KAMIST

Rewards and discount: which one engages

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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The idea of delivering the most value for the consumer has evolved over the years. As we know, the best marketing strategy is cetera desunt for adaptive future-leader mindset that uncertainly evolved over decades. Companies began to use various promises in effort to persuade and attract customers. The fiercely increasing conditions of competition added the popularity of the concept of “brand” and “advertisement” by adopting the concept of neo-marketing and elaborate them with psychological terms. Albeit, all emotion influences consumers personal relationships, business choices, and buying decisions. The emotion itself has situational and reactive qualities, as well as satisfaction and expectations formed over lifetimes of experiences and interactions.

When a boy goes to an ice cream parlor or restaurant, he will feel befuddled. Choosing what he is going to get, that’s the thing that he despises. Would chocolate chip or strawberry ice cream please him better? Cheeseburger or fried chicken? He feared that what he selected will not give him as much pleasure as the other option would give. What he doesn’t choose could provide a higher sense of pleasure than the one he chose. One interesting finding utilized by neuromarketing is that people really don’t want to lose out. People are just as worried about what they might lose as to what they might gain.
In the meantime, one of the biggest challenges that marketers deal with is customers’ expectations in the pre-purchase phenomenon where the consumers haven’t fixed their buying decision yet. To tackle the challenge, many companies are competing to build relationships with their customers, with the expectations that they will be able to provide the best customer experience for specific individuals. Therefore, the company must be customer-centric to carry out a successful marketing strategy in order to be noticed by consumers and to forge a brand identity.

According to McKinsey (2019), by making a fundamental change of mindset of focusing on the customers, companies gained significant enhancement on several aspects. Along with operational and IT improvements, companies generate 20 to 30 percent uplift in customer satisfaction, a 10 to 20 percent improvement in employee satisfaction, and economic gains ranging from 20 to 50 percent of the cost base addressed in the various journeys.

To overcome these challenges, companies have to understand consumers’ behavior and expectations. Hence, companies should put a bigger concern towards consumers’ buying-cycle from awareness to its advocacy. By implementing the concept of Neuromarketing, stereotypes of the communication matters of the marketing basis will be integrated with taste of individual market itself. The more personalized the promotion, the higher the probability that the advertisement will work. It could be done by using big data to allow the company for this huge aggregation of all consumers personal information that they’ve ever revealed to build a precise representation of who they are, now, more than ever before. Data and insight are not delivered to consumers as a whole but individually by delivering the most value to the customers with a very specific scope based on how they think.

In order to win in today’s marketplace, companies must be customer-centered, to the point that ideally, each individual customer’s values are taken into an account to derive the value that they are truly seeking. In essence, by generating consumer reactions, and treating them not as reactionary receptacles of marketing strategies, but as each their own person with differing individual values. Therefore, reinforcing belief is a very important matter for marketers that influences consumers experience. They must deliver superior value to their target customers traditionally and digitally with knowledge of neuroscience marketing strategies combined. Neuromarketing will surely strengthen customer’s contentment of a product itself.