‘People respond to incentives’ – These four words have been spoken by every major economist that has ever lived. The concept of using incentives to motivate a certain action or behaviour has been around since time began. It has been a major cornerstone of many fields of study, as well as one of the most important elements that we use when devising a successful promotion. In this blog we explore how to choose incentives to dramatically boost your promotion results.
What is a Promotion Incentive?
An incentive is essentially the ‘prize’ the user has a chance of winning by entering your promotion (another way to think about incentives is the ‘carrot on the stick’ you use to get your audience to do whatever you want them to do). It’s important to remember every promotion is a value exchange between you and your audience:
- Your business needs the user to perform some type of desired action in order for your promotion to achieve its objective.
- On the flip side, the user will only perform the desired action because they believe there is enough value in doing so.
How to Choose a Promotion Incentive
Choosing the right incentive actually requires that you do the proper preparation for your promotion first. This includes understanding your objectives and target audience, as well how much of a ’barrier to entry’ there is to entering your promotion (discussed in our last blog about promotional mechanics). With that in mind we have included some concepts below to help make the process of choosing your promotion incentives a lot more clearer.
Freedom of Choice – The Allure of Cash
‘Cash is king’ and much more desired over types of class promotional prizes such as trips, cars and tickets to special events. What is the reason for this? Simple, cash gives freedom of choice which is a hugely influential factor.
Human beings are a broad bunch of people, and if the holiday or car offered in a promotion is not the ideal prize for a particular user the chances of them entering will diminish.
Does this mean you should only use cash for promotions? Well no, while this is an important concept to consider when your promotion is aimed at a broad audience it is not always the superior option.
Relevance is Key – Reflect your Brand and Target Market
Cash can be a very powerful incentive, especially when your promotion is aimed at the masses, however, the majority of brands do have a well-defined target market. Therefore the best prize is going to one that complements your brand and appeals to your target customer.
Remember the objective of your promotion to attract people who will be interested in your brand. If you appeal to the wrong target market you won’t attract the right kind of people. Therefore think like your target customer, understand their needs, wants and desires, and choose an incentive that they won’t be able to resist.
Once you can understand this concept you could use a range of different products or experiences as your promotion incentive to great effect. For example, if your brand is sporting related then tickets to a major sporting event or grand final would be highly motivating to any sporting fanatic. If your brand is fashion related then a new season wardrobe or tickets to fashion week would be an irresistible incentive to any fashionista.
Perceived Chance of Winning
Every promotion needs a major prize, it’s the lure we use to attract people to enter our promotion. However contrary to popular belief they are not the be all end all to what drives people to enter. Even if your major prize is great it still may not be motivating enough to get consumers to participate if they perceive their chances of winning are remote.
How to do you counteract this? Simple, offer multiple smaller prizes instead. Consumers are more likely to enter a promotion that has multiple smaller prizes on offer than one major prize simply because they believe they have a higher chance of winning.
One again these smaller prizes need to be on brand and suited to your target market. For example, if your target customer loves skincare products, a high chance of winning a small but desirable skin care relevant prize could win their affections over the slim chance to win a bigger generic prize.
Note: Instant Win mechanics are great for promotions when you have multiple smaller prizes on offer. They not only appeal to the consumers chance of winning but appeals to their desire for instant gratification.
Some Final Tips on Choosing Incentives
You may now be asking yourself what is the better incentive to use for my promotion? One (or a few) major prizes, or, multiple smaller prizes? Well, why not use both, using a major prize combined with multiple smaller is a great way to appeal to customers from multiple angles, and ensure a high opt-in rate for your next promotion.