TECHNOLOGY

Study: Reward-based promotions outperform discount-based ones

BY Marianne Wilson

Research conducted by Aberdeen Group for a study by Hawk Incentives, a Blackhawk Company, found that reward-based promotions can outperform discount offers by driving better purchase intent and sales lift without damaging a brand’s image from discounting. (In previous research by Aberdeen, nearly 80% of surveyed consumers preferred rewards in the form of prepaid cards to other incentives such as discounts or merchandise.)

Aberdeen’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:

• Reward-based promotions can generate more annual company revenue and greater profitability per customer. Companies surveyed report an average year-over-year revenue growth increase of 36% that can be attributed to reward-based promotions as opposed to 28% percent attributed to discounts.

• Overall, compared with discount-based promotions, the companies surveyed that offer reward-based promotions generate a six percent greater average profit margin per customer (24% for rewards-based promotions versus 18% for discounts).

• Businesses use reward-based promotions to achieve specific business goals. When selecting between reward- and discount-based promotions, businesses choose reward-based to foster customer engagement (58%), drive purchase intent (48%), drive sales lift and/or purchase frequency (45%) and minimize lost revenue potential due to discounting (44%).

• Companies use reward-based promotions to elevate brand image. To create the impression of a premium brand image versus one that consistently discounts prices, 43% of companies surveyed consider using reward-based promotions. When directly competing with a rival on brand image, 44% of companies prefer to use reward-based promotions.

• Marketers measure rewards- and discount-based promotion success differently. Of the marketers surveyed, 67% gauge reward-based promotion success on increases in customer retention and loyalty, as opposed to 55% of those that sponsor discount-based promotions.

“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, VP of marketing, Blackhawk Network, a provider of rewards and incentives to organizations around the globe. “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,” she added.

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TECHNOLOGY

Nordstrom launches ‘The Nordy Club’

BY Marianne Wilson

Nordstrom is offering customers more than points in its transformed customer loyalty program.

The department store retailer will launch “The Nordy Club” this fall. The program incorporates the traditional point system and benefits of Nordstrom’s previous program, while also offering customers more personalized and enhanced service and experiences, including exclusive access to product and events and more convenient ways to shop.

“With the launch of The Nordy Club, we’re excited to go beyond the model of points for Notes and enhance our relationships with existing customers, while giving new customers more reasons to engage with us,” said Scott Meden, Nordstrom chief marketing officer. “We’ve seen significant growth in our program over the last few years and our 10+ million active members spend four times more and shop with us three times more than non-members.”

The new program will provide rewards at a faster earn rate. Starting later this fall, Nordstrom credit cardmembers will earn three points per dollar for purchases at Nordstrom, a 50% increase in earn rate. Members paying with cash or a non-Nordstrom card will receive one point for every dollar spent.

Customers will also have access to new product launches, and be “first to shop” the company’s off- price clearance event, Clear the Rack. Through the Nordstrom app, customers can collect Notes faster at $5, $10, and $15increments or wait to be issued a $20 Note.

Along with the new rewards and services, The Nordy Club will offer personalized experiences for every customer. The Nordstrom app will feature an integrated, dashboard allowing customers to easily see and interact with the loyalty program – providing access to their status, points balance and spend-to-next-level at all times.

The Nordy Club has four published levels based on annual spending, ranging from member ($0 to $500) to ambassador ($5,000 plus), each with its own benefits. There is also an invite-only “icon” status for top Nordstrom cardmembers.

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Walmart looks to boost Jet.com with a big makeover—and partnership with Nike

BY Marianne Wilson

Walmart is updating its Jet.com site with faster delivery, new merchandise offerings, more personalization and other enhancements as its looks to strengthen its defenses against Amazon.

The online retailer on Thursday debuted an updated website that features an array of new and improved offerings, with a shopping experience tailored to specific needs of urban areas, starting with New York City. (Jet will open a new fulfillment center in the Bronx this fall.). The changes are designed to expand Jet’s appeal to its target audience of affluent, urban-dwelling consumers.

“I’m personally thrilled with this evolution of Jet,” said Marc Lore, Jet founder, and president and CEO of Walmart eCommerce US. “It’s the next generation of shopping for city dwellers, and really brings the personality of their city and local favorites to life,” And, focusing Jet on customers in the major metro cities perfectly complements our overall e-commerce portfolio strategy.”

The changes include a bigger emphasis on localization. Starting with New York and rolling out to other major cities over time, Jet.com will feature iconic, localized imagery and messages on the home page and throughout the site. In addition, smarter product recommendations that prioritize shoppers’ preferences and timely re-order suggestions that predict needs to restock will provide more intelligent personalization. And iOS consumers will be able to use voice activation to build shopping lists on Jet’s mobile application.

Other changes include faster delivery. Most New York City customers will be able to arrange three-hour scheduled delivery windows for their groceries and other select merchandise. Upon checkout, customers will be able to add customized delivery instructions (e.g. “leave the package with the doorman”). Delivery will be offered through Parcel, the same-day, last-mile delivery company Walmart acquired in 2017.

Jet is also partnering with New York-based brands and small businesses to offer a more localized product assortment. New Yorkers, for instance, will be able to order local and craft beer for same-day and next-day delivery in the coming months.

NIKE: Jet also plans to add more brands to its site, including Nike. In October, Jet and Nike will partner to offer consumers Nike and Converse products in a fully branded experience. The initial assortment will include hundreds of products across apparel, footwear and accessories for men, women and children, including essentials for running, training and sportswear.

Jet was launched in 2015 and acquired by Walmart for $3.3 billion in 2016, Jet is the shopping destination for city consumers.

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