What does the next generation of promotions look like? The latest research from branded payment experts Blackhawk Network, ‘Next-Generation Promotions: Foster Customer Engagement and Maximise Marketing Effectiveness’, explores the effectiveness of using reward-based promotions versus discounts today.
The research, in partnership with Aberdeen Group, delves into the top factors for marketers in choosing reward-based promotional tactics and how to maximise effectiveness and profitability, retention, and loyalty strategy. The study involved questioning top marketing professionals across the UK, North America, Latin America and Australia, and as we hoped, rewards came out on top.
Compete on value, not on price
Discount-based promotions can have damaging effects long-term, not only to your own brand, but to the marketplace. Discounts have their place, however reward-based promotions have been proven to provide significant business benefits.
The Aberdeen Group research tells us that, as well as protecting product prices, reward-based promotions support an increase in revenue, provide incremental sales, and increase purchase intent, average revenue per user and profit margins. Rewarding action and behaviour throughout the customer life cycle fosters customer loyalty that will allow you to build lifetime relationships with customers, versus transactional relationships that often come as a result of using discount-based promotions in isolation.
The research also tells us that customer lifetime value increases by 35% and 32% in cross-sell and upsell revenue for businesses using reward-based promotions.
Take the pizza delivery industry: people are wise to the marketing tactics and so they won’t settle for paying full price, knowing that there is always a deal to be had. Over time this drives down the cost of the product, and subsequently the value. Consumers seek the deal and are less focused on the brand.
Meaningful data and insights
Reward-based promotions that engage customers and create meaningful data provide more strategic opportunities. In fact, 26% of marketers collect more customer data to personalise future buying interactions, and better understand buying personas and purchasing habits.
Knowing what your customer base wants and needs based on evidence is key to a brand’s success, so if you can gather data with each transaction, you can build stronger customer relationships. The key is to allow customers from all stages in the lifecycle to become familiar with your reward strategy, and to ensure that you create a simple customer UX.
If you can simplify the management of promotions throughout the full customer lifecycle by rewarding your customers through a single repository, you will boost marketing effectiveness without increasing costs, damaging your product price or impacting limited internal resources.
The importance of choice
No matter which sector you operate in, your brand needs to be front and centre throughout the full customer journey and your proposition should be simple, appealing and stand out.
The Generational Game whitepaper reported over 150 hobbies as common interests across various age groups across everything from board games and baking to music, illustrating how outdated stereotypes and generational presumptions have become. Associating your brand with the concept of choice equated to a brand that offers continued real value.
It’s not reward-based promotions alone that will move the needle, they need to be paired with choice, and should be relevant to all audience types and their changing passion points. A novelty of a brand gesture can quickly lose its value if it’s not suitable or relevant to that customer. In fact, it can alienate and create a negative brand experience where generic reward-based promotions are concerned.
Leona Heymerdinguer is head of customer loyalty and acquisition propositions at Blackhawk Network.