expertise.
All of these things work to improve their experience with the platform, continually increasing their motivation and engagement due to the constant unlocking of new benefits and achievements.
- Incentives can be a powerful tool to boost customer retention and drive revenue growth. By offering enticing rewards, you can create the perfect opportunity to keep your customers coming back for more.
- When developing and executing an incentive marketing campaign, it’s crucial to keep the target audience in mind and have a clear understanding of the desired outcome. This focused approach ensures that your goals remain the central guiding force.
- The effectiveness of your incentive strategy should be regularly measured and evaluated. To achieve this, seek constant firsthand feedback from your audience. This feedback loop allows you to gauge the success of your incentives and make necessary adjustments for optimal results.
By emphasizing these key points, you can optimize the potential of incentives to enhance customer loyalty, drive revenue growth, and achieve your overarching business objectives.
Speaking of incentives...
Why not sign up to Revenue Marketing Alliance's Pro Membership plan?
As a fully-fledged RMA member, you unlock exclusive access to an array of revenue marketing resources, including:
🤩 Exclusive content. An entire library of action-led content written by experts from orgs like Showpad, SecurityHQ, and Instagram. Added to every other week.
🛠 Templates & frameworks. To save you time, streamline your processes, and work off industry-standard documents. Updated every month.
🎬 On-demand event coverage. Catch up on every single second of our virtual and in-person events. Any time. Anywhere. And learn from Gong, HubSpot, Adobe, and many more.
🔥 Amplified expertise. Take your knowledge to the next level with our members' discount on courses and events, and early access to reports, and updates from our community.
🤝 Lasting community connections. Network with fellow members with all levels of experience. Ask questions and begin to reach new heights in your career. Together.
Plus, you get extra discounts on in-person and online events...
Wanna find out more? Click the link below.