Studying customer incentive program examples helps businesses develop and launch an effective strategy for winning customers. It empowers companies to snatch clients from competitors, making the brand the customer’s top-of-mind choice.
While high-quality goods and impeccable services remain at the core of customer acquisition and retention, a more compelling reason must exist to get customers to make your brand their favorite.
An incentive program helps.
But what is it, and why should you create one? Are there types you should know? What best practices should you observe?
Relax. We will answer everything to get your business zoom ahead of the competition.
What is a Customer Incentive Program?
It is a proven strategy for influencing customer behavior.
Businesses want customers to choose them over others. High-quality products and stellar customer-centered services can encourage brand loyalty. Unfortunately, these are often insufficient for many customers. Brands must create a compelling reason for clients to pick them over competitors.
That’s the fundamental purpose of a customer incentive program.
The strategy uses rewards, incentives, and positive experiences to divert customer attention from competitors. It’s like providing customers with a significant motivation to pick you over others.
Why Do You Need to Use a Customer Incentive Program?
Consumer incentives convince customers to patronize your products and stay loyal to your brand. Rewards and incentives produce happy customers. You value them. Keeping your customers happy and satisfied leads to unquestioned loyalty. They will stick with your brand through thick and thin.
Loyal customers are more receptive to referral requests. In most cases, you don’t need to ask them to refer friends, family, and social contacts to your business. They will do it because they’re loyal to you.
And when you deliver an exceptional customer experience, you will have an advantage over competitors. Add this to your program’s unique rewards, and your brand will stand out.
Customer incentives also help build brand awareness. It’s the first step toward expanding your customer base. Loyal, happy, and satisfied customers will increase their word-of-mouth marketing to recommend your brand to their social circles.
It’s a ripple effect. Friends of friends will know your brand. Most will be curious and want to learn more about your offerings. Some will become paying customers. And that boosts your company’s bottom line.
12 Key Customer Incentive Program Types & Examples
Successful customer referrals rely on an attractive incentive program. If you’re a novice business owner who wants to become the top-of-mind choice of consumers, you can consider the following customer incentive program examples.
Loyalty Programs
As the name implies, a customer loyalty program rewards existing customers for continued patronage. It’s your brand’s way of showing appreciation for customers’ enduring support and unquestionable loyalty. The following are the most common types of customer loyalty programs.
Tiered Systems
Tiered programs have levels or customer groupings. Each customer classification or tier can access rewards tailored to that group.
Categorization depends on the brand’s strategy, although most classify customers into memberships. For example, Platinum customers enjoy more valuable rewards than Gold, Silver, and Bronze.
Others might peg the classification at measurable outputs. For instance, airline companies might offer varying rewards depending on how many flying miles the customer has accumulated. This type of loyalty program is perfect for frequent flyers.
Hotels can classify rewards based on the number of stays a client has. Guests staying at least ten times in a hotel within a calendar year might enjoy more lucrative perks than clients checking in at the hotel only once a year.
Point-based Rewards
Many customer rewards programs use this type to add a fun element to client activities. As the name suggests, point-based rewards encourage existing customers to earn or score points by doing predetermined activities. They can exchange or redeem points for exciting rewards.
An excellent example of this reward type is Sephora’s Beauty Insider. The beauty brand “gamifies” shopping. It adds a fun element to purchasing and interacting with the brand.
Customers earn points every time they buy. Sephora classifies them into Insider, Very Important BeautyInsider, and Rouge. Customers enjoy progressively exclusive rewards as they move up the ladder.
This strategy enhances customer relationships. It gives customers a sense of achievement as they move through the ranks. The tactic also recognizes customers’ desire for recognition and exclusivity.
Unsurprisingly, Sephora’s program encourages increased spending and enhances customer engagement. That translates to a more significant revenue.
Gamification Elements
Gamification requires businesses to integrate game mechanics into their rewards program. Some brands incorporate game experiences to boost customer satisfaction. After all, who doesn’t want to have a fun experience?
For example, Starbucks designed the Stars Program to entice customers to buy. Each dollar they spend on eligible Starbucks products earns customers one to two Stars. It’s like a point-based rewards system, except the points are Starbucks Stars.
So, what do loyal Starbucks customers get?
Twenty-five Stars allows them to customize their drinks with their favorite syrups or add nondairy milk and espresso shots. A hundred Stars reward them with baked goods, iced coffee, brewed coffee, or packaged snacks. Four Hundred Stars allows Starbucks fans to bring home exclusive brand merchandise.
Unsurprisingly, Starbucks’ loyalty marketing strategy works.
Referral Programs
Although rewards for referral programs are identical to a loyalty-based strategy, the focus differs. While loyalty rewards acknowledge customers’ continued patronage and support, referral rewards incentivize customers’ ability to invite potential customers. Here are some examples.
Discounts for both referrer and referee
Here’s a referral marketing strategy guaranteed to wow customers and their referred friends. It works by rewarding current customers for every qualified referral. Moreover, the referred individual receives a discount.
Customers recommend the brand to their family, friends, colleagues, acquaintances, and social media contacts. When these individuals buy from the company, they enjoy a discounted price. Meanwhile, referrers get a reward.
An example of this reward type is Dropbox’s double-sided scheme. Referees get 500 MB of extra storage if they subscribe to Dropbox’s Basic plan or 1GB for Dropbox Plus. The customer referring to them also receives the same perk.
But why should you reward the referrer and referee? Will that not hurt your marketing budget?
Rewarding customers and their friends endear you more to consumers. It shows you value their social relationships. And that makes customers trust you more and stay loyal to your brand.
Double-sided rewards are effective. Otherwise, 91.2% of programs won’t implement this strategy.
Exclusive rewards for successful referrals
Many businesses don’t limit their rewards to discounts. Some offer items and incentives unique to the brand. A classic example is Uber’s referral strategy.
Although Uber’s 24,000+ customer reviews on Trustpilot give it an average 2.9-star rating, this ride-hailing company remains a favorite of over 130 million people globally.
Uber incentivizes its loyal followers with free rides up to three times when they refer a friend. Additionally, the referred friend also gets three free rides. Although Uber caps the free ride at a certain price, travelers can still enjoy savings.
Its global presence means regional variances in rewards. The referral reward amount varies from city to city.
So, if you have something unique to offer, you can turn that into a reward.
Social media sharing incentives
Some brands leverage social media’s global reach. After all, over 60% of the world’s population is on social media platforms, surfing the social sphere for about 2.5 hours daily.
Glossier is an example of a business rewarding customers who share the brand in the latter’s social media accounts. This beauty brand is on Facebook, Instagram, YouTube, Pinterest, X (Twitter), and TikTok.
Successful referrals earn the referrer a $10 promo discount and the referee a 10% price cut on the first purchase.
It’s worth mentioning that 70% of Glossier’s traffic and sales come from peer-to-peer (social media) referrals. You might want to emulate this trick.
Discount and Promotion Programs
Businesses want sales. Sometimes, brands have excess inventory they need to dispense. Others might leverage seasonal uptick in demand. Regardless of the reason, offering special discounts and promotional pricing can help companies generate sales quickly.
Percentage discounts
Have you noticed brands typically offer discounts during holidays and seasons? For example, summer is the perfect time to offer discount codes to beachgoers. Customers could enjoy a 50% slash off their favorite beach apparel.
Percentage discounts entice customers to buy NOW.
We must acknowledge these special sales as time-limited. They only last for several days or a few weeks. No customer would want to pass on the chance to save tens of dollars, but only if they buy now.
Coupon codes
Sending customers coupon codes is another technique for enticing them to buy. Discount and promo coupons are ubiquitous in newspapers, magazines, and other print media.
Unsurprisingly, these rewards are invading the digital world. Nearly three in five Americans prefer online or digital coupons. Nineteen million coupon users stay glued to their social media accounts for money-saving coupons.
Businesses can also send coupon codes via email. This strategy is perfect for abandoned carts. Some customers don’t finish the buying process, leaving before checkout.
Sending an abandoned cart email reminds customers of their intent to buy. Adding a coupon or promo code to the email can win customers back. They could use the coupons to consummate the purchase.
Bundled offers
This reward type doesn’t require extensive explanation. After all, everyone knows what a buy-one-take-one offer is. You buy a product, and you get another item for free.
Bundled offers require complementary items for optimum results. For example, buyers of tennis shoes will find complementary socks and wristbands an exceptional combo. Kids will appreciate a pencil, sharpener, and eraser bundle.
The beauty of this incentive type is you can sell multiple products in a single purchase. You only need to examine complementary items to make the perfect product combo.
Early Access and VIP Programs
This list of customer incentive program examples focuses on making customers feel valued and important. Everyone deserves recognition for their achievements. If a customer consistently drives new prospects to your business or frequently buys your product, giving them exclusive rewards can make customers feel like royalty.
Exclusive product launches or previews
How would you feel if a company invited you to a special event? For example, a red-carpet gathering of celebrities and high-profile people. You would feel elated, right? We would.
And what if your favorite brand sent you exclusive products you cannot buy in any store? The feeling is one of importance. You know how special and valued you are to the company.
That’s the power of previews and exclusive product launches. It makes customers feel appreciated and valued. More importantly, it strengthens their brand loyalty. These rewards can make customers stay with you longer. They will also share happy memories with their social contacts.
Priority customer service
We dislike waiting! So do many customers. It’s a time waster. Did you know we lose 37 billion hours annually waiting in line? Unsurprisingly, 41 in 50 customers ditch brands with long wait times.
Imagine how your customers would feel if you could prioritize them. Priority customer service enables VIP customers to find answers and request assistance quickly.
It’s like an airliner’s VIP service to executive or first-class passengers. They have access to a luxurious lounge and serve delicious meals. Some airlines offer a spa experience before the flight.
Although everyone deserves such a service, it would be financially disastrous. Businesses offer this service only to their most loyal customers. In return, VIP consumers bring more business to the brand.
Personalized offers and experiences
Businesses can also show appreciation to customers by customizing offers and personalizing experiences. This strategy is one of the best for boosting customer retention.
Personalizing offers show you understand customers. You recognize their passions and celebrate their achievements. It showcases how much you’re willing to make customers feel a part of your business family.
They are not just paying individuals. Customers are friends, business partners, and family.
Netflix, Spotify, Amazon, and other big-name brands are famous for personalized experiences. They analyze customer behaviors to create the best offer resonating with the client’s preferences.
You can observe the same trick with your incentive program. Examine and analyze your customers. Develop an incentive or reward that best resonates with such clients.
More Incentive Program Examples – Industry Specifics
Incentive programs vary across industries because they have different offerings. Their target markets also differ, with diverse buyer personas. Let’s look at the incentive strategies of the following segments.
Retail
The global retail industry is worth over $28 billion. Experts say it will reach $37 billion by 2027, making it one of the most lucrative markets to do business in.
Retailers often use multiple reward types, although most observe a tiered loyalty system.
For example, Amazon Prime rewards its members with an unlimited 5% cashback on Amazon, Amazon Fresh, Chase Travel, and Whole Foods Market purchases.
Members also enjoy 2% cashback at participating gas stations, transportation services, restaurants, and other Visa-using merchants. Moreover, new Amazon Prime members automatically receive a $100 gift card.
Another example is Sephora, which we already highlighted above. This beauty brand categorizes customers into Insider, Very Important BeautyInsider, and Rouge. The more customers spend on Sephora, the higher they progress through the tiers. That translates to more exclusive rewards.
These strategies entice Amazon Prime and Sephora customers to continue supporting the brands. It helps the two companies expand their base and generate more revenue. Such a strategy also strengthens brand loyalty.
Unsurprisingly, Amazon Prime enjoys the support of 230 million members, while Sephora has over 34 million. These numbers underscore the effectiveness of Amazon’s and Sephora’s loyalty programs.
Travel
Nearly a billion people traveled across international borders in 2023. Experts say more people will travel in the following years. These pronouncements lend credibility to the observation that travel is a multi-trillion-dollar industry (about $2.3 trillion in 2023).
Competition is fierce. Hence, travel companies must think outside the box to retain customers and ensure loyalty.
Point-based systems are common. For example, airline companies offer airline miles or frequent flyer programs to show appreciation for their loyal customers’ continued patronage.
Airline travelers earn points or ‘miles’ when they book a flight. They can exchange these “miles” for free flights, VIP treatment, better seats, and other perks ordinary passengers don’t enjoy.
Hotels can also give loyal clients rewards. For instance, Wyndham Hotels offers patrons rewards points when they stay at over 8,000 Wyndham properties or use their credit cards to book accommodation. Customers can redeem the points for free rooms, air travel, and other perks.
Other hotels might give patrons a loyalty card to enjoy discounted or free hotel stays.
SaaS
The global Software-as-a-Service (SaaS) is a $257 billion industry, with experts projecting a phenomenal growth reaching $1.3 trillion by 2030. Although this market is relatively new, it’s highly competitive. Over 30,000 SaaS businesses exist. Three in five are in the US, and more are coming.
Developing an incentive program for SaaS customers is tricky. The offerings are intangible, mostly existing in the virtual world. However, SaaS businesses have several options.
First, they could offer free trials. This incentive is ideal for SaaS companies about to launch new software. It’s also effective in winning non-users to consider adopting the software for their work or daily projects.
The strategy allows prospective customers to try the program without worrying about fees. Although with limited features, free trials can be a powerful tool for introducing a new program to target clients.
Some SaaS businesses complement the free trial with a freemium plan. Customers can continue using the software in its most basic form. However, they can also buy premium features or more advanced services. It’s like many free-to-play mobile games with in-app purchases to make gameplay more immersive.
Upgrade incentives also work. This strategy allows SaaS users to leverage more advanced features of newer or higher-level systems. Such a technique can boost the customer retention rate by keeping users glued to the software across versions.
Restaurants
Over 15 million people work in the restaurant industry. They form the backbone of a $1.5 trillion market with a modest 2.7% growth rate.
So, what incentives can restaurants offer to customers?
Punch cards are a favorite. These loyalty program tools allow restaurants to reward customers without hurting the bottom line. It works on a buy-X-get-Y-free principle. For example, customers must buy ten coffees to enjoy a free drink. Customers present the punch card at the counter, and the cashier punches out the number of orders on the card.
Punch cards are also perfect as birthday rewards. For example, you can give a free pastry or drink to a customer on their special day.
Loyalty apps are worth considering, especially for restaurants and food businesses with an online presence. This strategy relies on customer dependence on mobile devices. They use smartphones, tablets, and laptops to interact with the brand’s program to enjoy the rewards.
E-commerce
Online businesses are sprouting like mushrooms. Although experts say e-commerce stores could be as many as 24 million, the number could be higher.
But what incentives do e-commerce businesses give to customers?
Welcome discounts are perfect for new online stores. They could give a 25% price cut for every new customer. Businesses can extend these rewards to customers by referring friends for a more pronounced effect.
Another option is abandoned cart recovery emails. Seven in ten online shoppers don’t proceed to check out, abandoning their virtual shopping carts. E-commerce businesses can win back these customers by sending them an email about their abandoned cart. They can add a “sweetener” to the deal (i.e., discount coupon) to entice the customer to return to the website and complete the purchase.
Referral programs are the bread and butter of many e-commerce businesses. They want more new customers to patronize the brand. These companies leverage customers’ online activities and connections to expand their customer base. Brands offer rewards for each qualified referral.
Best Practices for Running Your Own Customer Incentive Program
Running an incentive program can be challenging for new business owners. However, the following tricks should help you ace the task.
Clearly communicate program benefits and eligibility.
Customers deserve to know what’s in it for them to buy from you. Do you offer a percentage or cash discount on qualified purchases? What items are eligible? What other benefits can they derive?
Clear communication of customer complaints and backlash against your brand. More importantly, it fosters trust.
Track program performance and make adjustments as needed.
Any business activity requires monitoring to ensure the strategies meet the objectives. For instance, if you aim to increase the number of new customers by 5% within three months, the results must reflect such an increase.
Use software to monitor critical consumer incentive metrics and generate timely reports. Analyze the output and adjust your strategies when necessary.
Offer personalized rewards and incentives.
Personalizing your rewards shows genuine appreciation for customers’ efforts. You convey the message that you value customers. You understand their needs, interests, and passions.
Such techniques endear brands to customers. It also strengthens loyalty, allowing clients to continue supporting the business through thick and thin.
Integrate the program seamlessly into your customer experience.
Customer experiences revolve around buying goods or availing services. They also interact with brands on social media and share with friends and social contacts. You might want to analyze these experiences to see how the program fits.
Incentives must be valuable to your customers or target audience. The program’s mechanics must also be easy to comprehend.
Use multiple channels to promote the program.
Consider emails, social media, messaging apps, newsletters, blogs, and other marketing channels to promote the incentive program.
The more avenues you use, the more chances you get for acquiring new customers and generating more sales.
Conclusion
Customer incentive programs do more than ensure happy, loyal, and satisfied customers. They can help businesses build brand awareness, increase customer lifetime values, enhance retention, and generate more leads. These benefits translate to more robust revenue-making opportunities.
We must reiterate that no two businesses are alike. A customer incentive program might work for one brand but not another. Hence, we advise business owners to examine their companies and customers to pick the best approach to incentivize loyal clients.
