Loyalty Programs and the Four Common Types of Incentives

Tuesday, October 22, 2019

You manage a company and want to reward your clients and attract new ones. Emerging trends in marketing best practices confirm that incentive-based marketing is a crucial tool. More than ever, consumers are inundated by choices during their purchasing process, and rewards programs offer a unique shopping experience and encourage repeat business. With the fierce competition in the industry, it’s important to develop a loyalty program that’s worthwhile for customers. Rewards issued from the accumulation of points related to purchases is an efficient method, but what are the concrete options in the market once it’s time to give back? Let’s explore the four main categories:

1. Merchandise

Merchandise consists of any type of product given to clients as a reward. Sometimes, the item is sold by the company in question and customers can procure it as part of their regular shopping experience. Other times, it’s an item like a camera, a watch, jewelry, clothing or a home appliance that isn’t part of the business’ inventory. As much as clients can appreciate receiving free merchandise, it’s difficult for them to quantify the value of the points used when receiving such items. It’s also an option that can seem restrictive, making the program appealing to only certain customers.

2. Travel Rewards

Travel rewards can consist of an all-inclusive trip to an exotic location, a cruise vacation, or any other type of travel-related expense such as flights or hotels. It’s a popular option as many people like to venture off and explore the world. However, most consumers prefer selecting their travel destination. Also, in practice trips awarded through loyalty programs often disappoint in terms of quality of experience. There are also many reasons why people may not be able to travel, such as family obligations or the inability to book time off work. As such, this option has definite pros and cons.

3. Money

Cash returns are a simple financial incentive. From a practicality standpoint, consumers like liquid cash. However, they usually feel obliged to insert it to their regular budget to cover their day-to-day expenses, minimizing the impact of this type of rewards program. Furthermore, it’s not the best way to capitalize on a company’s profits, since a part of the margins are given back to the clients.

4. Gift Cards

Gift cards as incentives are popular and their usage keeps increasing in society due to the flexibility they offer. It’s simple to calculate their value compared to the amount of points exchanged, making them appealing for consumers. Unlike cash, recipients usually opt for gift cards from retailers where they’ll splurge on a reward that isn’t linked to their regular financial obligations. From a monetary standpoint, companies who offer gift cards as rewards can purchase them in bulk with large discounts, therefore gift card rewards are both extremely appealing to customers and also financially viable for companies.

When developing your program, do not hesitate to combine different types of rewards in a creative way to keep your customers engaged. To be fully supported in your efforts, discover how Gift Card Warehouse can help you with gift card incentives to truly maximize your efforts in rewarding your clientele.

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