The Power of Incentives and Referrals
Incentive and referral marketing can be powerful tools for companies. But what exactly are they? And what should you remember when applying these tactics to your marketing strategy?
INCENTIVE MARKETING
Chances are you've heard of 'incentive marketing' at one point or another, whether you knew it or not. It is simply the use of motivational devices such as competitions, games, premiums, or special pricing, to promote the sale of merchandise or service. Incentive marketing is an incredibly effective tactic used by companies everywhere. For instance, in the U.S. alone, businesses spend around USD $90 billion annually on incentives, according to the Incentive Marketing Association.
In the form of a customer loyalty program or a one-off promotion, businesses put out special offers to incentivize customers to purchase their products so often that consumers have come to expect such offerings from the businesses that they engage with. In a world where consumers have more choices than ever, incentive marketing helps businesses grab the attention of customers with special deals or opportunities.
Now that you know what incentive marketing is (and why it's worth utilizing), it's time to take a look at some of the need-to-knows:
Incentives should always relate to your offerings: Be smart when you craft your incentives. It's easy to throw free stuff at people, but it's not the smartest approach to rewards. You should always link back your incentives to your business, for example, incentivize customers by promising 20% off their next purchase when they spend $100 or more today. Rewards along these lines don’t just encourage your audience to buy things in-the-moment; they prompt them to keep buying in the future. An excellent example of an incentive for credit unions would be to offer a cash bonus when opening a checking account!
Incentives should attempt to answer big pain points: Take the time to think about the biggest problems the customers in your industry face. Generally speaking, the issue falls with companies promising a platform will do X, Y, Z and then delivering a product that doesn't quite fit the bill. This pain point can be addressed by incentivizing your customers with a quality promise. In the credit union world, you’ll often see an incentive to lower your interest rate by refinancing through them or rewards credit cards. These incentives can be extremely promising when the business is able to hold up its end of the deal.
Incentives should be simple: If you want people to take advantage of your incentives, you need to make sure you communicate them in the simplest and most direct way.
REFERRAL MARKETING
Now that we’ve covered incentive marketing, it's time to take a look at another vital marketing tactic, referral marketing. Referral marketing, also known as word-of-mouth marketing, is one of the oldest (and still most effective) marketing strategies out there. It’s basically about people buying your products and services because somebody they trust recommends it to them.
Word-of-mouth is a subtle process that is present everywhere in our daily lives, and is shown to be one of the most powerful forms of promoting your business, but what makes referral marketing that special?
The Power of Persuasion: Think about the last time you went to a new restaurant or signed up for an online course or mastermind. Chances are you were recommended based on the opinion, experience, or results of a person or business you trusted. This is what makes referral marketing so successful; people trust the opinions of other people they respect and love. This tactic is a vital component in running a successful business.
Laser Targeting: If you’ve taken a shot at Facebook advertising, you know that if you don’t get your target audience right, your entire ad budget will go to waste. Thankfully, this is not the case with referral marketing. This is because the clients who recommend your products, are generally only recommending it to those friends, family members, and social media followers that actually want it. Your targeting can’t get any better than this, and without any efforts on your part! A study found that 68% of people trust consumer opinions posted online, while 84% of people trust recommendations from people they know. Thanks to Airbnb’s referral program, the company has almost doubled its total number of consumers each year since 2012.
Taking advantage of the right kind of marketing is vital to reaching your goals, and honestly does not have to drain your entire marketing budget. Both incentive and referral marketing are powerful tools and can often work together. Rewards have long been proven to increase the likelihood of referrals. Whether it’s a discount or any other item of value, referral rewards or incentives give customers a real reason to share your brand with others.
It’s also important to note, the best place for your customers to leave reviews for your company is on Google. Reviews on Google provide valuable information about your business to both you and your customers. Business reviews appear next to your listing in Maps and Search, and can help your business stand out on Google.
Instead of relying solely on word-of-mouth, take advantage of these marketing tactics and create a more reliable, more scalable referral program. If the thought of running another promotion or clarifying how to earn an incentive sounds too much for your team, let the COMMANDOs implement and execute key strategies to get you on the right start for 2021.
