Watch out for backfiring incentives

Incentives must be among the most common sales and marketing tactics around, whether they are used in the B2B or consumer space – or even in the family home (if you eat your sprouts you can stay up till 8pm!) – the incentive has likely been in use since the dawn of speech.

MeercatWithout even visiting my trusty Google search bar I can name a number of examples from the marketing world:

  • The annoying BOGOF double glazing salesmanYou buy one, you get one free! (if you’ve missed this highly irritating advert well done, I definitely wouldn’t recommend that you click the link...)
  • The free Meerkova toy given to any person who makes a purchase through Compare the Meerka..sorry Market .com
  • The 100gb of free space my client EVault is offering businesses that purchase a backup solution from its partner network.

But just because incentives seem to work, it doesn’t mean marketers should throw incentives around willy-nilly. In fact, there is a school of thought that suggests incentives, when not presented correctly, can negatively affect marketing campaigns.

One person who has dared to express such thoughts is Priya Raghubir, a social scientist who conducted an experiment to find out whether a bonus or incentive can reduce the desirability of the original product. At this stage in the blog you probably won’t be surprised to find that it can. In Raghubir’s experiment a pearl bracelet was offered alone or as a freebie when a person purchased a bottle of alcohol. When asked to guess what the value of the bracelet was, those who saw it bundled with the booze came to the conclusion that it was worth approximately 35% less than those who saw it as a stand-alone product.

So what can we do to combat this, the sceptical nature of human beings? How can we stop people from assuming that there must be something wrong with the product, or that the business is finding it hard to shift stock?

One answer is to remove the opportunity for assumption. Don’t let people guess the value of the product, tell them. So, instead of offering a second free piece of software when a business application is purchased, point out what the end user would have to pay if the two were purchased separately. Do this and you will better communicate the value and importance of the product offer.

For example:

Buy our sales intelligence software and receive free data backup would become Buy our sales intelligence software and receive data backup worth £50 per gb.

Of course such strategies can be applied throughout your life, not just when convincing Joe Public to purchase a product or solution. Let people know that you will give them your time, giving up your own to help them finish a project and that this will cost you, but that you’re always happy to help. This can make you appear more valuable in the eyes of your colleagues.

Afterthought:

Neither the BOGOF man nor Compare the Market applied this principle (although it would be interesting to find out whether more people would want a fluffy Russian toy if they knew it was worth £10... ) but here are some of the companies that did:

What do you think? Do the items in the list above appeal more because of the perceived value? Let us know.

If you work in a marketing department and are interested in learning more, why not register here for one of our free seminars on the science of digital marketing?

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