New research* completed by Aberdeen Group, a leading analyst firm, finds companies that offer consumers reward-based promotions to drive engagement and purchases are more likely to experience greater marketing promotion success and profitability versus those that offer discount-based promotions. Specifically, reward-based promotions can outperform discounts by driving better purchase intent and sales lift without damaging brands’ images from discounting.
These are among the findings of the study commissioned by Hawk Incentives, a Blackhawk Network business that provides incentives solutions, to assess the presence and impact of discount- and reward-based promotions among U.S. businesses. Reward-based promotions are defined as those that offer shopper incentives to encourage purchase or action; discount-based promotions reduce part of the purchase price at point of purchase.
“Businesses have plenty of choices when determining marketing strategy, but reward-based programs stand out as incredibly impactful options to achieve business goals and drive effectiveness,” said Theresa McEndree, Vice President of Marketing, Blackhawk Network. “These promotions enable businesses to encourage consumers to buy products while creating engagement that makes them more likely to make repeat purchases in the future. Consumer loyalty can be fleeting, but reward-based promotions offer businesses the opportunity to keep shoppers coming back while also encouraging revenue growth and building brand reputation.”
Aberdeen Group’s research findings were based on a survey of more than 200 U.S. businesses on the use and performance of reward-based and discount-based promotions. Key takeaways include:
“If a business is aiming to drive sales lift or purchase frequency, compete on perceived brand image or drive purchase intent, companies using well-planned and executed reward-based promotions typically perform better than peers using discount-based promotions,” said Omer Minkara, Vice President and Principal Analyst for Contact Center & Customer Experience Management, Aberdeen Group. “In fact, other research** has found that the majority of surveyed consumers—nearly 80 percent—prefer rewards in the form of prepaid cards to other incentives such as discounts or merchandise.”
*About the “Next-Generation Promotions” Research
The “Next-Generation Promotions” research was a study conducted independently by Aberdeen Group on behalf of Hawk Incentives between February and March 2018. The sample size of 212 American businesses was comprised of companies with a self-reported average annual revenue of $4.5 billion, and included companies in the Fortune 500 and Fortune 100. A probability sample of the same size would yield a margin of error of +/-3%.
**“Reward Preference” is an online survey of 1,022 smartphone owning Americans completed by Leger for Hawk Incentives between February 10‒28, 2017.