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Consumers: Types of Programs

Incentives can be used to promote any type of consumer behavior. Here is an overview of the various types of consumer incentive programs and some special considerations, if any.

Sweepstakes and Contests

A sweepstakes is a pure game of chance; contests involve some form of participation, such as a game, quiz, or essay. Sweepstakes and contests are frequently used to:

  • Draw attention to advertising or marketing
  • Build permission-based databases
  • Increase retail or online traffic
  • Educate or involve consumers.

Special planning considerations:

  • Integrity pays. Companies interested in creating a long-term relationship with customers have an interest in maintaining trust. Using sweepstakes and contests deceptively might achieve short-term goals, but today’s increasingly sophisticated customer and the ability of the Internet to spread negative publicity decrease the chances that deception will pay off.
  • Make sure your sweepstakes or contest complies with state lottery laws. (See Legal issues.) The main issue: Unless yours is a charitable organization using a raffle in an authorized fund-raiser, your sweepstakes or contest cannot require any form of payment. This is true as well of sweepstakes for dealers and resellers, but many marketers either ignore or are ignorant of the fact that that almost no game of chance can legally require payment to play.
  • Have very clear rules. Anything involving consumers opens you up to the potential for litigation and bad publicity if there are any ambiguities.
  • Remember the tax consequences. In most cases, winners will be taxed at the fair market value of the award. This can diminish the appeal of the award and generate negative publicity.
  • Consider your retail partners. If you sell through retailers or other third-parties, how can the promotion be designed to help them promote both sell-in and sell-through as well?

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On-Pack or In-Pack Incentives

These consist of products either packed on to another product or in the package of another product. The classic concept would be blades with a razor, but these promotions can be quite inventive. A CD might be packed with headphones; a box of cereal packed with a toy premium, or a beverage case packed with a cooler. These powerful point-of-sale promotions help marketers:

  • Draw attention to their product
  • Get shelf-space
  • Promote repeat business
  • Target branding messages at best customers
  • Enhance product value or utility.

Special planning considerations:

  • Logistics are critical: Each program has to address manufacturing, packaging, warehousing, and shipping issues, as well as the logistics of retail customers who have to accommodate the package in their warehouses and shelves.
  • Safety first: Don’t consider any product for household audiences that could have anything remotely dangerous to children.
  • Food regulations: Anybody in the food business already knows the regulations that apply to packaging anything near food.

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Gift-with-Purchase Offers

These programs reward people who make purchases: It could a gift card given to someone who buys a car or house; a bed frame to someone who buys bedding; or free movie tickets to someone who gets a high-end car detailing job. Organizations generally offer gifts with purchase to:

  • Increase sales without appearing to discount
  • Enhance the relationship with the customer
  • Provide a residual marketing benefit.

Special planning considerations:

  • The greater the true value of your offer, the greater the long-term benefits.
  • Presentation is everything: The way you present the gift says as much as the gift itself.

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Door-Opener or Test Drive Incentives

These programs use gifts to open the door to a sale or to promote a product trial. They are frequently used in the insurance and financial services business to improve customer receptivity, or in the automotive, boating, time-share or other product categories in which getting someone to try the product increases the chances of a sale.

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Loyalty Programs

Although popularized by the airline frequent flyer programs, loyalty marketing has existed for over a century and still comes in all sizes and shapes. Programs include: Coupon or stamp programs in which consumers can save print or electronic units for later redemption; point-based programs for online or retail purchase; continuity plans that earn discounts or free merchandise based on purchases made over time. Technology has become a prime tool for automating almost all aspects of these systems.

Special planning considerations:

  • These are not short-term, quick-hit programs: A loyalty promotion means a long-term commitment to rewarding loyal customers.
  • These programs require a long-term commitment to communication, technology, award fulfillment, and measurement.

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Word-of-Mouth and Referral Programs

Incentives to promote word-of-mouth and referrals will continue to grow in popularity as organizations gain the ability to track this business via the Internet and customer relationship management technology. These programs give incentives to people who tell their friends about a product or service, or whose friends end up buying.

Don’t just provide incentives: Consider offering useful information, recognition, networking opportunities, and other strategies that provide extra benefits for promoting a company to others.

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Web Site Opt-In or Subscription Sign-Up Incentives

The economies of permission marketing have driven a significant increase in the use of incentives to promote sign-ups to ongoing communications.

Special planning consideration:

  • Make sure that your incentive does not attract too many unqualified people willing to sign up just for the award. You can do this by promoting the informational or entertainment value of signing up first and foremost, and positioning the incentive as an added call to act now.

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Direct Mail Syndication

Organizations that frequently invoice people for a recurring service often include “bill stuffers” offering discounts or special values on merchandise. In the case of syndication, the discount or value is offered on products or services offered by third-parties. So, consumers might be offered discounts on housewares in the bill they get from their utility company. Many companies fail to take advantage of routine customer communications to not only reinforce the relationship, but to sell more.

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Event Give-Aways

One of the most rapidly growing areas in marketing is face-to-face events. Suddenly, businesses everywhere want to engage with key audiences through some kind of event. Organizations include incentives and gifts to:

  • Increase attendance
  • Extend the brand experience after the event
  • Create word of mouth.

Event give-aways frequently are imprinted with the giver’s brand and tie in thematically with the nature of the event or its audience.

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