How can we build our brand? This is the perennial question in business, and the answers are complex. Whatever you are selling, incentivized purchases can help consumer thoughts turn towards your brand. Incentive programs use buyer psychology to encourage customers to make decisions that build your business.
Incentivized purchases often encourage customers to buy a product, but they go far beyond that. They change many consumer behaviors, encouraging customers to:
- Return to make additional purchases
- Sign up for an ongoing plan
- Upgrade their plan
- Refer friends
- Write positive reviews
- Share on social media
- Create content about your business
The Power of Incentivized Purchases
Incentives provide encouragement to customers. What are some types of incentivized purchases, and how can they benefit your company?
Incentivized purchases draw in new customers, providing them with inspiration to buy from your business. They encourage consumers to make the leap and become customers.
Once you have gained a customer, incentives promote customer loyalty, forging a positive and consistent connection with your brand. Loyalty programs encourage customers to renew a membership, receive discounts as a repeat customer, or sign up for an ongoing plan.
Over time, customers begin to identify as a person who buys this particular product or subscribes to this program. Through this loyalty, they not only continue to be customers themselves, but they also promote your product to others through word of mouth or by creating user-generated content. That content allows you to better target your advertising to those who are connected to your existing customers.
Consumer loyalty is also extremely valuable to your bottom line. It is difficult to gain new customers. It’s much easier to work with those who are already pleased with your business. Often, up to 40 percent of business revenue comes from repeat customers. Since you have an existing relationship with these customers, you also have information about their buying behaviors. With this information, you can target your incentives to your customer base.
This loyalty can even continue through small bumps in your relationship: late shipping or damaged products. A customer who has received rewards and feels loyal is more likely to continue that loyalty, even if there is a single negative experience.
Understanding Consumer Behavior and Incentives
Why do incentivized purchases work to change consumer behavior?
They work through buyer psychology. By linking a customer reward to a specific business goal, you create a win-win situation for both parties. For instance, a customer signs up for your loyalty program. That customer gets an ongoing discount on selected items, and your company gets more customer data and more security that this will become a recurring customer, leading to more sales.
Purchase incentives also work well with leads who are on the fence about purchasing your product for the first time. They give the buyer the feeling of a good deal, helping them become a customer.
Ongoing incentives also give your customers a feeling of relationship with your company. In return, loyalty programs help you shape future products and incentive programs to better suit your customers. Since many incentive programs ask that the customer give you some data to receive the incentive, they allow you to collect data on customers. In turn, this helps you target future incentives.
Steps to Creating Effective Purchase Incentives
How can you create purchase incentives that work?
First, set your goal. Your goal should be specific, and it should work within your project budget. It might fall into one of the categories below:
- Generate new customers
- Encourage customers to purchase a new product
- Increase order size or frequency
- Add new repeat customers
- Target customers from a specific profile
- Target customers from a specific area
- Build loyalty and reputation
- Gather data
Different goals may need different incentives, and you can change your goals over time to adapt to your company’s needs. Set a budget and make a staffing plan for your goal so that you know it’s within your company’s means.
Next, put your customer data to good use. Take the data that you have on existing groups of customers, or reach out to survey new potential markets.
Use this data to develop potential incentive programs. These programs should match your customer’s lifestyle and needs. Consider the cost of each incentive versus the potential income or impact. There are many types of incentive programs, including:
- Online points
- Cash back or rebates
- Discounts
- Gift cards
- Rewards, such as items or travel
Consider what action will lead to a specific reward. Customer actions might include:
- Reviews
- Sharing data
- Referrals
- Buying bundled products
- Ongoing loyalty, such as anniversaries
You can have different incentives for different actions. For instance, a referral could yield your customer a rebate on their next order. A loyalty program can offer a consistent percentage discount or exclusive sales.
Loyalty Programs as a Sales Strategy
Loyalty programs work with a valuable group of customers: those who return to your business again and again. It is a lot easier to keep a current customer than to convince a new one.
Loyalty programs and rewards can boost sales and customer retention.
What makes a loyalty program successful?
- Make it easy. It should be simple to sign up for the loyalty program and easy to continue in it.
- Make it personal. Use customer information to target loyalty rewards to your customers, making those rewards feel even more valuable.
- Make it exclusive: Give loyalty customers advance offers or access to exclusive perks.
Harnessing Buyer Psychology in Reward Schemes
To create an effective reward scheme, bring together buyer psychology and your company’s goals. This will result in stronger consumer engagement tactics.
Before you create your reward scheme, get to know your audience. Then, get to know each part of your audience.
Decide who you’d like to target, and examine their buyer behavior. What rewards motivate this particular group? You may need to experiment until you find a reward that speaks to them.
Over time, your rewards may need to change. As consumer trends change and your customers also shift, update your reward schemes so that they reflect where your buyers want now instead of what they wanted in the past.
Continuously getting to know your buyers and diving into what motivates them will help you invent and reinvent reward schemes that work.
The Future of Sales Strategy
Your business has many sales strategies, and incentivized purchases should be among them. New customer incentives and loyalty programs use buyer psychology strategically. Visitors become customers, and first time customers become repeat customers. As you look to future-proof your sales strategies, take a look at our ultimate CPG marketing library to learn more.
