As a business, partnering with a Member Loyalty and Rewards Platform is a great promotional strategy to get in front of a large and engaged audience looking for a reason to use your products and services. There are many options when it comes to creating great incentives or offers to drive business to your location.
But how do you ensure your offer is strong enough that members take you up on it? We’ve put together a list of four tried-and-true types of offers for participating retailers.
1. Direct Discount
A direct discount is a set discount on the price of a product or service, measured either as a percentage saving or set dollar amount. For example: “Save 15% off any pair of blue jeans” or “Get $10 off a deluxe spa treatment.” Direct discounts work very well when you are looking for a simple and easy promotion.
Pros: Direct discounts are easy for the customer to understand and simple to implement.
Cons: Many of your competitors will have similar direct discount offers in the market, making it hard to stand out.
2. Bundling Offer (Buy X Get Y)
With this type of offer, you will receive a bonus item or service at no additional charge when you purchase a specified product. Basically, you get something for free. Generally, the giveaway item is a lost-leader: the real margins are made in selling the intended item at full price. Bundling offers are effective because people like getting something for nothing. Plus, there is less likelihood your competitors will have a similar offer in the market.
It is important that the bonus item is something the customer can use or will value. One way of achieving this is by choosing an item that is complementary to the original purchase. For example: “Receive a set of snow tires with the purchase of a new car” or “Purchase our Home Will Kit and receive the Power of Attorney Kit at no charge.” Another example is: “Buy two furnace filters, get one free.”
Pros: It’s easy for the customer to understand and simple to implement. If you choose the right bonus item, you can maintain high-profit margins on the lead item.
Cons: If the bonus item does not appeal to your potential customer, your promotion will have limited success.
3. Value/Service Added
Instead of using a product as a lost-leader, you offer an additional service at little to no extra cost. Ideally, the service should be related to the full-priced item. “Buy a new vehicle and receive 1-year of free service” or “Buy a couch and receive free delivery” are just two examples.
If you take care in pairing the full-priced item with a service the customer would normally have to pay for, you can create a compelling incentive to buy. Throwing in the service for free (or at a discounted rate) makes particular sense during your slow seasons, when the staff responsible for providing the service is not working at full capacity – but is still being paid to be there.
Pros: There is real perceived value, especially if the service is something that the customer needs anyway.
Cons: If the item has limited appeal or is hard to explain, the promotion will suffer.
4. Buy One - Get One (BOGO)
Known by several names, buy one, get one free promotions are very popular with consumers. No wonder! There is a great deal of perceived value. You get something you want to for free. And hey, two of something is always better than one!
The risk in such a strategy is that you can’t be giving away an item that has a high hard cost unless you have big margins. Such promotions lend themselves well to things like admissions. That is because once you get that person through the gate, you can likely sell them other items (such as food). For items with a hard cost, such promotions should be used sparingly and only for a limited time. For example, a 2 for 1 offer on a hamburger might make sense to drive traffic to a new store opening.
Pros: This is very attractive for high frequency items. It can create a sense of urgency to increase sales over a short period of time and is a proven winner for admission-based businesses.
Cons: Expense. This type of promotion can cut into margins and may cost more than you will make. Depending on the uptake, fulfillment may be an issue leading to a negative customer experience.
Measuring Your Offer’s Success
Finding the types of Rewards program offers that work best for your business may involve some trial and error. Always be sure to track your promotions so you can evaluate the traction of the offer – and support your advertising buying decisions. Also, avoid running in multiple channels simultaneously; this will help you determine where your sales are coming from.
Always strive to make your offer unique. If you simply match a competitor’s offer, there is nothing to differentiate you, and customers won’t see the value. Don’t forget, unlike coupons – Rewards programs are not “one and done”. If you have the right offer, people will be able to redeem it multiple times.
Incentivizing your customers is a learning opportunity. It is a fantastic way to build brand awareness while seeing what drives customers to your business!