Why Invest in an Incentive Program when Times are Tough? (cont.)

Avoid the urge to reduce the award structure of your incentive program. Instead, fight to maintain the value of your customer incentives and the revenues that they are driving. Reducing the value of the incentive program to customers in a slowing market can worsen revenue loss and raise doubts in the minds of customers at a time when they are evaluating their purchases very closely.

Even if left unchanged, a program with award rules directly related to customer purchases will decline as purchase levels slow in the market. Thus, the unaltered program will naturally experience its own reduction in cost. And, in line with the discussion on marketing communications, in a market where competitors are decreasing their purchase incentives you may win additional share of wallet and new customers by maintaining the value proposition of your program offers to customers and prospects.

• Encourage cost saving ideas and behaviors As we've mentioned, when revenues are under pressure from an economic downturn, cost reduction throughout the organization is at a premium. Consider investing in inexpensive employee training and the addition of a reward and recognition program that includes an emphasis on cost-saving behaviors and activities. Both can cost effectively motivate employees to improve service quality and proactively reduce expenditures. They can also reduce costly staff turnover during times of low morale.

2. Keep talking to your customers and prospects - but do more with less
Rethink your marketing strategy and reevaluate how you will allocate your downsized marketing budget for the most impact. One tool that should be near the top of your list is your incentive program. It offers you a number of costeffective marketing levers that can move sales in a positive direction, including customer/market research, customer communications, loyalty/relationship building, product sales promotion, product education and training, and more.

Here are some ways your incentive program can help you squeeze more impact out of your overall marketing and communications efforts.

• Take a closer look at your market and hone your value proposition to a more precise fit. Your incentive program provides you with a convenient tool for conducting research - you have a ready-made audience of interested customers to participate and an inviting way to compensate them for their time and effort. The economic downturn is also impacting your customers and, like you, they are adjusting their priorities. Survey your partners and customers to learn more about what is truly important to them. Then use this insight to refine your value proposition and better align it with the needs of the marketplace.
  
  
• Target the "right" customers with the "right" tactics and messages for maximum effectiveness. The data-centric nature of point-based incentive programs lend themselves to customer analysis and segmentation. The resulting customer insight can help you tailor your offers and messages in ways that make your scant marketing resources work more efficiency. For example, identify the customers most at risk for defection or those with the greatest potential for growth - and then target them with communications and offers that are relevant to them to produce stronger results. Your communications efforts will simultaneously be reduced in scale (and cost), and will produce a greater return on spend. In short - research, refine and target.
  
  
• Use program-based communication to “boost your mileage”. Reinforce your value proposition to customers and partners in regular communications. Make “what’s in it for them” crystal clear – explain exactly how you are making it easier and more cost effective for them to do business.

Leverage the communication tools and high participant attention levels found in your incentive program to get the most out of these efforts. Your program provides the equivalent of a marketing gold mine - immediate access to an audience that has given you permission to communicate with them and is clearly receptive to your message. Because of this, program-based communications simply do a better job of getting your message to your customers than other channels.

In many of the incentive programs supported by Loyaltyworks, participants are awarded points for specific activities and behaviors. These participants also receive program-related communications throughout the year from a variety of sources – examples include monthly statements in the mail that show their point balances and new awards, updates on new reward selections found on the program Web site, personalized emails relaying new point earning opportunities, and more. Participant attitudes about earning points and redeeming them for rewards are positive, so customers are generally enthusiastic about reading communications related to their program. To get maximum attention from this audience, try integrating other key company communications alongside those normally associated with the program.

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