6 Marketing Incentive Solutions That Enhance Business Performance

Whether your business’s current focus is to build employee loyalty, gain more customers, or drive more sales, you can’t expect people to help you achieve these goals out of the kindness of their hearts. Instead, they need an incentive.

In other words, what’s in it for them?

Marketing incentives are a crucial component of any good growth strategy. However, incorporating incentives the right way is even more important than simply offering them to customers or employees. 

In this article, we'll explore six proven incentive solutions, including how to integrate them into your performance strategy.

How do incentives motivate people?

Incentive marketing is the process of using rewards to motivate people to take specific actions to drive business growth. This type of marketing can work both internally and externally to improve employee performance and motivate customer sales. 

For your employee retention and performance strategy, incentive marketing can provide benefits like:

• Incentivizing employees to meet specific goals
• Building loyalty among employees
• Aiding employee hiring (i.e., with an incentive sign-on bonus)

As a customer-facing strategy, incentive marketing offers benefits like:

• Encouraging more expensive and/or larger purchases
• Building customer loyalty, since customers will want to receive future incentives
• Motivating clients to refer their friends

Businesses can incorporate reward incentives into a wide range of marketing strategies, including referral programs, loyalty programs, employee contests, and more. 

Ultimately, incentive marketing works because of extrinsic motivation. Sometimes, it's just easier to motivate people with an external reward — such as a digital gift card, a discount on a purchase, or more PTO days. This can be much more powerful than just intrinsic motivation alone, which is doing something for the inherent satisfaction of doing it. 

Incorporating an external reward into your business strategy creates a mutually beneficial offer that encourages employees and customers to complete certain targeted actions.

Top 6 incentive solutions for business - with use cases

Marketing incentives contain two important components: the desired action and the reward. The action you want customers or employees to complete often dictates the type of reward you provide and how you structure your program as a whole. 

Below are the top six marketing incentives focusing on different actions. 

1. Cash incentives and discounts

Cash incentives motivate people to spend money. They’re most commonly used in customer-facing marketing strategies designed to motivate customers to purchase products or services. 

With this approach, the main incentive for a customer to spend their money on your business is to gain your valuable products or services in return. However, providing an additional incentive to purchase can help “seal the deal” for customers still on the fence about their purchase. 

Use cases of cash incentives and discounts include:

• Providing a 25% discount on certain services
• Giving cash back when customers buy certain products
• Offering a gift card that users can put toward a purchase of a certain amount
• Promoting a “buy one, get one” offer

2. Performance-based incentives

Performance-based incentives reward employees or customers for performing specific actions in your company. Use cases include:

• Loyalty incentives that encourage customers to make recurring purchases
• Referral programs that motivate customers to refer their friends 
• Sales incentives that customers can trigger when they buy a certain product

Performance-based incentives are very actionable. Make sure your customers and/or employees know what actions they need to take to trigger the reward. 

3. Goal-based incentives

Goal-based incentives invite customers and employees to meet specific, measurable goals. You can structure this type of incentive solution so that the more points a person earns, the greater their reward.

Alternatively, you can offer one large incentive that participants can earn for completing all “tiers” of the program. 

Use cases of goal-based incentives include:

• VIP programs where customers can earn points for each purchase
• Social media campaigns that give users one entry into a contest every time they share your post
• Referral programs that give better rewards for each friend referred

4. Recognition-based incentives

Recognition-based incentives are slightly more abstract than the concrete goals used in a goal-based incentive program. These programs recognize customers or employees for performing at the highest level. They demonstrate that your business notices and appreciates these efforts. 

Examples of recognition-based incentives include:

• Customer appreciation programs
• Rewards for the most loyal customers
• Incentives for highest-performing employees
• VIP experiences for top performers

5. Travel-based incentives

Travel-based incentive solutions focus more on the type of incentive you provide than the required action. These programs give travel rewards instead of tangible items like money or free products.

Such rewards may include:

• Plane tickets
• Hotel stays
• Cruise tickets
• Travel experiences (scuba diving, parasailing, dolphin watching, etc.)

You can give these rewards in the form of a gift card or purchase the tickets in advance to give to the recipient. 

6. Sales reward-based incentives

Sales reward programs motivate your employees to meet certain sales goals. Use cases of this type of incentive program include giving gift cards to an employee for:

• Landing new customers
• Accumulating a certain amount of total sales over a designated period
• Generating a certain number of leads 

These actions are generally measurable in the same way goal-based incentive programs are. Employees should know the exact goal they need to meet to earn their rewards. 

Sales reward-based incentives work because they give employees extrinsic motivation to boost their performance. Employees aren’t necessarily motivated to work hard for your company; they must personally gain something in return. That something could be a gift card, travel experience, a raise, a PTO bump, or a range of other incentives. 

Why are incentives important in marketing?

Incentive solutions are important because they directly impact both business performance and growth. 

So, what exactly is the ROI of incentive programs? Of course, incentive programs cost money. But, when structured correctly, they can give you a lot more in return than you initially invested in the program. 

Consider these statistics:

• Strategic sales incentive programs have a 50% higher impact on sales than similar investments in advertising.
• 90% of top-performing companies use incentive programs to reward their sales teams.

An effective incentive travel program can increase sales productivity by 18% and provide an ROI of 112%.

Yes, incentive programs initially take away from your business’s bottom line. But their ROI can also be dramatic, helping to boost business growth often long after the incentive period is over. 

Remember, when you incentivize customers to make a purchase, they develop a sense of loyalty to your business. They’ll be more inclined to choose your business for future purchases even when no incentive is offered. 

Meanwhile, when you incentivize employees to meet sales goals, they learn the level of performance they’re capable of. They also experience the intrinsic reward of feeling satisfied with their work, which can motivate them to keep their performance high even after the sales program has ended.