5 Important Rules Of Giving Incentives

February 9th, 2014

In times of financial recession, customers develop a thick skin when it comes to making a buying decision. The challenge for marketers now is how to come up with smart incentives to encourage customers to buy. Get ideas from your customers and business partners. Find out from them what could be necessary to motivate them to buy a particular product. Since you must spend something on whatever incentive you adopt, bear the following in mind:

1. Give incentives which are related to your product or service

For example, you could offer ipods as an incentive to encourage a customer to buy another product. But will this affect the buying decision of your customer? Or will he or she simply give this gift away to someone else?

It takes imagination and creativity to work out incentives that relate to your product or service. The customer’s buying pattern has to be analyzed and mapped out, including possible barriers to the sale. Think up your ideas to come up with the best. For example, you could offer ‘six months free maintenance’ along with your product.

2. Think of incentives so that buyers can convince their managers about this purchase

Quite often, a buyer can get excited over a product or service but the trouble is in convincing other people, like bosses - it may not be in the budget. In this case, the following incentives may work:

(a) The deal will be financed by the vendor.

(b) The vendor will offer free education.

(c) The travel expenses for the team being trained will be covered by the vendor.

3. Consider the current stage of the buying cycle

At the early stage of the buying cycle, when a buyer is still gathering information about the product or service, he will not give attention to incentives that want to persuade him to buy immediately. What he requires at this stage is adequate information to enable him make a buying decision. At the stage he is close to making a buying decision, he is likely to be encouraged by incentives to buy now.

4. Incentives should be simple and easy to understood

Too complex incentives cannot be understood by the majority of customers and business buyers. The result is that they will ignore it. You don’t need a lawyer to help your customers interpret your incentive offers. Your description should be short and simple such as: ‘buy now, pay later’, ‘buy one, get one free’ and ‘buy 50 and get X’. The time limit for the offer should be included in the short description, where applicable.

5. Target an incentive that is of greatest concern to your customers

Risk is a very important factor when it comes to customers making buying decisions. Giving an incentive that will help minimize the risk could go a long way to encouraging a prospect to buy. For example, many people who buy large, complex software systems often get disappointed by companies who promise great value, but deliver something less. In these cases, offer incentives that practically handle the fears or concerns of prospects, such as, ‘if we do not meet your deadline, you get one year free maintenance’. But don’t make promises you cannot keep.

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