John Bird, UK General Manager, 360 insights, explains how the digitisation of rewards and incentives schemes can revive dying practices and lead to increased sales and market share.
The incentives industry has been around for an age and a day and it hasn’t changed much. The dynamics are still the same. Understand the buying habits of customers, gain a sense of what drives purchases and nail down what is required to drive loyalty.
If these objectives are realised, organisations can predict who will buy what and when, and then adapt their sales and marketing strategies to maximise revenue.
Rewards programmes are the traditional means to foster customer loyalty. Once a customer has been ‘captured’ through these schemes, an organisation can drill down and find out exactly what drove the purchase and arm the sales and marketing teams with a swathe of detailed information to generate future sales.
Theory and reality
At least, that’s the theory. The reality tends to be a bit different. Reward schemes often fail and there are several reasons for this. Often, the objectives are not clearly defined, there isn’t enough resource devoted to making it work, customer service lapses, there’s a lack of insight into the target market and the scheme doesn’t stand out from the competition.
Yet companies still persist with these programmes because the alternative is a deeply discounted price war, which no one wants to get into as it negatively impacts the bottom line.
These complexities are magnified in the channel. Sales incentives, sell-through, volume incentives allowances and so on are well established. But cashback promotions, for instance, are often handled manually and it can take months to get the funds to the customers. Market development funds and co-op marketing funds are difficult to monitor accurately and, as a result, marketers often have little idea how effective they really are.
Speed, accuracy and visibility
For successful programmes, three principles are essential; speed, accuracy and visibility. Speed ensures faster fulfilment, accuracy ensures you don’t overpay, while visibility provides you with an unrivalled window into the market and your customers.
Of course, this is the digital age and as such, incentive programmes can now be automated. Digitisation removes the burden of managing and running programmes from time-poor brand and channel marketers. Within the context of the channel, automation accelerates cashback and sales incentive processes, leading to the rapid gathering of valuable accurate market data. Additionally digitisation gives the brand or channel sales manager immediate access to real time customer and channel data. The provision of dynamic dashboards and analytic tools that means programmes can be adapted and refined immediately to reflect customer and channel feedback.
Reward schemes are a proven tactic that can reap real results for businesses. For instance, cash rewards for customers via a company branded MasterCard can make a radical difference in how customers view your brand and importantly, how they respond to you.
Whenever the customer uses your company branded MasterCard, your name is there and it’s a powerful reminder of where their next day out or latest pair of shoes came from. In short, your reward remuneration is associated with a good, positive feeling. This makes customers extremely receptive to a brand.
There are many variations on this. For example, a specific customer segment might be more responsive to a £100 Screwfix card or a John Lewis gift card. Of course, the reward depends on the customer demographic and reflects what they value.
This approach is a subtle twist on existing practice but the value it adds is immense. Customer reward schemes can help boost the sales of struggling product lines, increase loyalty, lead to more customer intelligence and underpin the successful roll out of repeat programmes.
Reward programmes still have value but, for them to be successful, they need to be brought into the modern age through digitisation and new thinking. Companies that recognise this stand to make great gains in measuring where their incentive spend is going and knowing which channel partners are actually supporting the brand.