• by Ranjith Kumaran , April 5, 2013

There’s no question that offering incentives can be a powerful way to get your customers and prospects to take the actions you want. Most marketers understand that the right combination of audience, actions, and rewards will attract, engage and retain more of the audience they’re aiming for. And despite the recession, overall consumer participation in loyalty and incentives programs has jumped 19 percent in the U.S. since 2007, according to research by Colloquy.

And yet, many companies don’t implement incentives programs because they assume incentives mean a large outlay of cash. But the reality is that with some creative thinking and careful planning, even companies with the smallest of marketing budgets can develop incentives programs that cost-effectively build consumer loyalty. 

The first step is to narrow down the audience you’re trying to reach. Do you want to connect with Gen Y consumers or baby boomers? Sports car drivers or fashionistas? Determining who your target audience is, based on the factors that are most important to you -- such as their profession or their location -- will provide you with clues to what will drive them to take actions and redeem rewards.

Next, think about what actions you want this audience to take, and how often you would like them to take those actions. Are you hoping they will share your content, or invite five friends to sign up for a newsletter? Are you looking for them to repeatedly sign a petition or call their local elected official? Aligning incentives to your audience and the actions you want them to take will ensure quality engagement and targeted traffic -- and ultimately. a successful program.

It’s also important to put yourself in the place of the consumer. Think about what’s in it for those who take action. What you can offer beyond a financial reward? What would make you take an action?  Think about other ways to entice your target customers -- can you offer them something special or unexpected? Remember that even financial rewards do not need to be expensive -- the right rewards are those that fit your brand identity and are uniquely valuable to your target customer.

Many companies also shy away from incorporating incentives into their marketing programs because they don’t want to attract coupon and sweepstakes hunters, or they think doing so would be too costly. While coupons or giveaways can be effective to engage quality customers, you don’t have to immediately offer up a discount as a reward.

When you’re ready to build your program, here are four different types of incentives that can help you build a loyal following with a limited budget:

1. Social recognition: Show your customers a little love and give them something to brag about. For example: re-tweet them, feature them on your Facebook page, highlight them on your blog, or invite them to a special “elite” customer club.

2. Virtual rewards: Offer your target audience things like achievement badges, points, virtual currency, levels and statuses for taking the action you’d like.

3. Exclusive access: Providing early or VIP access to people, content or events can be a powerful way to collaborate with customers and prospects and test ideas. A good example of exclusive access is the Zappos VIP Club, which allows members to get 24-hour advanced access to new styles and offers special customer support contact information with less waiting time.

4. Real-world stuff: This doesn’t need to be anything extravagant, despite the repeated giveaways of the latest iPad. If you make the rewards relevant, consumers will be excited to receive them -- whether it’s gift cards, t-shirts, tickets to special events, upgrades or VIP treatment.

Developing and executing loyalty programs that work for your brand -- and your budget -- can be a simple undertaking no matter where you are in the development of your marketing programs. While your company may grow, you never outgrow the need for better engaging users and building more fans.