Having spent a few years in the trenches of incentive marketing and the related services; I would like to offer a short explanation of what the topic is about – as well as what kind of value it does provide. This chapter is a description of 3 different scenarios.
Incentive marketing is usually the definition a marketing service / effort made by an organisation who wishes to provide the person or company making a decision of a purchase with an extra ordinary value to decide on their product – instead of the competitor.
It can be used as a hidden discount; it can be used as an opportunity to provide extra ordinary services, and finally also to secure that the individual are being granted a value for his/her loyalty.
We have throughout the years seen several scenarios where this effort has been used to secure the deal – and I would like to provide you with a sample scenario of what have been done; as well trying to place my comments of how used and what kind of value this has made.
IT-Hardware supplier bundle UNIX Services with Education.
An American IT supplier (IBM did at a certain time) bundle their offerings of RS6000 based Servers, with free education for the organisations employees.
The challenge, Microsoft Windows Servers was making the first impressions of the market and several of IBM’s customers made the decision of replacing these services, with the cheaper and more “simple managed solutions”.
Did it make a difference, I hardly think so – but it was a way to show that value in knowledge could be bundled with hardware sales.
Today, we are looking at several hardware suppliers bundling software (Windows with the Computer) as well as Free Applications when buying hardware (Navigation Software/Hardware bundle) and many similar solutions. I have even seen several US-Based offerings of Cable Services with Free Computers and Network Access for a longer subscription period.
Rebate and Bonus Programs
Who hasn’t had a bonus card from a Coffee Shop, Burger King, Meals and bookstores (as well as many others). We have been lured into the belif that the fact that we have been “valued customers” did provide us with a certain value – but the customers have realised that they haven’t been granted a better price, and everyone else have made the same decision – thereby making it not big deal.
Was it worth it – Well, first of all – it made the customers loyal – until the same solution was offered by the competitor and thereby making our Rebate program less valuable.
Usually, we had to introduce a new program soon after, again with the competitor following the same path and so the story goes.
Basically; although been cheap to implement – they haven’t really made an impression in the clients brand recognition, when the customer are moving in between several loyalty cards; we have achieved anything and not changed their purchase patterns.
I fail to see any but one industry who has secured and enhanced the usage of loyalty cards within the years; the Airline Industry.
As an industry they have understood that their frequent flyers had the opportunity to gain “personal value = frequent flier miles” on the companies expense, as well as catering and extend the value by offering several levels (Bronze, Silver and Gold Memberships) – again making the “club” more exclusive.
The value of the card has also been extended with adding in Credit Card, Club Membership as well as Hotel Chains, Car Rental and many other services.
Incentive to decision makers.
Well, haven’t we all heard about these offerings? Choose my product (Cable access to your office) and we will give you a Free X-Box (or whatever tool), I have seen companies who sell IT-Equipment – offering Fridges and Air cons to volume based purchase agreements in Asia.
Does this kind of service work; surely – you can always rely on human greed. Is it ethical – well; sort of / could be / perhaps…. It depends on how it’s been introduced.
Honestly have seen few companies who has used this Incentive form as a lifting pole for the sales – and introduction of new equipment (Lets not mention the excursions and seminars made by the medical industry within the 80’s and early 90’s for the doctors and pharmaceutical decision makers).
Certain companies have taken the effort to be open about the opportunity; but also provide their client with an opportunity to gain personal or company incentive value – to secure future loyalty in purchasing. I have even seen a Danish Organization in Asia go through a sign up procedure for participants – who was that strict in having the Companies CEO to sign up on the admission to this kind of programme.
They just didn’t want anyone later to point fingers and say that the decision was made by an individual who had an opportunity to make personal gaining on securing this deal going through.
Read my next chapters – about the value of incentive marketing.
