Consumer Incentives: The Ultimate Guide in 2023

Employee Daniela
by Daniela Maria Zabrautanu
April 05, 2023

As a business owner, you know how important it is to have loyal customers. But how do you keep them coming back? One way is by offering consumer incentives. In this blog post, we’ll explore the benefits of consumer incentives and provide examples of effective strategies. By implementing these tactics into your business strategy, you can increase customer loyalty and ultimately drive success for your business. At Huuray, we specialize in rewards and incentives. Read on to learn about how we can help your business grow.

Understanding Consumer Incentives

Consumer incentives are a powerful tool for companies looking to boost customer retention and loyalty. Businesses can encourage customers to interact with their brand more often by providing incentives like gift cards, bonuses, or loyalty points. For instance, frequent logins or repeat purchases could result in a client earning more points toward future discounts or prizes.

Businesses can build an emotional bond with their customers by understanding their motivations and putting innovative ideas to work that benefit the customer. Over time, increasing engagement and loyalty result from this connection. The secret is in selecting the ideal combination of rewards that appeals to the interests and preferences of your target audience while achieving measurable business results.

Related: Incentive Pay: Boost Your Team’s Motivation with Gift Cards

consumer incentives

What are consumer incentives?

Consumer incentives are benefits or rewards companies give their customers in exchange for particular actions or behaviors. These incentives provide value above and beyond the goods or services being sold in an effort to promote client loyalty and retention. Consumer incentives add value without reducing sales, in contrast to discounts and promotions that lower costs and profit margins.

Loyalty programs, point systems, gift cards, bonuses for referrals or repeat purchase, exclusive access to events or items, and tailored offers based on consumer behavior are a few examples of common consumer incentives. Businesses can strengthen their connection to their customer base and boost sales by providing various prizes and perks to customers who interact with their brand in certain ways (such as making purchases, referring friends, and leaving reviews).

In summary:

  • Consumer incentives are rewards offered by businesses to encourage customer engagement
  • Examples include loyalty programs/benefits/referral bonuses/personalized deals
  • Incentives differ from discounts/promotions because they add value without reducing revenue

Types of consumer incentives

Businesses can boost customer loyalty and retention by providing three different forms of consumer incentives: cashback offers, loyalty programs, and referral benefits. Customers receive benefits from these incentives in exchange for carrying out specific tasks, including making a purchase or referring a friend.

Examples of these types of incentives include:

  • Cashback offers: Customers receive a percentage of their purchase back in the form of cash.
  • Loyalty programs: Customers earn points for purchases that can be redeemed for discounts or gift cards.
  • Referral bonuses: Customers receive rewards or discounts for referring new customers to the business.

Businesses may build a sense of worth and gratitude in their consumers by providing these customer incentives, which will ultimately result in more sales and customer loyalty. So why not start putting some consumer incentive ideas into practice right now?

Why consumer incentives work

Customers’ loyalty to your brand may rise if you can make them feel special. Customers feel appreciated and unique when businesses provide them with personalized incentives, bonuses, and benefits like gift cards or points that can be redeemed with each purchase or log in. This fosters enduring relationships and motivates them to promote your company to others.

By including fun concepts in consumer rewards, you can further “gamify” the purchasing experience. You may, for instance, offer extra points in exchange for reviews or for referring friends who make purchases from your website. This generates talk about your business, boosts engagement, and motivates customers to act.

Because they reflect that you are interested in your customers’ needs and interests, personalized gifts are an excellent approach to increasing customer loyalty. You establish an emotional connection with the customer that goes beyond merely closing a deal by providing personalized rewards according to previous behavior or purchase habits. These kinds of incentives encourage repeat business from customers and set your company apart from rivals who might not successfully use this strategy.

Related: Read about Customer activation and learn to engage your customers and gain loyalty

boosting morale and motivation

Benefits of Offering Consumer Incentives

Providing consumer incentives can help your business in a variety of ways. It boosts repeat business and client retention in addition to increasing consumer loyalty. Customers are more inclined to pick your brand over competitors if you offer incentives or bonuses for loyal support.

Offering incentives to clients not only encourages their return business but also helps them have a great experience that they will associate with your company. As a result, word-of-mouth recommendations and new clients in search of great service and benefits are attracted. Why not use consumer incentives to your advantage and give your company the boost it deserves?

1. Increase customer loyalty

Personalized incentives, special awards for loyal customers, and top-notch customer service are all powerful strategies for building emotional connections with clients and creating loyalty. Businesses can enhance sales and brand awareness and loyalty by putting these methods into practice and making sure that their consumers feel valued and appreciated.

Businesses can use consumer incentives in a variety of ways to promote client loyalty, including the following:

  • Personalized discounts or offers based on the individual’s past purchases
  • Exclusive access to product releases or events for loyal customers
  • Loyalty programs that offer points or rewards for repeat business
  • Surprise gifts or perks as a way of saying thank you

By going above and beyond in terms of customer service and creating a sense of exclusivity with special incentives, businesses can create happy, loyal consumers who are more likely to return time after time.

2. Improve customer retention

Customer retention can be increased by implementing consumer incentives. Businesses can boost customer satisfaction and loyalty by rewarding loyal customers, making personalized offers based on past purchases, and creating a sense of community through loyalty programs.

  • Implementing a point system that rewards customers for repeat purchases

If customers feel valued for their loyalty, they are more inclined to come back. A points-based system that rewards or incentivizes customers depending on how frequently or how much they buy from you encourages them to stick with you as a customer.

  • Sending personalized offers and discounts based on purchase history

Personalized communication shows your customers that you value their relationship with your brand. Offering unique promotions tailored to individual interests and buying habits encourages them to remain loyal by continuing to do business with you.

  • Creating a sense of community among customers through loyalty programs

Loyalty programs give your most valued clients exclusive benefits while fostering relationships between other members of the program. This creates an emotional connection between consumers, forging trust in the brand and increasing overall customer retention rates.

When a business seeks to improve client retention rates, consumer incentives should be at the forefront of its plan. Businesses can succeed in maintaining devoted customers over the long run by integrating these methods into an existing marketing plan or developing new ones entirely around them. For more info on this topic, check out our article where we show how the use of digital rewards changes your marketing plan’s outcomes.

3. Generate repeat business

Offering seasonal promotions or limited-time offers is a terrific strategy to boost sales and inspire customer loyalty. Customers are more inclined to make a purchase before the deal expires when there is a sense of urgency. Asking for feedback on goods and services is another technique to entice returning clients. This not only enhances the customer experience but also demonstrates your value for their feedback.

Using social media as a platform to regularly update clients on new products or special offers will help keep your business top-of-mind with them and entice them to use it again. Think about publishing user-generated content from delighted consumers or behind the scenes at how your company operates.

  • Offer seasonal promotions and limited-time deals
  • Solicit feedback from loyal customers
  • Use social media for consistent updates

By implementing these tactics, businesses can increase customer loyalty and retention while generating repeat business through consumer incentives.

Pros and cons of using consumer incentives

Businesses can enhance sales and customer loyalty by offering consumer incentives. Yet, there may be disadvantages to take into account. The followings are some advantages and disadvantages of implementing customer incentives in your business:


  1. Increase sales: Consumer incentives can persuade consumers to buy goods they might not have otherwise, increasing sales revenue for the business.
  2. Attract new customers: Providing incentives or discounts can welcome new clients who are looking for a good bargain or value-added advantages.
  3. Increase customer loyalty: Businesses can promote client loyalty and entice customers to make additional purchases by rewarding loyal customers.
  4. Create a competitive advantage: A company can stand out from its competitors and gain a competitive edge in the market by providing better incentives.


  1. Reduced profit margins: Incentives can reduce profit margins, especially if the discounts or awards are substantial.
  2. Attract price-sensitive customers: Consumers that are primarily driven by incentives or discounts may not be long-term supporters because they are more inclined to switch to a company that offers better prices.
  3. Devalue products or services: Incentives may diminish the perceived value of the goods or services being delivered if they are given out too frequently.
  4. Difficulty in predicting outcomes: It can be difficult to forecast if incentives will be effective and how customers will react, which can result in a waste of money and time.

Overall, consumer incentives can be an effective tool for businesses, but before implementing them, it’s crucial to weigh their advantages and potential disadvantages.

Implementing Consumer Incentives into Your Business Strategy

Consumer incentives have been shown to promote client retention and loyalty, which boosts revenue for organizations. Setting attainable objectives, picking the appropriate rewards, and monitoring their effectiveness can help you apply these incentives successfully. Businesses can concentrate efforts on obtaining particular results that are in line with their overall business strategy by setting realistic targets. Understanding your target audience’s needs and preferences can help you choose rewards that will appeal to them the most. You can optimize future strategies based on actual data by tracking and assessing your progress to gain useful insights into what works best for your company.

1. Set realistic goals

Setting realistic goals that are in line with your company’s needs and customers’ preferences is crucial for maximizing the efficacy of your consumer incentive program. Research consumer expectations for rewards programs and areas where customer retention may be enhanced before making any decisions. Have specific goals for the incentive program that will encourage consumers to interact with your brand.

Here are some specific steps you can take when setting realistic goals for your consumer incentives program:

  • Identify areas where customer retention can be improved
  • Research consumer preferences and expectations for rewards programs
  • Establish clear objectives for the incentive program

2. Choose the right incentives

Think about various forms of rewards, such as discounts, free items, or exclusive access. Don’t, however, restrict yourself to these choices. Try out different incentives that fit your business and target market by using your imagination.

Adapt incentives to particular client segments based on their interests and behavior. Conduct market research to see what drives each category, then modify your incentives as necessary.

Make sure the incentives are both sustainable and financially viable. Establish a budget for your incentive program and determine the return on investment (ROI). Keep in mind that building long-term client loyalty requires sustainability.

  • Personalize rewards
  • Offer experiential rewards
  • Utilize gamification tactics

3. Track and measure success

Tracking and evaluating your customer incentive program’s performance is crucial for its success. You can determine whether your incentives are really increasing customer loyalty and retention by looking at indicators like the repeat purchase rate or referral traffic. Also, getting direct feedback from clients is a helpful approach to learning what elements of the program are effective and what needs to be improved. Make any necessary program adjustments based on data analysis and client input.

Consider these tips for tracking and measuring success:

  • Use metrics such as repeat purchase rate or referral traffic to evaluate the impact of incentives
  • Collect direct feedback from customers through surveys or focus groups
  • Analyze data trends over time to identify areas for improvement in your incentive program

What is an example of a positive consumer incentive?

Consumer incentives are designed to motivate individuals to take specific actions, typically aimed at driving consumer behavior that benefits businesses or society as a whole. A positive consumer incentive offers tangible benefits or rewards to consumers, which encourages them to engage in desired activities, such as making a purchase, adopting a particular behavior, or supporting a cause. One notable example of a positive consumer incentive is the “loyalty rewards program.”

Loyalty Rewards Program: A Win-Win for Businesses and Consumers

Loyalty rewards programs have become a ubiquitous feature of the modern business landscape. These programs are offered by a wide range of companies, from retail giants like Starbucks and Amazon to airlines, hotels, and local businesses. The core concept of a loyalty rewards program is simple: the more a consumer engages with a particular brand or business, the more they are rewarded for their loyalty.

Examples of consumer incentive programs in the UK

What better way of learning more about consumer incentive programs is there than offering concrete examples? We gathered a few examples for you to get inspired from. You are probably familiar with at least a few of these consumer incentive programs. By looking at these examples you might draw inspiration for your new incentives program.

  1. Tesco Clubcard: One of the biggest supermarket chains in the UK, Tesco, has a loyalty program called Clubcard that lets customers earn points for their purchases. These points can be exchanged for future purchase discounts or gift cards to other stores or restaurants.
  2. Boots Advantage Card: Customers can get points on their purchases using the Advantage Card loyalty program offered by Boots, a major pharmacy and beauty shop in the UK. These points can be exchanged for special deals, discounts on future purchases, or other benefits like free delivery.
  3. Amazon Prime: For a monthly fee, Amazon Prime members receive free shipping, access to streaming services, and other perks. Customers are encouraged to use Amazon for a greater variety of services and to make more purchases through the program.
  4. Costa Coffee Club: Customers can accumulate points on their purchases through the Costa Coffee Club loyalty program, which is offered by the well-known coffee shop chain Costa in the UK. You can exchange these points for gifts like free drinks.

These are just a few specific examples of consumer incentive programs in the UK that are popular with customers and effective at incentivizing purchases and customer loyalty.

How to create a consumer incentive program

Creating a consumer incentive program can be a complex process, and the specific steps involved will depend on the goals of the program, the target audience, and the available resources. We tried to keep it simple so, here are some general steps that businesses can take to create an effective incentive program:

1. Identify the objectives

Finding the program’s objectives is the first stage in developing a customer incentive program. Is the objective to grow sales from current consumers, draw in new ones, or promote client loyalty? Businesses can create a program that is suited to their unique needs by making the objectives clear. Some objectives could be to:

  • Increase sales
  • Enhance customer loyalty
  • Raise customer acquisition
  • Stimulate customer engagement
  • Gather customer data
2. Determine the target audience

Businesses need to identify the program’s target audience after the objectives are defined. Existing clients, potential clients, or particular demographic groups may be mentioned here. Here are some examples of target audiences for a consumer incentive program:

  • New customers
  • Loyal customers
  • High-value customers
  • Social media followers
  • Employees
3. Choose the incentives

The next step is to select the customer incentives that will be provided. They could consist of monetary consumer incentives such as discounts, free goods or services, loyalty points, cashback incentives, or other perks. The incentives must be appropriate for the target audience and in line with the goals of the program. These are a few examples of consumer incentives you can use for your program:

  • Discounts
  • Free gifts
  • Points or rewards
  • Sweepstakes or contests
  • Early access or exclusive perks
  • Cashback or rebate
  • Charitable donations
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4. Develop a marketing plan

Once the program is designed, businesses need to develop a marketing plan to promote the program to the target audience. Advertising, social media promotion, email campaigns, and other marketing initiatives may fall under this category.

Here is an example of an incentive marketing plan for implementing a consumer incentive program:

  1. Objective: Increase sales and customer loyalty through a consumer incentive program
  2. Target audience: New and existing customers who are interested in healthy living and fitness.
  3. Incentives: Offering a free trial of a health and wellness app for signing up for the program, and offering rewards for accomplishing a specific task, such as tracking meals, workouts, and weight reduction progress. Discounts on supplements, athletic equipment, or professional coaching sessions are examples of rewards.
  4. Marketing channels:
    • Email: To advertise the program and the incentives, several emails will be sent to leads and current clients. The advantages of the app and the incentives that can be obtained will be highlighted in the emails.
    • Social media: The program will be promoted on social media platforms and a hashtag will be used to encourage participants to track their progress and take part in challenges.
    • Influencer marketing: Influencers in the health and wellness industry will be contacted to ask them to use sponsored posts to spread the word about the program to their followers.
    • Content marketing: The advantages of the app and the program, as well as how it can assist users in achieving their health and fitness objectives, will be highlighted in blog posts and articles.
    • In-store promotion: Stores will display flyers and posters to advertise the program and its benefits to customers.
  5. Measurement and Evaluation:
    • Sales: To assess the program’s efficacy, keep track of the number of purchases made throughout the program and make comparisons to previous periods.
    • Customer retention: Throughout the program, keep an eye on the client retention rates to see if the program is successful in boosting customer loyalty.
    • Social media engagement: Keep an eye on the activity on social media and count the hashtag’s posts, shares, and followers.
    • Customer feedback: Survey customers for feedback to better understand their experiences with the program and pinpoint areas for improvement.
5. Monitor and adjust the program

Finally, companies must keep an eye on the program’s effectiveness and make any necessary adjustments. This could mean altering the program objectives, the marketing strategy, or the incentive structure.

84% of UK consumers say that they are more likely to do business with a company that offers some form of reward or incentive scheme. Meanwhile, 70% of UK consumers have signed up to at least one loyalty scheme, with over a third (36%) belonging to more than one. On average, UK consumers belong to 3.6 loyalty schemes each.

This quote is from a survey conducted by YouGov on behalf of American Express in the Uk. The popularity of consumer incentive programs in the UK and their potential to influence customer behavior are both highlighted in this remark. According to the results, companies that give customers incentives or rewards may have a competitive advantage and strengthen social relationships with their clients.

How do you measure your incentive program’s success?

It is necessary to establish specific objectives and key performance indicators (KPIs) that can be tracked and analyzed over time in order to evaluate the effectiveness of a consumer incentive program.

We already discussed some common metrics for assessing an incentive program such as evaluating the sales, customer retention rate, social media engagement, and customer feedback. However, that’s not all. One of the most important measurements is the return on investment (ROI). ROI is a widely used indicator to assess an incentive program’s effectiveness. It calculates the percentage-based relationship between the investment’s cost and return on investment.

The first stage in calculating the ROI of an incentive program is to list all the costs involved, including those for creating and running the program, purchasing the incentives, and any other costs like marketing or advertising. The whole cost of the program may then be subtracted from the total income that was created as a result of the program, and the result can then be divided by the total cost of the program to determine the return on investment.

The ROI is represented by the resulting percentage.

The ROI, for instance, is (£25,000 – £10,000) / £10,000 x 100% = 150% if a company invests £10,000 in an incentive program and receives £25,000 in revenue as a result. To learn more about ROI, check out this article by Investopedia.

Prior to launching an incentive program, it’s important to establish precise measurements and track them consistently throughout time. This can assist in figuring out what’s working and what isn’t so that changes can be made to the program to maximize its success.

7 Consumer Incentives Insights

  1. Personalization: Given the fact that they seem more relevant and meaningful to the customer, personalized incentives may be more successful than generic ones. Giving a discount on a product that a consumer has recently searched for, for instance, can be more effective than giving them a general discount code.
  2. Gamification: Gamification is a useful tool for engaging consumers and adding fun and interactivity to incentive programs. Challenges, leaderboards, and other game-like features can boost participation and motivation.
  3. Social Proof: Consumer incentive programs can also benefit from the use of social proof. For instance, displaying client endorsements or testimonies that highlight the advantages of the program and prizes can assist increase participation and the level of trust.
  4. Limited-Time Offers: Customers may feel compelled to respond quickly by limited-time offers or flash sales. One example of how to boost the probability of a sale is to provide a discount that is valid for just 24 hours.
  5. Emotional Appeal: Incentive programs that tap into the emotions of customers can also be more effective. For example, offering a donation to a charity for every purchase made can create a sense of social responsibility and encourage customers to make a purchase.
  6. Long-Term Engagement: Long-term engagement incentive programs, like point-based reward programs, can be more successful in keeping consumers and promoting repeat purchases. These initiatives foster client loyalty and offer rewards for sustaining brand involvement.
  7. Accessibility: Customers may be more engaged by incentive programs that are simple to access and grasp. Customers may become disconnected from a brand if a program is complicated to understand or involves too many stages.

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Interesting aspects of consumer incentives

Another interesting aspect of consumer incentives is their ability to influence consumer behavior beyond just making a purchase. Consumers might be encouraged by incentives to perform particular tasks, including checking out a new product, subscribing to a newsletter, or introducing friends to a company.

This is due to the fact that incentives appeal to fundamental aspects of human psychology like the desire for reward and the fear of missing out. Businesses can encourage customers to do actions they might not otherwise consider by providing a tangible reward or advantage.

Companies that effectively use incentives to inspire staff and customers experience 31% higher revenue growth than their peers, according to a Harvard Business Review analysis. In a study by Incentive Research Foundation, 46% of consumers said that they would be willing to share personal information in exchange for an incentive.

Overall, consumer incentives can be a powerful tool for businesses looking to attract and retain customers, drive sales, and build brand loyalty.

Resources for Consumer incentives

If you are just getting started on consumer incentives, we recommend you a couple of resources for additional information. Read more about loyalty programs, employee incentives, promotions and campaigns. For customer referral programs, check out a great article from HubSpot. The article includes examples and ideas that work for referral programs in 2023.

Talk to an Expert at Huuray

At Huuray, we are experts in gift cards, rewards, and incentives. We specialize in offering the best solutions tailored to our customer’s needs. Whether you need advice on how to start using gift cards in your incentive or loyalty programs or want to learn more about sales incentives or marketing incentives, we can help. With more than 10 years of experience, we deliver value and support our customers in achieving their targets.

Are you looking for gifts for your employees, marketing incentives, or sales incentives to boost your sales staff? Huuray can help you, plus it’s global and free to use.

Final thoughts

In conclusion, consumer incentives can significantly impact customer loyalty and retention, but not all incentives are created equal. By using some of the tactics mentioned in this blog post, such as personalization, gamification, social proof, limited-time offers, emotional appeal, long-term engagement, and accessibility, businesses can create more effective incentive programs that resonate with their customers. At Huuray, we specialize in offering the best solutions tailored to our customers’ needs. Contact us today to learn more about how we can help you achieve your targets.

Frequently asked questions on Consumer Incentives

Why do consumers like incentives?

Because they offer an additional advantage or reward for performing a certain action, such as making a purchase or finishing a survey, incentives are popular with consumers. Discounts, rebates, free gifts, or loyalty points are just a few examples of consumer incentives.

Consumers are drawn to incentives for a variety of reasons. Firstly, incentives can provide consumers with a sense of immediate satisfaction and value for their money. A discount or refund, for instance, might boost the perceived value of a purchase and make it seem like a better deal.

Second, rewards might express a feeling of exclusivity or exclusive treatment. For instance, a loyalty program that grants members exclusive discounts or benefits can make customers feel cherished and appreciated by the business.

Finally, some consumers may find motivation from incentives’ sense of challenge or competition. For instance, a points-based program that allows customers to earn prizes for doing particular tasks or activities can motivate them to interact with a brand or product more frequently.

Overall, incentives can be a powerful tool for businesses to bring in and keep customers, as well as for customers to feel appreciated and rewarded for their commitment and engagement.

Do incentives work on customers?

Yes, incentives can be effective in influencing customer behavior. Here are some statistics that prove that:

  1. 60% of UK customers agree that the availability of discounts or promotions influences their choice to make a purchase, according to a YouGov poll.
  2. 90%of UK shoppers utilize coupons and discount codes, according to a RetailMeNot poll.
  3. 82% of UK consumers feel loyalty programs increase their likelihood to conduct business with a firm, according to a Rakuten Marketing poll.
  4. According to a Capgemini study, 43% of UK consumers are open to disclosing personal information in exchange for personalized offers and discounts.
  5. According to a Nielsen study, 50% of UK shoppers are more likely to buy a product if it includes a free gift.

These figures show that incentives like discounts, vouchers, loyalty programs, personalized offers, and free gifts can have a significant impact on consumer behavior in the UK.

How do you incentivize customers?

There are various ways to incentivize customers depending on the type of business, industry, and target audience. You can consider using Discounts, loyalty programs, contests and giveaways, referral programs, and personalized items. It’s crucial to pick rewards that will resonate with your target consumer and promote your company’s objectives. You can gradually improve your plan by experimenting with different incentives, and monitoring their efficacy until you obtain tangible results.