To define the concept, the Incentive Marketing Association utilizes simple yet complex terms. It is a planned systematic approach to get individuals to perform something you require of them. It bases its theories on an underlying psychological principle, which states that when there are motivation and ability, there tends to be performance. According to this theory, there are certain groups of people that get paid more, receive more benefits, or have greater access to other desirable resources than other individuals. These groups, called incentive groups, include employees, students, customers, members of the clergy, and others such as lottery winners, film stars, and athletes.
This is how incentive marketing company works. The company offers some form of reward to achieve the target that an individual or group has set for himself/herself, and this reward is conditional upon the performance of the target. Performance is measured through quantifiable outputs such as sales or production. This is then followed by a system of internal controls to ensure that incentives do not adversely affect performance because the company will be accountable for the quality of its product or service. When the goal is to make the best products and provide the best service, then the company can effectively use incentive marketing.
Companies may create incentive programs based on many factors including the type of product or service being offered, the age or gender of the customer, or even an association with a company or organization. Some of the most common incentive programs are general recognition programs, customer loyalty programs, recognition programs for key personnel, and customer incentive programs. For example, in order to encourage customers to buy more, a customer recognition program might be designed. In order to motivate employees to work harder, a customer loyalty incentive program might be arranged.
In general, there are four components that make up an incentive marketing strategy. These are (a) the incentive, (b) the delivery system, (c) the resources needed to deliver the incentive, and (d) the results needed to evaluate the system. The components are very important because they drive the value creation process. These are also called the four C's of incentive marketing strategy.
The incentives to be given may come in the form of cash, product, service, or a combination of any of these. There are four distinct types of incentive marketing such as (a) cost per action (CPA), (b) cost per sale (CPS), (c) single-issue reward programs, and (d) multi-channel incentive marketing strategy. Cost per action (CPA), in which a company offers a coupon or discount to a prospective customer, is a form of cost per action marketing strategy. Cost per sale (CPS), in which a company provides a discount on the sale of a particular product or service to a customer, is an example of cost per sale marketing strategy.
In incentive marketing, the four C's will often be coupled with one or more specific activities. For instance, a loyalty program might integrate multiple elements. It might offer a discount on the first five purchases of a certain product or service, or it might promise a reward for every sale that exceeds a specific minimum. The activities might also be bundled with other elements, like email or website promotions.
On-demand services represent one of the most successful forms of incentive marketing. This is especially true in the context of the digital business. Digital businesses can be relatively inexpensive, especially compared with the costs associated with traditional marketing strategies, but they still need to attract consumers and retain them. The challenge is twofold: first, digital businesses need to convince customers that they have great value and, second, that consumers want great value. Through the use of loyalty programs and other on-demand services, digital businesses are able to accomplish both goals quite well.
If you are looking to increase your brand's influence or increase the profitability of your company, then you should consider offering incentive marketing to your consumers. There are many companies offering a wide range of different incentive programs, so it's a good idea to spend some time exploring your options. Be sure to keep in mind the general goals of your incentive marketing campaign as well, it should be designed to create a more personal connection with your consumers and draw their attention to the core of your company. The success of your efforts largely depends on how well you understand your audience and their interests. Take the time to carefully evaluate all of your options and you'll be able to come up with a plan that works for your digital business.