There is no denying that we humans love getting something for nothing. The psychology behind our love for free things has long been studied, with it seemingly impossible for many of us to reject the offer of a thrilling freebie. Whether you’ve accrued some free discount vouchers thanks to your supermarket loyalty program or been given a healthy increase on your Christmas pay packet, receiving bonuses always feels like a gift for the consumer, while it can seem perplexing as to why so many businesses offer them out. However, in the business world, our engrained appreciation for all things free has been tapped into, with the concept of bonuses being used as an effective marketing tool across multiple sectors. Here’s why bonuses don’t just work for the consumer.
Enticing and retaining customers
Bonuses are frequently used by businesses to attract new customers and then lock them into becoming repeat consumers of products or services. Supermarkets and other retail stores are a perfect example, with many offering loyalty programs to customers that offer perks for spending money in their stores. Accruing points may provide in-store discounts or even vouchers for external products and experiences. With bonus programs like this, consumers are compelled to stick to using the same store, knowing that every penny they spend helps save up for a freebie in the future. Elsewhere, online casinos focus on bonuses as their primary customer acquisition strategy, offering new members things like free spins, deposit matches, and sometimes even cash to spend on the platform. By offering these bonuses platforms are able to stand out from a crowded market and grow their player base.
Strengthening brand image
Offering generous bonuses to customers is an easy way for companies to build a positive brand image for themselves, which in the long term can prove beneficial for financial performance. Appearing as customer-focused helps to grow consumer trust in a company, with generosity often being remembered by potential customers. In today’s world of online trends and social media hype, tapping into the potential to increase your brand awareness should not be overlooked. By offering creative bonuses, companies can increase their visibility via social media sharing, allowing their products and services to reach a wider audience. PayPal used this tactic with great success in the fintech company’s early days. By offering new customers $10 for signing up and existing customers the same for referring someone else, the company’s reputation exploded, with customer numbers growing exponentially. This example shows just how beneficial offering bonuses can be in strengthening a company’s brand image.
Boosting engagement
The first step on the road to losing customers is when they get bored and start to lose interest in the product or service a company is offering. If customers stop properly engaging with a certain brand, then they can just as easily start engaging with an alternative somewhere else. By employing effective bonus programs, businesses can create a stronger relationship with their customers and minimize the possibility of losing their attention. Brands often use marketing campaigns that involve some form of contest with the possibility of a prize to maintain high customer engagement. A common example would be the classic Willy Wonka golden ticket tactic, which has been used by multiple food brands, from confectionary to breakfast cereal, in order to generate buzz around their product. Furthermore, the gamification of services has been increasingly employed across several industries, from hospitality to gambling and even in healthcare, to boost customer interaction and ultimately increase revenues.
Gaining vital insights
For many leading marketing teams, offering bonuses is just one small part of a multi-faceted campaign in which various levers are pulled to produce a net positive effect. Incorporating different tools like search engine optimization, social media marketing, and influencer collaborations together helps to create an effect bigger than the sum of its parts. Offering bonuses is an essential component, not only as an immediate sales driver but also through the amount of customer data offering them can collect. More often than not, there will be some form of sign-up or registration required to claim bonuses, in which consumers will be required to share their personal details. This valuable data can then be utilized by other marketing tools to help businesses better understand customer preferences. As the power of data is becoming increasingly relevant in today’s digital world, methods of gaining this data are more vital than ever.
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Bonuses work financially long-term
The final way in which bonuses also work for businesses lies in how these marketing schemes are structured. From the consumer’s point of view, it can feel as though businesses are likely to make a significant monetary loss from offering freebies to their customers. However, bonuses are carefully structured to ensure that potential earnings far outweigh the total input cost. For example, a coffee shop might offer a free coffee for every seven or eight that a customer purchases. Alternatively, an online casino offering a $100 deposit match requires $100 to be put down by the player in the first place. In both scenarios, the consumer must first spend money to benefit from the bonus scheme at hand. This is the case for the majority of bonus schemes out there.
Laying the information out, it is easy to see why companies from virtually every sector of global commerce use bonuses as an essential tool in their marketing toolbox. The beauty of the bonus lies in its duality, loved by businesses and customers alike, they present a situation where everybody feels like a winner. At the end of the day, companies thrive when their customers are happy with their service, and is there anything that makes us happier than when its free?
