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Consumer Incentives: Programs, Benefits, Examples, and Ideas

Consumer Incentives are rewards given out to the ‘customers of a business’ for brand-building purposes. They include reward points, digital gift cards, cashback, etc. This guide covers the need for consumer incentives, their benefits, how to start your incentive program, and the various types of consumer incentives.

Consumer & Loyalty
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10 Min read
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Last Updated on
September 13, 2021

If customers are excitedly waiting for loyalty points and digital coupons in their inboxes, then you are going on the right track. But are they motivated enough? Are your customers as engaged as you’d like them to be? Is there something more that you can do? Well, the answer is “Consumer Incentives.” It’s a long-known fact that incentives work as the biggest motivation and engagement boosters. So, why not offer your customers excellent incentives for every value they bring to the company.

What are Consumer Incentives?

Simply put, consumer incentives are rewards given out to the ‘customers of a business’ for brand-building purposes. It is an effective way to build customer loyalty and increase sales. Consumer incentives can include reward points, cashback, store credits, branded sway, gift cards, bonuses with free purchases, etc.

While completed purchases are an essential part of these, businesses also give out incentives to customers for many other simple activities like:

  • Writing testimonials
  • Making repeat purchases
  • Upgrading their subscription plan
  • Referring to other potential customers
  • Creating user-generated content for social media

But it turns out that merely doling out points for completed purchases is not enough to incentivize your customer. Instead, you need to have a systematic incentive structure that maximizes the draw for consumers while giving you the most benefits at an optimum cost. 

The reward needs to be something that your users are actively motivated by and should ideally tie back to the brand itself in the form of discounts, gift coupons, freebies, and so on.



Consumer Incentives Example


Choosing a personalized and relevant reward is essential, as this will be what interests the consumer enough to consider joining the incentive program in the first place.

At the same time, you need to get other elements right, such as demonstrating how your customers can save money through the incentive program, showing that you genuinely care about them, and making it easy for them to access or use the program.

Adding to that thought, here is a quick guide to designing the perfect consumer incentive program for your brand.


Consumer Incentive Program vs. Consumer Loyalty Program

The words ‘loyalty’ and ‘incentive’ are often used interchangeably. However, an incentive program is not quite the same thing as a loyalty program.

A customer loyalty program is designed to reward existing users for their transactions and give them a compelling reason not to switch to competing brands.

On the other hand, consumer incentive programs focus on delivering sales growth when your customer achieves a target by rewarding them.

Such programs include gift cards and coupons, just like loyalty programs. Still, they may also offer more valuable rewards like merchandise or travel vouchers to further appeal to buyers and win their emotional attachment.

Another difference is that loyalty programs reward consumers for every transaction. On the other hand, incentive programs only deliver the reward once a specific target (such as a certain number of purchases) has been met.

Depending on your goals and the kind of engagement you would like to see with your customers, you can choose to have one or both for your brand.

Benefits of Consumer Incentive Promotions

Having a system of rewards in place for consumers has many advantages. They will be more likely to keep coming back to you and recommend your brand to other people. 

Here are some key benefits that you will reap when you launch and promote your incentive program.

1. Customer satisfaction

When you give incentives to your customers, you show them that you value them for choosing to buy from you. This will help them feel good about their decision and keep them returning and buying your products or utilizing your services.

An important aspect worth considering is to target the right customers with your consumer incentive rewards. 

A tip – Analyze and identify the most profitable customer base and design an incentive program that offers benefits meaningful to this group.

2. Data collection

When consumers sign up for an incentive program, they give you the data that you can use to target them in a tailored fashion and amass critical data insights about your consumer base.

Running incentives offers an easy way to persuade users to willingly share details like their email address or their phone number, things they might not otherwise want to disclose.

Let’s take the example of a supermarket chain that offers loyalty cards to track purchases linked to individual shoppers. If they asked for this information, even the most loyal shoppers would be apprehensive of having their purchases tracked and recorded. Instead, by compensating customers with discounts for using loyalty cards, the store creates an incentive that boosts customer satisfaction while supplying fresh insights into consumer behavior.

3. Customer retention

It is no secret that acquiring new customers is far more expensive than retaining existing ones. By providing the right incentive for consumers, you can keep them hooked on your brand for the long run.

Keep your customers engaged through enticing rewards for more purchases with your brand. And the more you leverage the consumer data you collect; the more relevant your rewards can be, thereby improving customer retention.

A digital incentive platform like Xoxoday can fetch insights about your customers, enabling you to curate your catalog. With this data, you can customize rewards, thereby engaging your target audience effectively.

4. Charity focus

Consumers want to feel like their actions are making a difference. In response, many brands offer incentive programs that let their customers donate their accumulated reward value to a charity of their choice.

This helps the consumer feel good, enables the brand to give back to society, and establishes a reputation as a community-minded company.

Let’s assume you run a retail store. You could announce that a small percentage of your monthly profits will be donated to a particular charity. This becomes a win-win for all. The charity will receive a sizable donation. Customers will feel they’ve helped their community for a cause. And your store will make enough money to cover the donation as well as earn a tidy profit.

Consumer Incentives Program Best Practices

Be cautious not to fall into the trap of thinking that your consumers would be pleased by any token of appreciation. In reality, everyone, including your competitors, is doing some form of incentive or loyalty marketing to attract and retain customers. 

To truly get the most value out of your consumer incentive program, you need to have certain fundamentals in place. Simply putting together “points for purchase” or “refer a friend” social media promotion isn’t going to win new customers or influence existing consumers to stay. 

Here are best practices in mind when designing your customer incentive program:

1. Have clear objectives

Know exactly why you need a consumer incentive program at this point. Do you want to boost your sales? Do you want to promote specific products or services? Do you want to win consumers back from the competition? Do you want to increase customer referrals? This clarity will help you get the nuts and bolts in place.

In other words, know the reasons why you need this program. What do you hope to accomplish? Indeed, customer reward programs boost sales and instill customer loyalty, but they can also: 

  • Increase word-of-mouth referrals (the cheapest marketing strategy)
  • Warm-up potential customers to a sales call 
  • Promote trials 
  • Increase sale of specific products

2. Target the right people

Your consumer incentive program should focus primarily on your high-value and repeat buyers. They are people who are more likely to keep buying from you, giving you the most return on your investment.

In short, getting the maximum bang for your buck isn’t necessarily about targeting every customer base.

3. Be true to your company culture

Your customer incentive program becomes the critical component of your business strategy, and it needs to reflect your brand’s values and culture. The theme of your program should be simple and relevant to your business. 

After all, great incentives drive value for customer advocates, not only for your business.

4. Keep the whole company involved

Remember, the customer incentive program is not siloed to the sales and marketing teams. For instance, IT has a significant role to play in getting the technical side up and running. 

Further, once the incentive rewards are launched, the supply chain, logistics, and other departments would also be involved at various stages of the customer experience. They need to understand how it works, its implications and be clear about their role in making the program work.

5. Have a tiered program

Offer different types of meaningful rewards at different program levels so that new buyers can quickly win something and then be eager to keep buying and earn the higher prizes. For instance, Sephora’s Beauty Insider loyalty program has a point-based system that keeps increasing the bonus points for each purchase made by the customer.

6. Keep tracking

Always keep monitoring your consumer incentive program stats to see what is working and what is not. You should also reach out to the program members for feedback on what they would like to see more of.

Some key insights include: 

  • Enrolment – by geography or demographics 
  • Program usage – beyond enrolment, who participated in the program? What behavior did they exhibit? 
  • How soon did the participants respond after receiving the incentive?

Types of Consumer Incentives to offer and Consumer Incentive Examples 

There are several types of rewards to pick from when designing your consumer incentive program. 

The most popular types of rewards in customer incentive programs are:

  • Price reductions
  • Free shipping
  • Bonus products
  • Free upgrades
  • Loyalty points
  • Free design customizations
  • Sweepstakes 
  • Exclusive or early access to sales 
  • VIP access to unique experiences 

An example of famous consumer incentives is: ‘Roll Up The Rim’ campaign by Canadian coffee chain Tim Hortons. Customers are asked to roll up the rim of the beverages they buy and possibly win a prize.


Consumer Incentives Example

On the other hand, T-Mobile offers perks to its app users every Tuesday, including gift cards and vouchers from other popular brands like Taco Bell or Puma.

Ready to give out Consumer Incentive Rewards?

You know the importance of keeping your customers happy by giving them the right reasons to keep coming back. The question is, what kind of incentives will do the trick? 

Brainstorm with your team and develop reward ideas, referral marketing campaigns, types of incentive programs, and examples of reward programs that can be significantly advantageous for your business. Do not rush the process and be willing to experiment with your campaign ideas.

Lastly, don’t forget to have a customer incentive promotion strategy in place. 

If you are looking for an effective tool to help you run effective customer incentive programs quickly, try Xoxoday today! Book a demo now to understand how it can work for you.

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