Incentives influence a customer’s behaviour—to which 66% of customers agree—and they are used by companies in order to urge customers to do something for the brand. Oftentimes, these incentives are tied to more purchases, higher average order values, amongst others. Sometimes, they are linked to more social media followers, or more loyalty program members.
At least 90% of companies have a loyalty program, such as prominent figures McDonald’s, Ali Baba, Starbucks, and more. In exchange for a customer’s continued purchase, they would periodically arrange for rewards to be delivered to the loyal customer.
If you desire to increase your customer base, then all the more you need to get your incentive management underway and start using them. Before you lose out on this race…
However, what sort of incentives should you go for?
Direct vs Gamified Incentives
Diving into the world of incentive management can be scary, but the whole concept is really quite simple. First of all, you need to choose between two types of incentives, both having their charming and ugly sides: direct and gamified incentives.
Direct incentives are what they say on the tin. These are rewards given directly to the customer for taking a certain action.
Gamified incentives, however, are rewards that are obtain through an interactive experience, such as, obviously, a game.
Neither reward is objectively better than the other, but incentive management dictates that you do need to consider their pros and cons before choosing which one to use. The better incentive here will be the one that best matches your needs.
Direct Incentives
Direct incentives are a popular way for brand owners to attract customers to their store. They confer upon your brand immediacy, in which customers will respond how you want them to in a short period of time.
Examples of direct incentives include discounts, coupons, cashbacks, and complimentary products.
Pros:
1. Easy to Understand
It’s easy for both you and your customer to understand what a direct incentive entails, and that is precisely what customers want. Follow your brand on social media, and they get a 20% discount off their next purchase. Buy a certain item, and they get that other item free.
When customers see promotional material of these rewards, they are sure to understand immediately what they are getting themselves into, and what they can get out of it.
Because of its simplicity, customers are likely to be more willing to purchase from you to obtain that reward. This is essentially the basis of its effectiveness.
2. Drive Specific Behaviours
Because of how simple it is, direct incentives can help drive specific behaviours, such as joining your loyalty program, or participating in a booth at a roadshow. If you want customers to support you in ways other than buying from you, you could consider using direct incentives to do so.
Simply make it clear when promoting your campaign, and you might find customers flocking to you and participating in whatever you want them to do. This can be an effective way in driving numbers other than in sales.
87.5% of loyalty program owners intend on communicating with customers in non-transactional ways in the next year. Being able to interact with your brand other than purchasing things is also a great way to build an emotional connection with your customer.
3. Measurable
Parameters relating to direct incentives are measurable. The number of customers that respond to your incentive campaign can be easily tracked, and the records stored in a centralised database that you can peruse at any time.
This can make it convenient for when you need to take a quick look at your business statistics and make decisions based on hard data rather than speculation. Your decisions on incentive management are likely to be sounder, and it can yield better results in your next marketing campaign.
Cons:
1. Costly Here
As enticing as direct incentives sound, they can be expensive. For example, if you offer a free item for every social media follower, then you could be looking at several hundred or even thousand followers, and the need to hand out several hundred or thousand items.
The more customers that respond to your direct incentive, the higher your costs go. You must consider your disposable budget carefully before deciding just how many direct incentives to offer, or if you should offer that at all.
2. Impersonal
If a large number of people are receiving the exact same reward, then the direct incentives could appear impersonal. That is to say, that your customers do not feel special, and you may have wasted an excellent opportunity to deepen your emotional connection with them.
80% of customers say that they prefer doing business with a company that personalizes the shopping experience. 71% of customers are also frustrated by impersonal shopping experiences.
In other words, you may have missed out on a chance to gain more loyal customers.
3. Pre-Empted
If you give out direct incentives too often, your campaigns can be pre-empted by customers, which may make them less effective.
For example, having a 1-for-1 sale every week gives customers the idea that they can get a 1-for-1 sale no matter when they visit your store, so they do not respond as strongly to your campaign anymore.
Over time, this reduces the effectiveness of your direct incentives. Spacing them out can help, as it would indicate that the incentive is exclusive, and that customers need to act now if they want to get a piece of it.
Gamified Incentives
Though gamified incentives were developed quite recently, they’re coming in hot. What motivates customers are now points, levels, and badges, where these prizes create a more engaging and interactive experience for customers.
Pros:
1. Engagement and Loyalty-Building
Gamification is one of the best ways to engage your customers, with the usage of gamification resulting in a 54% increase in engagement and a 15% increase in buy clicks. Having your customers play games gives them a sense of thrill as they test their skills or luck.
Gamification keeps customers focussed on the game and ups the time spent with your brand. This alone can lead to a 30% increase in browsing time on websites.
When customers are satisfied with the shopping experience that you can provide, it only makes sense that they would come back for more. That is how simply gamification can make engagement and loyalty building.
2. Interactive and Entertaining
The shopping experience is the most important thing a brand can offer for customers, and it is affected by every interaction that your customer has with you. To stand out from the crowd, you should aim to make your customer experience as entertaining and appealing as possible.
Gamification can help you do that with entertaining games that keep your customers at the edge of their seats. Such as in the case of Lucky Draws and Spin the Wheel games that keeps them invested in their interactions with you.
During events, 86% of attendees rated an event app as one of top three aspects that made their time at an event more enjoyable. Moreover, 49% of businesses say that clients interact the most with engagement elements, one of them being gamification.
3. Motivation
The goal of gamification is to motivate your customers in the long run, and to give them a reason to keep coming back. By offering them a reward, you can ensure that customers would start returning to try their hand at the game again to try to win a prize.
If your customers perceive your rewards to be worth their time and effort, then they would likely stay motivated to come back. They chase the rush that playing the game gives them, but also the sense of accomplishment they receive if they win, and the reward as well.
This can help you maintain your customer base size, and maybe even grow it in the meantime.
Cons:
1. Difficult to Implement
Creating a game is difficult, and it takes up precious time and energy should you attempt to make and maintain one unless you already have an in-house team. Your game may, at any point, experience crashes, bugs, and other issues that may be out of your power and knowledge to fix.
Designing the game is not easy either. You have to come up with the mechanics before you can even begin developing the game. Afterwards, you need to settle on the aesthetic choices as well.
Though the benefits you can reap are great, the costs are also great, and maybe even greater, particularly if you are doing it yourself.
2. Cannot Drive Specific Behaviours
Unlike direct incentives, it may be more difficult to drive specific behaviours. After all, the incentive lies in playing the game and the rewards that come with winning the game. The behaviour the incentive is driving is the playing of the game itself.
Besides, customers may not equate the value of the action they are required to perform to the game item on offer. The purchase of a big ticket good may be difficult to compare to several badges in a game.
If you want customers to perform a specific action, you are better off offering direct incentives instead.
3. Harder to Measure
Unlike direct incentives, it may be more difficult to measure gamified incentives. Gamified incentives tend to be more personalised, and they may differ from person to person. This can make it harder to track the incentives given out, players who have attained a certain reward, and more.
Moreover, temporary gamification campaigns present challenges where the metrics of the previous game do not carry over to the new game, particularly if you have changed the game used. It is difficult to match the metrics of one game with another, which translates to difficulty in reporting statistics and numbers that are actually useful.
Over time, these discrete values will start piling up, with no way to reconcile them. This can lead to messy data, numbers, charts, and graphs that you cannot decipher easily to determine how it can help for your future campaigns.
Conclusion
Direct and gamified incentives are both important in the world of incentive management. Each of them has different pros and cons, and they are both useful in select, specific instances.
Direct incentives are best for driving specific behaviours, whilst gamified incentives are best at delivering an engaging and entertaining experience for your customers. Choose the better incentive for your needs, and your campaign is likely to go far.
If you are in need of any of these incentives, check out Vouchermatic’s wide repertoire of games and our reward management system! Our gamification engine can be linked to our rewards management system so that rewards your customers win can be automatically sent to them.
Moreover, we use an API-first platform, so we can seamlessly integrate Vouchermatic into any of your existing systems. That also means that we can incorporate our engines into Google Forms, so that you can easily collect customer data with your gamification campaigns.
Interested in engaging in our services? Contact us here and our dedicated team will strive to answer all your questions. We even provide a free demo upon request!
