Brands have used incentive programs to influence consumer behavior as long as mass marketing has existed. From floral-printed flour sacks that thrifty Depression-era housewives could make into dresses for their daughters to online “points” programs that help consumers earn tangible rewards like electronics, incentive programs have been implemented across almost every CPG category.
Brands have used incentives to drive sales and build loyalty for as long as commerce has existed.
Brands know that when it comes to shaping consumer behavior, metaphorical “carrots” work, while “sticks” do not. Incentive programs get results, driving sales and helping with customer retention. Like any approach to driving consumer behavior, incentive programs must be well-planned and well-executed to produce the desired return on investment. Here is how savvy brands put incentive programs to work to drive sales and sharpen their competitive edge.
How Incentive Programs Influence Consumer Behavior
The right consumer incentive program accomplishes several things. It can make the typical consumer feel more like a personally valued customer, especially if rewards can be customized, as is the case with many “points” programs. By making consumers feel as if they are receiving something extra for no extra investment of money, incentive programs shape consumer behavior by boosting their view of themselves as smart stewards of their disposable income. Incentives that engage and resonate with consumer needs and tastes give consumers the sense that brands “get” them, and this can strengthen their brand loyalty.
How Brands Can Create Incentive Programs
As effective as incentive programs are, it is important for brands not to overdo them. When incentives are overused, they become expected, and lose some of what makes them special. Furthermore, they can drive customers to only purchase a product or brand when there is an incentive involved. That said, there are several simple methods brands use to incentivize consumer behavior successfully.
- Offering a promotion, such as a discount, bundle package, or free gift
- Providing free shipping, which makes online shoppers feel especially valued
- Donating some of the brand’s profits to a well-regarded charity
- Allowing consumers to personalize and customize their orders, which can also help brands ultimately develop new products that will appeal to the customer base
- Using tried and true seasonal opportunities like holiday specials, particularly for products that align well with particular holidays or seasons
Brands that align with certain seasons or holidays can do especially well when incentives also reflect this alignment.
What Incentives Work Best?
No incentive program is worthwhile to consumers when a brand’s customer service does not live up to expectations. Therefore, re-examining and, if necessary, modifying customer service practices to get them up to standards is critical before implementing an incentive program.
Virtual gift cards are amazingly popular, because they are the closest thing to giving customers money to spend as they see fit. With rewards programs, starting consumers out with a positive points balance helps motivate them, because they immediately feel as if they are closer to the “finish line” of earning a reward. Time-sensitive offers are also good at creating a sense of urgency and getting consumers to shop right away. Collecting consumer demographic information including contact and purchase data helps brands develop incentives that resonate best with their target consumer demographic.
How Can CPG Brands Successfully Use Incentive Programs?
Success in driving consumer behavior with incentives requires excellent planning, execution, and follow-up, undergirded by a strong tradition of excellent service. Collecting data from incentive programs and analyzing it helps brands learn what works best so they can double down on that and minimize time wasted on less effective incentive programs.
Incentives have been used to influence consumer behavior for as long as brands have existed. When used judiciously, and with meaningful rewards, they can not only drive sales, but also encourage happy customers to share their experiences, while increasing their loyalty to your brand.
Hangar12 is constantly striving to be at the forefront of CPG marketing strategy and more. Subscribe to our blog to stay up to date with our latest insights!