Hello, OptiMIST People!
Back at it again with KaMIST! Your weekly dose of insights into the latest marketing trends. In this week’s KaMIST we’ll dive into how rewards can affect brand perception among consumers.
As a customer, what makes you appreciate and feel a connection with a brand? Of course, the frequent discounts they offer drive your desire in making a purchase. However, the next time the brand attempts to charge full price, will you be loyal and still make a purchase? In the long term, will you continue to remember the discount offer?
When a brand relies on a price-slashing strategy to engage loyalty, the customers would most likely always expect the brand to constantly offer them discounts and feel cheated once they put the normal price back. There is no special connection felt by the customer with the implementation of this strategy. For brands, in marketing their products, prioritizing customer desires is indeed important. But, it is necessary to keep in mind that their revenue needs to be equally prioritized. Therefore, businesses must find another way to build customer loyalty which at the same time still benefits them.
Savvy marketers find out the more effective way to acquire customer retention is by rewarding them. The reward can be anything, including a gift card to use at various merchants or a dining experience at a restaurant. It’s one of the ways to demonstrate to a customer how the brand values its business. In terms of psychology, it builds emotional ties that cannot match with the brands that only engage in continuous discounting.
According to a survey of marketers by Aberdeen Group, rewards generate an extra 11.5% in revenue as opposed to 7.3% from discounts. The most important thing for marketers to remember is that this increase in sales was achieved by retaining brand positioning rather than lowering prices. Thus, 40% of marketers admit that using incentives helps them retain a premium brand image. More than half (56%) and more than half (53%) of respondents say they use awards to increase sales, while 30% say they use rewards to prevent revenue loss to rivals.
There are some factors in maintaining a customer’s emotional connection. The first one is choice and brand alignment. Consumer choice is essential when thinking about how to maximize a rewards strategy. It just seems logical that the receiver of a present should be able to select what they desire. Nobody will recall the money they saved on a transaction or the freebie they refused. Nevertheless, they will remember the option they chose. Ensuring the gift is branded is also an essential component.
The other factor is to keep measuring multiple KPIs and contexts. It doesn’t stop there; the brands must still keep the bonds with the customers. Brands need to stay in contact; they still provide the customer another gift as a thank you for their continued support.
Everyone enjoys receiving rewards. It’s thrilling and enables everyone to acquire something that makes them happy. It strengthens the emotional bond while keeping pricing points. Therefore, it is the opposite of perpetual discounting, which drives down prices and only affects brand perception among consumers.
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