Before you establish a loyalty program, the first thing you need to do is differentiate between a loyalty program and an incentive program. Once you do that it will be easier to establish your loyalty program
What is the difference between loyalty and incentive programs?
Loyalty programs are targeted at customers who are already doing business with you and are rewarded for each transaction. The program allows the business to reward them for their loyalty, but it also helps protect customers from being poached by competitors.
Incentive programs target customers who want to earn a credit toward future purchases. Larger transactions receive larger rewards by definition. These rewards may not be in the form of cash back, but they can operate very similarly. Typically the customer is treated no differently than any other, and the benefit is limited to receiving and redeeming the reward credit. An incentive program’s primary objective is to deliver sales growth upon a customer achieving a target. If a customer achieves X, they receive Y.
Put another way: Incentive programs reward the purchase; a loyalty program reinforces the behaviors that lead to more purchases.
7 Examples of Successful Incentives
Whether your workforce is remote or on-premises, it’s important to promote good work morale and motivation. Offering incentives can be a great way to create an enjoyable environment to energize your employees.
- Sales Quotas
- Specific Brand Incentives
- Employee Motivation to Learn, Safety and Interact
- Traffic Builders
- Seasonal / Tent-Pole Promotions
- Finance Assistance
- Invigorate Sales Reps
Fun Fact: Despite the fact that a little over half of all consumers use loyalty programs in order to save money, 37.5% of consumers are looking more interested in rewards than discounts.
In conclusion, the difference is that in a loyalty program, the customer is rewarded for every purchase, whereas, with an incentive program, a customer is only rewarded after achieving a sales target or sales goals. The real difference about each program is that loyalty protects customers and incentives drive growth.