The Not So High Price of Incentives
When you think of incentives, do you think of less or more money in your pockets?
If you said more, you can stop reading, you have the right idea! If you said less, please continue...
Let's start with the definition of incentive, shall we..
1. something that incites or tends to incite action or greater effort, as a reward offered for increased productivity.
"......increased productivity." BOOM! If you want to increase your productivity aka your volume or sales or leads, you need to increase your incentives. Now, it doesn't necessarily have to mean an increase in the monetary value of the incentive or discount, but rather an increase in the quality of incentives you offer.
This blog post will demonstrate how there isn't a high price to pay for incentivizing your audience... backed by mathematics and standard benchmarks. After all, it's YOUR bottom line we are talking about.
If you want to incentivize, you must first choose which type of incentive to push.
The three types of incentives:
Derek Halpern points out that Steven D. Levitt and Stephen J. Dubner classify 3 types of incentives in their book Freakonomics (good read btw!). While Derek applies it to ways of persuading people to help you, the principles hold true when using them, in any context.
1. Economic incentives: Is your product or service of value to your customer? Does it save them money? Time? ...(time is money)
2. Social incentives: How does your product or service make your audience look in the eyes of their peers? What does this do for their social standing?
3. Moral incentives: How does your product or service make your customer feel? If your audience participates, are they contributing to a greater good?
Now that you've figured which type of incentive to push, what is your incentive going to look like?
There are a few appeals for effective incentives. The product or service that you will push will be the determinant. Here's some examples:
Daycare: Let's say your a daycare provider. You want to appeal to Mothers and Fathers with a social incentive for upcoming fall registration. You will portray that friendships, education, and social interactions for your child are crucial for their development and social skills because this will help them to develop strong communication skills, basic ABC & 123 before Kindergarten, have trusting relationships, and independence away from home.
Restaurant: Your a mom and pop restaurant chain. The restaurant prides itself as being a sustainably sourced, ethical, grown local food provider. You will push a moral incentive for your new Fall/ Winter menu. You will portray that dining at the restaurant supports local farmers in their end of season harvest, reduce emissions and pricing due to lower cost of produce transportation, and "not only will your belly feel good, you'll feel good about eating good!" Catch my drift? GOOD.
B2B Service: Ok now insurance provider. How will this help you? Your a boutique insurance firm. Most of your business is from local folks. Your looking to expand and see a great deal of possibilities in an up and coming neighborhood near by. Lots of newly weds! You have to come at them by being sweet as their wedding cake! Having just paid for a wedding, honeymoon, and a new house... they're strapped for cash. Nor do these younger, newly weds want to hear a spiel similar to one they hear from their parents and grandparents about how they need insurance. Life, health, dental, house, car, fingernail, etc. Your going at them with from an economical standpoint. Your going to bundle and push yourself as being the most flexible and affordable insurance company.
What will I use to actually incentivize them?
... an offering!
Who can say it better than Jeremy Levi, "A 10% discount gets looked at, 15% sounds good, 20% and up will get people to stop what they’re doing and open your email." This holds true for your Facebook Ads, tear off ads in 7eleven, etc.
Want to know what's even better than 20% off? FREE.
WHAT?! What will that mean for my bottom line?
Let's go back to the Daycare and use the FREE incentive.
Fall registration coming and you want to increase your sign up rate. So you decide to take the social incentive appeal by offering a trail class, a sneak peak into the school year with the 1 hour evening class, "School Sneak Peak." It will be one hour or two. Whatever tickles your fancy.
Your potential customers will turn into PAYING CUSTOMERS by offering a free trial class faster than they would if they heard of you otherwise. They are already in the door, you've made the perceived value tangible, and they are in an experiential euphoria. Seal the deal after the class.
There you have it - an effect incentive money making push!
Want to really rock your pockets? COMBINE all of the three incentives.
Let's continue with the Daycare example...
So you had the free trial class. That's the SOCIAL incentive. Now time to introduce the other two types of incentives. Insert ECONOMICAL incentive: "Sign up tonight to receive 20% off your class." So now your looking super nice and your revenue is looking something like this:
- $ 20
"Wait, I'm losing $20.00?"..... NO. No you are NOT.
Because now your going to introduce the MORAL incentive. "Do you have friend's with children around your son/daughter's age? How would your friend like to have a happy experience for their child?" Make them feel like they would be doing their friends justice by providing the same, wonderful experience.
$ 100 $ 100
- $ 20 - $ 20
$ 80 + $ 80
$ 160 off 1 push
BUT THE ULTIMATE COMBO:
"I hope your enjoyed your free class and had a FUNtastic opportunity to see first hand how we truly value implementing education and life skills to our students. If you sign up tonight, you'll receive 20% off your class. If you invite 2 friends, not only will your children be more comfortable with companions but you'll introduce your friends to a quality experience, I will extend a free trial class to both of your friends, and when you all sign up. everyone receives 30% off a class."
May seem like a sales pitch when it's spelt out in plain English but as you move through the motion it will be natural.
$ 100 $ 100 $ 100
- $ 30 - $ 30 - $ 30
$ 70 + $ 70 + $ 70
$ 210 off 1 push
Way to go! Email or comment with how you plan to incentivize your audience. Do it now! Your business is counting on your to continuously seek profitable options of improvement. & You deserve success!
After you've rocked it and pushed your incentive full cycle, tell us how! We would love to hear your success story. We read every story.