5 Cardinal Rules for Incentive Marketing

When the economy gets tight, customers can take forever to make a buying decision.

So, managers start spending conference room time trying to think up incentives that will encourage the customer to buy.

Any incentive will cost the company something, so make sure that whatever incentive you use actually causes prospective customers to take the next step in their buying process.

Note also that very few of these ideas incorporate an actual discount - a slippery slope you'll want to leave for your less-imaginative competitors.

1. Offer Incentives That Relate to Your Product or Service

Any clueless executive can order a bunch of iPods and instruct salespeople to give them away in an attempt to get the customer to buy. What happens most of the time in those situations is that a lot of teenagers whose parents were given the iPods will end up with an iPod, and the parents' buying decisions won't be affected.

It takes hard work and a lot of thinking to come up with an incentive that somehow relates to your product or service. Map out the customer's buying process, and identify all of the barriers to the sale. Think about what you can do at each stage to make it easier for the customer to get to the next step.

Besides, imagine the buyer talking to his boss about the incentive. "If we buy this, I get an iPod!" will not go over as well as "If we buy this, we'll get three months of free maintenance."

2. Offer Incentives That Make it Easier for the Buyer to Sell the Purchase to His Managers

It's quite common for one "champion" to be excited about a product or service, but he has trouble convincing others. He may hear: "It looks great, but it's not in the budget."

Incentives that may work in this situation include the following:

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3. The Incentive Needs to be Appropriate for the Stage of the Buying Cycle

A buyer who is still at the early stages of his buying cycle—just gathering information about solutions, for example—will pay no attention to any incentives trying to get him to "buy now." What he wants at the early stages is proof that you understand his situation and concerns and are able to educate him in a helpful way. When he's closer to making his buying decision, he'll be more likely to be motivated by an incentive to "buy it now, get this stuff free."

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4. The Incentive Needs to be Really Simple to Articulate and Understand

It's easy to get too clever with an incentive so that only a lawyer could figure out how it really works. Customers will completely ignore a too-complex incentive, and your resellers or business partners will, as well.

The most successful incentives can be explained in one simple sentence: "Buy one, get one free," "Buy now, pay later." "Buy now, get X." "Buy 50, get this." If there is a time limit, make it part of the short description.

Your business partners and customers, especially in a tight economy, are being bombarded with dozens of offers. The one they are most likely to remember—and act on—is the one that can be described in one short sentence.

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5. Offer an Incentive That Gets to the Heart of Their Biggest Concern

People who buy software—especially large, complex software systems—have been burned repeatedly by companies who promise the stars... and then deliver defective flashlights. Consider creating an incentive that faces this reality head on: "If we can't get this running by July 15, your first year of maintenance is free."

Obviously, don't make the promise if you aren't sure you can keep it, but realize that this type of promise removes the biggest barrier of all—"can they be trusted to deliver?"

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In Conclusion

People hesitate when they are buying something because every purchase is a risk. In each case, you're giving up something that you know is valuable (money/budget) for something that may turn out to be valuable - or a liability. Anything you can do to reduce the risk will increase the chances of making the sale.

And isn't that what incentives are really all about? You're not in the business of giving away your product or service... or iPods, for that matter. You're in the business of selling your product or service for a profit. Incentives should support that activity, not detract from it.

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Credits

Published by Chris Wood - © Acticom Uk - Online Marketing and Web Design