Everyone Wants Something for Free

Consider the recent seven-state ticket-buying frenzy set off by The Big Game lottery boasting a $350 million jackpot. People stood in mile-long lines and crossed state lines to purchase the $1 tickets — all despite publicized odds of one in 76 million.

Obviously, public enthusiasm would have flagged if the potential windfall had run three digits instead of nine. Therefore, this column's headline should be amended to reflect a greater reality: Everyone wants something for free, as long as the potential reward justifies the time and effort required to obtain it.

This quid pro quo is at the core of successful consumer incentive and loyalty programs. Both the marketers and their target audiences know that “free” offers have strings attached. In exchange for a gift, product sample or trial subscription, the consumer agrees to perform a desired activity or honor a set of terms and conditions. Minimally, they must invest the time to find out what the offer entails. While tied to purchases and service usage, loyalty programs also hold out “something for free.” In this instance, the frequent or volume shopper gets a bonus for being a good customer and is motivated to return for more “freebies.”

As the name suggests, a good incentive campaign should motivate consumers to fulfill the marketer’s objective. Incentive programs are a good way to build brand awareness, increase Web site traffic and collect consumer data for future targeted offers.

The most successful incentive programs match the value of the reward with what the consumer must do in return. A dangled carrot might motivate a mule but would draw zero response from a lion. Use the right bait. Design a teaser that clearly speaks to your primary audience. Your campaign should draw qualified customers, not a horde of bounty hunters.

Incentive programs also must be easy and convenient to enter. Offers can be posted on your e-commerce site, through ad networks or in e-mail correspondences. JavaScript pop-up windows bring the action to the consumer, since the desired activity can be executed inside the banner. JavaScript — vs. HTML banner promotions — also has the added advantage of flexibility. The showcased products and the look of the promotion can be changed on the fly. As a result, featured items drawing a tepid reception can be replaced with more worthy contenders.

To add punch to an incentive campaign, consider the following tips:

* Include a time limit. Consumers are more likely to stop what they are doing and participate in a marketing activity if the opportunity has posted time limits.

* Use branded rewards. Incentives should reflect what a site carries and reinforce its branding. These campaigns should educate consumers about a site’s merchandise and service line and encourage site traffic.

* Take advantage of holidays and special events. Consumers get into the holiday spirit and respond well to offers tied to special occasions. For instance, at the end of the school year, teen-agers will perk up at offers with school prom themes. IQ.com designed a Valentine’s Day sweepstakes featuring Melanie Griffith for OneWorldLive.com. The teaser: “Win Melanie’s Recipe for Romance.”

* Reward interest. While sweepstakes have a set number of official winners, no one should leave empty-handed. Provide a consolation prize to all participants, such as an electronic coupon or product/service sampler.

* Provide another chance or two. One-shot deals are less compelling than staggered sweepstakes or merchandise offers. Give people a reason to come back by posting the date of the next contest or merchandise offer.

* Consider rich media solutions. Enhance the interactivity and visual interest of a campaign using rich media effects — i.e., animation, streaming audio or video. Many ad networks now support rich media banners, including 24/7 Media, DoubleClick, Engage Media and BurstMedia.

An early e-commerce strategy to build a customer base was to sell products at razor-thin margins. For all but retail discounters, this is a bad precedent. Customers primarily concerned with price demonstrate little retailer loyalty. They tend to buy wherever the price is lowest and now have several comparative price search engines at their disposal.

Today, e-tailers increasingly concentrate their resources and energies on their best customers. They offer personalized services, private online sales and targeted communications to strengthen the relationships. Merchants also use loyalty programs to reward patronage.

Loyalty programs are designed to attract and retain customers who care about quality, reliability and service. Although loyalty programs can provide cash-type rewards in the form of discount coupons, earned percentages off future purchases or year-end rebates, the site’s standard pricing for merchandise and services is not compromised. In other words, the public pays the set price, while preferred customers, who have racked up a lot of reward points, qualify for lower prices.

Since the reward systems are generally cumulative, loyalty programs give customers an incentive to shop as much as possible at that site. The more a customer purchases or performs a desired activity, the more reward points accrue. The “currency” should be branded and complement your product and service offerings. For instance, an online travel reservation service might reward frequent users with free frequent flier miles, complementary hotel stays or car rentals. The ClickRewards Shopping Network even lets customers donate their awards to Habitat for Humanity and the Special Olympics.

Here are tips on enhancing loyalty programs:

* Provide 24/7 account access and usage. Give customers the means to check the status of their personal account at will and use the currency when convenient.

* Keep the rules simple. Don’t encumber online loyalty programs with a lot of “legalese” and intricate maneuverings; nobody wants to work that hard for a bonus.

* Remind customers of time limits: If a program extends for only a calendar year, give customers a heads-up by e-mail or on the site that they must redeem their prizes by a certain date. That way, customers can blame only themselves if they miss the deadline.

* Extend the value and potential uses of rewards. Some Internet affiliate networks are creating a branded currency for use and redemption at any member site. Other rewards programs enable consumers to use accrued benefits throughout their retail organizations.

* Keep the gift selection fresh. A loyalty program based on cheap or useless gifts will backfire. Repay value with value, and update the offerings frequently so customers always have something new to work toward.

If you don’t want to take on the responsibility inhouse, there are Internet marketing companies that specialize in incentive and loyalty programs, among them IQ.com, Netcentives, MyPoints and ClickRewards. The turnkey solutions typically manage the entire program, including promotion design and consulting, software implementation, account monitoring and reporting, reward fulfillment and customer service.

No retailer can afford to take customers for granted, especially online when departure is a mere click away. While no one really expects to get something for free, most of us appreciate a program that rewards our patronage or cooperation. An e-tailer does not have to give away the store to acquire and retain customers. Good service, personal attention and quality product are the main inducements. The “extras” are merely nice, and nice goes a long way toward building strong customer relationships.

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