Bearing gifts can smooth relationships

Marketers’ views vary on the use of vouchers and incentives to build relationships, but many believe they are an effective tool, especially for rewarding staff.

Vouchers and incentives are a great way to motivate and reward staff, but brands find them less effective at building relationships with clients, according to the first Marketing Week Vouchers and Incentives Attitudes research.

Some 88% of marketers believe vouchers and incentives are very or somewhat effective at boosting staff morale. But when it comes to improving relationships with business clients, 32% of marketers think vouchers and incentives are not effective at all or don’t make a difference.

Using vouchers and incentives to build relationships with consumers falls in between, with 84% of respondents saying these methods are very or somewhat effective at helping a brand forge a closer relationship with shoppers.

When it comes to choosing what type of voucher or incentive is best, opinion is split depending on who a company is trying to impress or get business from. A voucher that can be spent at several different retailers is a clear favourite when it comes to boosting staff morale. Nearly two-thirds say this is the best method, while 10% consider a bespoke gift to be the top way for a company to show it cares.

Vouchers that can be spent with only one retailer are out of favour, with only 3% thinking them a good way to reward and motivate staff. An experience day is favoured by only 8% of marketers, but this might be because of the difficulty in ensuring an experience is appropriate for a particular employee. However, one marketer from the media industry says: “An experience day is good if you can give it to one staff member or a whole department.”

Consumer incentives
Marketers must take a very different approach if it is consumers they want to impress, the research shows. A money-off voucher is the best way to build a relationship with a consumer, according to 34% of respondents. Loyalty cards are also a popular option brands should consider to build relationships with customers.

Supermarkets such as Tesco with its Clubcard, and the Nectar card, which is used by brands such as Sainsbury’s, Homebase, Expedia and Amazon, are all building an effective relationship with their customers, according to 26% of marketers. A loyalty card, which enables customers to build up points to redeem in store, helps customers to feel close to brands, the survey suggests.

But offering a voucher or incentive does not seem to be a very effective way of encouraging existing shoppers to introduce new ones to a brand, with only 10% saying this is an effective way to build relationships.

Offering a free gift to a customer gets a lukewarm response, too, with only 12% believing this sort of promotion will build a relationship with a consumer.

Although 32% of respondents do not believe offering vouchers and incentives to business clients is an effective way to build relationships, those that support this method have fairly split opinions on which approach is best. A voucher that can be spent at several different retailers is a popular option for building relationships with clients, with 29% believing this to be the case.

Nothing says “I know you so well” better than a bespoke present, which is why gifts are the second most popular way to build a relationship with a client. Experience days prove less popular here, with only 16% believing they are the best kind of gift to forge long-term relationships with business partners.

Many predict that much less will be spent on vouchers and incentives in 2011. One respondent says it will be more difficult to justify vouchers and incentives because “budgets are tight and more internal auditing and procedures regarding use of incentives will be carried out”.
But other marketers are more optimistic about the future of vouchers and incentives, many believing that digital technology will move the industry forward. One respondent says there will be “a big move towards online gift cards”, and another says 2011 will see “the redundancy of paper gift vouchers and the growth of multi-store gift cards”.

A marketer working for a company with more than 5,000 employees believes there will be an “increasing move towards multi-retailer gift vouchers as motivation tools”. With many companies freezing pay, vouchers can often raise employees’ morale, another suggests.

A chief executive of a media company told the survey: “As cost-cutting hits home, there will be an increase in money-off vouchers, but also some companies will reward staff with ’treat yourself’ days to boost morale.”

One marketer goes as far as to argue that the key to business growth is through staff rather consumer incentives, because “consumers are not reacting in the same predictable way that they did a few years ago”. While shoppers are busy switching brands, staff could be brand loyal to the business they work for if the right incentives are given, the respondent suggests.

When it comes to predicting what will happen in the consumer space in 2011, there is a mixed response from marketers. Some say brands will rely less on vouchers to encourage loyalty, with one suggesting: “Customers will become more savvy, holding out for competitor offers.”

But another marketer disagrees, saying that more retail discount vouchers, such as a money-off voucher if you return to the same store again, “are becoming more common and expected by consumers, meaning discounts of 10-15% are no longer as effective as they used to be”.

Many respondents suggest that the greatest innovations are coming from the digital space. “The culture around vouchers is changing,” an online marketing executive says. “Online customers are looking for promotion codes and signing up to websites such as Money Saving Expert to find a bargain.”

Online providers such as mobile discount service Vouchercloud have been hyped up in the past year, with brands such as Odeon and Crussh launching campaigns via the service this year. Although redemption rates for some brands on the site are as high as 40%, according to Marketing Week’s sister title New Media Age, most marketers have not highlighted mobile vouchers as a likely big trend in 2011.

However, one marketer says: “Advertisers will realise the potential of using voucher sites to reach consumers.” Perhaps, if this strategy proves successful, other brands will follow suit.

Other marketers have noticed a culture of giving vouchers as a way of gleaning customer data, but one warns that if too many brands jump on this bandwagon, it will turn customers off sharing their details.

The respondent warns: “I believe we need to be wary of saturating the market. I myself have signed up for a voucher scheme and now not only receive the daily offers from that company, but many others. Companies need to be more cautious about sharing data because the market will soon become saturated and consumers will resent this particular type of marketing.”

So, although the survey shows varied opinions about the vouchers and incentives industry, it is clear that many marketers view it as a favoured method of building relationships.

about this survey

  • This research was carried out in September 2010 among readers of Marketing Week and users of marketingweek.co.uk.
  • 25% of respondents work for an organisation with between 101 and 500 employees, while 16% of respondents work in companies with more than 5,000 employees.
  • Marketers from a variety of sectors responded to the survey, with 14% from financial, 8% from consumer goods firms, and 10% from media organisations.
  • All results have been rounded up or down to the nearest percentage point. Not all tables add up to 100 because there may have been more than one answer given.
  • Most respondents are of marketing manager level (56%), 11% are at marketing director level, while only 2% are in a specialist promotions and incentives manager role.

key findings

  • 40% of marketers believe that vouchers and incentives are very effective at motivating or rewarding staff.
  • 9% of respondents do not think vouchers and incentives are in any way effective in terms of building client relationships.
  • 23%say there are no positive or negative motivations for handing out vouchers or providing incentives to forge good relationships.
  • 25% of respondents believe that vouchers and incentives are very effective at building consumer relationships
  • 35% of marketers consider a money-off voucher to be the most effective way of building a relationship with a consumer.

trends for next year

Key predictions from survey respondents:

  • There will be a drop in voucher use as consumers become more savvy, holding out for competitor offers, and there will be less brand loyalty.
  • There will be a move towards making traditional vouchers traceable and towards fraud prevention. There will also be more vouchers in electronic form.
  • Money-off vouchers for attracting new clients are going to be critical for another very difficult economic year ahead.
  • Staff incentives are great for driving sales. Changing promotional incentives weekly will be important because people can get fed up with receiving the same thing.
  • Incentives will prove even more difficult to justify when re-budgeting for 2011/12, unless results are quantifiable and any incentive programme has resulted in incremental business.
  • In a work environment, incentives will continue to be a successful alternative to bonuses and pay rises where companies have been affected by the economic downturn.
  • Rewarding people for giving feedback online will be a good incentive. Data collection and client feedback is always difficult because what you get for the time you put in is relatively poor.
  • A trend towards using iPods, iPads and other tangible gifts for staff, rather than vouchers, is likely to develop.

key findings

  • 26% say a loyalty card, which enables customers to build up points to redeem in store, is the best way to get close to customers.
  • 10%believe that a voucher reward is an effective way of motivating a consumer to introduce another person to the brand.
  • 63% say a voucher that can be spent at several different retailers is the best way to reward or motivate staff.
  • 22% of marketers say a bespoke gift is the best way to build a business relationship.
  • 2%of marketers responding to the survey have the title promotions and incentives manager.

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