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At Hawk Incentives, we're not just rewards experts - we want to be your rewards partner. With more than 700 reward options, we'll find the incentives that can elevate performance.
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As lockdown measures begin to lift across the UK, many businesses will be preparing for a ‘new normal’. Recovery in the wake of COVID-19 will look vastly different across sectors, with each area having faced a unique set of challenges, threats and opportunities in recent months.
Despite differences, the unifying priority for brands will be to attract and retain custom. As competitors scramble to recoup losses incurred during the crisis, the marketplace is set to become oversaturated with promotions. With consumer confidence down to the lowest level since 2012, every customer, lead and sale will count on the road to recovery. Ensuring that your brand stands out from the crowd will require a carefully planned marketing strategy.
Discount-based promotions reduce part of the upfront cost at point of purchase. Though discounts may seem attractive, they offer a short-term solution. Sales may be bolstered within the initial discount period, but often fall away again when the full-price returns. There is even research to suggest that price promotions and discounts may damage brand equity in the long-run.
On the other hand, reward-based promotions like rebates, gift cards and e-gifts are designed to incentivise an initial purchase, whilst encouraging further engagement down the line.
Rebates are a form of reward-based promotion which can offer similarly attractive savings on purchases. The difference being that brands can assert control over how and where rebate savings are spent. Gift cards and e-gifts also offer the opportunity to make customers feel rewarded, whilst carefully targeting their future spend.
Some recent research from the U.S. has provided a helpful insight into the benefits of using rewards, instead of discounts:
Over time, organisations that offered reward-based promotions generated a 6% greater average profit margin per customer than those that offered discounts1.
Consumer research from Blackhawk Network2 found that getting a reward from a brand or retailer would encourage 63% of respondents to spend more with the business giving them the reward. 65% of respondents reported that they would purchase more often from the business giving them the reward.
With disruption to the UK economy expected to outlast the current Coronavirus pandemic, the relevancy of these findings from across the pond will be paramount, as businesses fight to make up lost ground.
Wider benefits of reward-based promotions can be seen globally:
Customer loyalty will become even more difficult to maintain post-crisis, and reward-based promotions offer businesses the opportunity to keep shoppers coming back by regularly reaching out to them. When given rewards, shoppers often associate a positive experience with your brand. This can lead to a long-term affinity and a higher likelihood of maintained engagement with your brand over time. Conversely, discounts are often forgotten shortly after checkout.
Rewards drive a high customer response rate because they offer deeper savings after redemption. Also, many rewards, like virtual prepaid and e-gifts can be delivered digitally - making them perfect for consumers who will be emerging from isolation, more digitally enabled than ever before. Digital rewards have a greater speed of delivery and ease of use online and in mobile wallets.