Do You Know When to Incentivize?

“When do I incentivize a call to action?”

“What call to action do I promote?”

”When do I run a promotion?”

These three questions can really be addressed in one directive: When to incentivize.

 

First, let’s address the purposes of incentives. Summed up quickly, an incentive is a means to encourage or reward a particular action or behavior. In most businesses, incentives typically fall under the scope of the sales and/or marketing departments and, therefore, their use is primarily to encourage an action in the form of a promotional incentive. The less frequent and more underrated use of an incentive could be used by any customer facing area of a business, to reward behavior.

 

Encourage a Call to Action

Even the most successful business will always have some action they would like to further encourage in their customers. Some desired actions may be less obvious than others.

Increasing Traffic

Member-based businesses often have a singular focus on increasing membership. This is easy to understand as adding members has a seemingly simple formula and a predictable revenue forecast. This gives an incentive a clear return on investment (ROI).

 

If your business is lacking foot traffic your incentivized call to action would be as simple as, “walk through our door.” Or, “try our product.” Here, your ROI calculation includes your conversion rate, cost of acquisition, and membership value or average purchase.

 

What if your business has ample traffic but is lacking in closing sales? Here, the call to action you would incentivize is the actual sale. This type of incentive can have the side effect of increasing traffic as well.

 

If you are wanting to further increase motivation, you can incentivize both actions at once. Either offering duplicate incentives for traffic and sales, or offering an incentive for traffic that is increased in the case of a sale.

Promoting Specific Products

For businesses that are already at capacity for traffic, a call to action would be more internal. In the example of a thriving gym, you could incentivize an up-sell such as personal training or peripheral products such as supplements or accessories.

Further, your promotion could also aim to increase overall capacity by incentivizing movement to lesser used or lower footprint areas. An example would be motivating members to move to a group cardio class, leaving vacancies on high traffic, larger machines such as steppers and ellipticals.

 

An incentive is a means to encourage or reward a particular action or behavior.

 

Reward a Behavior

Incentivizing a behavior can be very simple or it can utilize more finesse and understanding of clientele. In the case of the former, the cost to benefit ratio can be much more favorable.

Create Habitualization

It is well known that exercise routines can be difficult to establish. Once established, however, member activities become habitualized and highly predictable.

Take a boutique gym whose business model is based on revenue driven from extras and upsales. In this model, a member’s usage habitualization is critical. Incentivizing attendance and the purchase of refreshments and other extras will build a habitualized behavior that brings in predictable revenue.

Example: A member attends an average of three days a week, approximately 17 days a month. Each workout includes the assistance of a personal trainer, attendance of a group class, a food and beverage purchase. Every other visit includes use of the spa for tanning or a massage. Once a month the member purchases new athletic attire.

When calculating the ROI of this member, the combined value of each extra and upsell for the month will be worth multiple times that of a member who has developed no habitualization.

Build Loyalty

In this age of social media and virtual marketing, customer loyalty is more important than ever before. In addition to the repeat business and word of mouth marketing that a loyal customer brings, they are now one of your social media representatives. Clicks, likes and shares are all calculable marketing assets and correspond directly to a member’s level of loyalty and engagement.

Incentivized engagement builds customer loyalty. In these campaigns, a call to action may be less monetary and specific. Instead, being more about gestures and good will.

Example: A member is active across multiple social media platforms and generally active online. Incentivized campaigns that reach this member may be highly targeted or more general. Loyalty incentives may reward attendance or activity goals. They may encourage social media engagement and propagation. They may be simple acts of recognition such as a birthday or membership anniversary reward.

 

Behavior rewards can be combined with other calls to action with proper targeting and messaging.