Why to Use Reward-Based Promotions to Create a Better Brand Experience


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In the age of the consumer, marketers know that each sale, customer acquisition and customer retained is hard-fought. To add to the challenge, shoppers have increasingly grown accustomed to constant promotions and rewards and now respond better to frequent discounting than an everyday low price. Thankfully, there are a variety of available promotions to help marketers achieve their goals.

Reward-based promotions—those that offer shopper incentives to encourage purchase or action—can help customers feel like they are receiving best-in-market prices while also engaging them to promote future sales and drive store and site traffic. Rather than discounting, brands can design promotions that engage consumers and meet them wherever they are—online, in-store or on their smartphones—and consumers are responding. New research from Hawk Incentives focusing on the presence and impact of reward-based promotions among U.S. businesses found that reward-based programs are effective tools used to boost brand image and encourage repeat purchases.

Plain and simple? Reward-based promotions outperform discounts. For instance, reward-based promotions can:

Generate more company revenue. Companies surveyed report an average year-over-year revenue growth increase of 36 percent that can be attributed to reward-based promotions as opposed to 28 percent attributed to discounts.

Drive greater profitability per customer. Overall, compared with discount-based promotions, the companies surveyed that offer reward-based promotions generate a six percent greater average profit margin per customer (24 percent for reward-based promotions versus 18 percent for discounts).

Elevate brand image. To create the impression of a premium brand versus one that consistently discounts prices, 43 percent of companies surveyed consider using reward-based promotions. When directly competing with a rival on brand image, 44 percent of companies prefer to use reward-based promotions.

Help achieve specific business goals—a lot of them. When selecting between reward- and discount-based promotions, the top reasons why businesses prefer reward-based promotions are because they foster customer engagement (58 percent), drive purchase intent (48 percent), drive sales lift and/or purchase frequency (45 percent), compete on brand image (44 percent) and compete on price (41 percent).

Brand perception, purchase frequency and customer satisfaction are among the many brand benefits of reward-based promotions, which is why they stand out as impactful options to achieve business goals and drive effectiveness. And as reward-based promotions like rebates continue to evolve with innovations like instant redemption and loyalty auto-enroll, there is also a rise in consumers’ preferences for such promotions. A separate research study from Hawk Incentives found that as technology improves rebates, shoppers are searching for products with rebates 20 percent more than last year.

Brands have a plethora of options when determining a marketing strategy, but reward-based promotions offer businesses the opportunity to keep today’s empowered shoppers coming back while also encouraging revenue growth and building brand reputation.


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