Whether you’re B2B or B2C, we all need to attract and retain new and loyal customers—which is why we all need the right customer incentives, too.
The right incentive tools can lead to improved customer acquisition and repeat purchases, along with much better customer satisfaction and brand awareness. The wrong tools, however, won’t just be ineffective. They’ll also be a drain on time, resources, and morale.
In this article, we’ll explore a powerful tool for customer incentives: rewards that are instant and digital.
We’ll include how to choose and implement the right types of incentives to target and reward your best customers and, ultimately, boost your bottom line.
Customer incentives are tools that businesses use to motivate specific desired actions from their customers and/or target audience. Essentially, they’re rewards given to reinforce desired behaviors, such as making a purchase, referring a friend, or remaining loyal to a brand.
Customer incentives can take various forms, from offering discounts and loyalty rewards, to giving free gifts and rebates. As we’ll explore below, the best incentives are those like digital gift cards that are instant and digital.
Critically, good customer rewards are mutually beneficial. When done right, giving a reward is a strategic move to encourage repeat actions that benefit both the business and the customer.
Note: 'incentives’ differ slightly from ‘rewards.’ While a reward is the actual object given to the customer, an incentive is the promise of something valuable in return for a specific behavior. This promise is what helps shape customer behavior, driving sales, loyalty, and customer retention.
Reward (n): The object given to reinforce actions
Reward (v): The act of giving the reward
Incentive (n): The promise of something as result of a desired behavior
Incentivize (v): The act of encouraging behavior by promising a reward
Companies often use customer incentives specifically because they’re looking to get high quality leads and improve their sales.
So how do these types of incentives actually work? In short, they prompt immediate actions.
When customers know they will receive an instant reward, they are more likely to make a purchase or otherwise engage with your brand quickly. This is particularly true in today’s fast-paced world, where instant gratification is not just valued, but expected.
For example, offering a digital gift card as a reward for purchasing a certain product can lead to immediate sales boosts. Customers will choose you over your competitor because they want that instant satisfaction, and that innate joy we all get from ‘freebies.’
Think about that popular carrot and stick analogy. In this case, incentives are the carrots that businesses use to proactively engage with potential customers and their existing customer base.
And we’ve all heard of Pavlov’s dog, an experiment where dogs were conditioned to salivate at the sound of a bell, just by consistently pairing the bell with food. Over time, the dogs began to associate the bell with their food (ie, their reward), demonstrating how repeated positive reinforcement can drive behavior.
Similarly, by consistently rewarding purchases, businesses can condition customers to expect and seek out these rewards, thus increasing sales over time.
Sofia Baltasar,Giftbit Head of Customer Success
When you’re planning a customer rewards program, almost nothing is more important than the timing of your rewards.
Indeed, the latest research clearly shows that the longer it takes to get your reward, the less value you give it.
Specifically, according to researchers Maria A. Bermudez and Wolfram Schultz, “the economic value of reward decreases with increasing delays. ”
In layman’s terms, when we do the ‘right’ thing, we want our reward right now. No one likes delayed gratification—and that includes your customers.
Think about it. When your mom wanted you to behave in the grocery store, she might promise you some candy when you were done shopping. That only worked if you actually got the candy at the end of your trip, right? If she’d promised you candy some time next week, would you have been so well-behaved?
Moreover, Bermudez and Schultz also found that ‘this temporal discounting may lead to the preference of sooner smaller rewards over larger later rewards.’ (emphasis added)
In other words, we’d all prefer a little bit of candy now, over a lot more candy at some nebulous time in the future.
This is great news for anyone looking to introduce a new customer loyalty program. It means small incentives can still have a big impact, as long as they’re delivered instantly.
And how to do you offer instant rewards? You take them digital. With a modern and reliable gift card provider, you can offer both digital rewards and digital payouts that will have you boosting sales and reducing churn in no time.
And like we’ll cover next, taking your incentives digital is going to offer a lot of other benefits, too. 🙌
If we’re talking instant customer incentives, then we’re also talking digital customer incentives. It’s digital gift card platforms and API that are really going to upgrade your loyalty programs.
Traditional customer loyalty incentives have always faced significant barriers. Two of the biggest barriers have been cost and logistics.
Manufacturing, encoding, and shipping a plastic gift card can cost anywhere between $0.65 and $1.25 per card. For a $5 gift card, that represents 13% to 25% of the total value. And that’s before considering shipping costs!
Meanwhile, processing and shipping times added further delays. Depending on the method you choose, it could take anywhere from 3 days to 6 weeks to deliver a reward.
Knowing what we now know about the importance of timely rewards, this lengthy delay clearly would have slowed down customer engagement and diminished the impact of the reward.
Plus, to offset these costs and delays, businesses had to offer larger and larger rewards to make them effective. Not only was this more expensive. It also prevented them from providing those smaller, more frequent incentives that would keep customers engaged over time.
Lose-lose.
But when gift cards went digital in the early 2000s, these obstacles were immediately removed.
Delivery time vanished, making rewards instantly available.
Manufacturing and shipping costs vanished.
And businesses were no longer constrained by the expense of physical cards.
Suddenly, you could reward customers immediately, with things those customers actually wanted.
Win-win.
Automation meant that loyalty programs could now run (and scale) seamlessly, generating and automating rewards as soon as customers earned them.
Critically, this shift also allowed for greater flexibility in reward amounts. Companies could offer rewards in any amount, even low denomination gift cards for as little as a penny, without worrying about production costs.
And they could better track metrics like delivery and redemption rates—critical data they could use to improve their programs to better meet their customers’ needs. With the old system, how would you ever know if your cards actually ended up in the hands of your customers?
The ability to use digital gift cards changed the customer incentive game. They provide instant customer incentives that are also scalable, cost-effective, flexible, and dramatically more engaging than more traditional options.
When United Communications switched from physical to digital gift cards for their customer incentives, they doubled their productivity and enjoyed happier customers in the process. Read their story here: How United Communications Doubled Productivity
So you’ve signed up for a free B2B gift card account, and you can start sending digital customer incentives ... now what??
The following are some of the most effective use cases for customer incentives.
Nothing beats word-of-mouth marketing, which is why referral programs are one of the most powerful and popular ways to drive growth. When customers refer friends or colleagues, they’re putting their trust in your brand. Rewarding them for this action encourages continued engagement and spreads brand awareness.
Similarly, many companies use incentives to prompt reviews on important sites like G2 or Amazon. For example, that's how OpenPhone doubled their customer reviews
Incentivizing repeat purchases is another key strategy. Many retailers will give their customers a small gift card after a certain number of purchases or after accruing a certain number of loyalty points. This type of program can create a stronger customer relationship and lead to repeat business.
Many companies use customer incentives to improve market research. We all know how important customer feedback is for improving products and services. Offering gift cards for taking surveys or leaving reviews can increase participation rates. For actions like these, smaller, instantly available rewards, such as $1-5 digital gift cards, can be quite effective.
Digital rewards also work well for boosting social media engagement. Incentivize your customers to share your content or tag your brand in their posts. Small amounts can be effective here, too, especially as they tap into the immediacy of social media interactions.
Programs that encourage early payments or upsells can also benefit from digital incentives. Offering a discount on the next purchase or a small gift card for paying early can motivate timely actions and increase overall sales.
The right incentive strategy can also be used for demand and lead generation. For example, many companies will use incentives to both motivate their sales teams and to encourage demo bookings and other pipeline generation tactics.
Finally, thoughtful incentives can be incredibly powerful for customer recovery