Finding Balance with Customer Incentives
When companies offer a promotional incentive in exchange for customer feedback, they must find a delicate balance between rewarding their customers and managing financial expectations.
What Makes a Good Customer Incentive?
A “good” incentive should balance the needs of the customer, the brand, and franchisees. For the customer, an incentive should:
- Be relevant and have value
- Have broad appeal
- Illicit an emotional response
Customer Incentive Types
To the Brand/Franchisees, an Incentive Should:
- Increase purchase value and profit by motivating for repeat vis.its (bounce back) and/or trial of strategic products, categories, or day parts (as long as it is relevant and has broad appeal).
- Increase insight actionability by increasing the number of surveys and insights, and reducing non-response bias. Surveys without an incentive tend to narrowly capture either the “gripers” or the “very happy” customers. Using an incentive increases participation from customers in between the polarized ends, giving you better results.
- Have a comparatively lower hard costs
Our Customer Incentive Recommendations
- Charity Donation: Use a donation to a charity as an incentive to get more responses. Allows the business to define the pa.rameters around the charitable amount and tie each response to an amount
- Free “Soft Cost” Item: Use a free “soft cost” item when first launching your program. This produces the most survey volume right out of the gate and creates a customer “habit” of leaving feedback
- Free “Soft Cost” Item w/ Purchase: After launch, change to a free “soft cost” item with purchase to increase bounce back growth while still maintaining high survey volume
- BOGO “Soft Cost” Items: Typically has less of an appeal than a free soft cost item unless the item is highly sharable and most of your transactions are 2+ customers
- BOGO “Soft Free “Soft Cost Free “Soft Cost” Items Item w/ Purchase Cost” Item
- $ or % Off Next Purchase: Allows more freedom of choice for the customer on their next visit. However, it loses the emo.tional response and brands have less control over costs with $ or % off
- Sweepstakes: Allows for one fixed cost for the entire brand. However, sweepstakes generally produce the lowest amount of surveys, appeal more to certain demographics, and usually does not stimulate repeat business or trial. If you use a sweepstakes as your incentive, we highly recommend you use a professional sweepstakes company to ensure your sweep.stakes meets all local and federal laws. We also suggest that you publically post sweepstake’s winners.
- Minimum purchase or specific times to purchase: Adding a minimum purchase amount (e.g. “free fries with a minimum purchase of $10”) or specific items to be purchased (e.g. “free hamburger with a purchase of a large fry and drink”) for the redemption can help to ensure a customers simply does not choose the item with the smallest dollar amount on the menu. Keep in mind that any restrictions can lower your number of surveys.
- Valid redemption time period: Consider adding on your survey invite (typically the receipt) an expiration date to redeem the incentive (though in general we suggest you redeem all incentives whether they are past the expiration or not). “This incentive is valid up to one week after taking the survey” or “This incentive is valid up to one month after the date on your receipt.”
- Track redemptions. If possible, add a button to your POS to track incentive redemptions and the amount purchased to monitor your bounce back growth (redemption visit $ spend / initial visit $ spend). Also, actively monitor how many times an incentive is redeemed to make sure team members are redeeming properly
- Multiple offers: Consider giving the customer multiple incen.tive choices to choose from. All restaurants should redeem all offers given to the customer.
- Be consistent: Use the same incentive(s) across the entire brand to give the customer a unified experience and minimize the chance of differing stores only recognizing certain incentives
- Survey invite (receipt): Make the incentive stands out, use bold or a larger font when possible
- Alcohol restrictions: This is specific to food services brands, but if your brand serves alcohol, check with your local and federal laws to ensure your incentives meet all applicable laws and state any restrictions (some states consider survey incentive redemptions as a “coupon” and do not allow coupons on alcohol).
- State any restrictions: State any restrictions to the incentive or the redemption clearly on the survey invite (not valid with any other offer or discount, restrictions on alcohol sales, minimum purchase requirements, valid at participating locations only, not transferable, not open to employees, etc.)