Rewards-based promotions deliver greater return for Australian retailers

New research has revealed that customers are more driven by rewards-based promotional programs, with Australian businesses reporting a 27 per cent higher return compared with discount promotions.

Additionally, 49 per cent of businesses reported a year-on-year increase in sales, because of offering customers rewards rather than discounts, with 31 per cent of those increasing sales by between three per cent and 10 per cent resulting from reward-based promotions.

The Australian data was part of a global research project commissioned by Blackhawk Network and was conducted by Aberdeen Research.

It surveyed 201 small, medium, and large businesses including 100 Australian-based firms with a combined annual revenue of more than $50 billion.

Marc Cheah, Senior Marketing Director, APAC, Blackhawk Network, said with Christmas just around the corner many businesses are looking into their marketing promotional strategies to help drive sales.

“All businesses are keen to tap into the increased consumer spending that happens in the lead up to Christmas and this research suggests that reward-based promotions deliver better sales results.

“But more than that, the research showed that this form of promotion delivers longer term benefits by generating greater customer loyalty and the ability to use data from digital reward redemption able to be linked to membership, loyalty benefits and branded applications,” he said.

The survey data highlighted increased customer loyalty with Australian companies reporting an average 2.6 per cent year-on-year lift in customer satisfaction attributed to reward-based promotions.

Most brands reported using a near 50/50 mix of reward-based and discount promotions and the stronger Australian results for reward promotions were reflected in the global research that included leading brands operating in North America, the UK, and Latin America.

Both forms of promotion had a positive impact with the global survey data revealing greater benefits from reward-based promotions including 10 per cent greater redemption by customers compared with discount promotions.

It also highlighted an average 8.6 per cent greater return on marketing investment compared with discount promotions; an average 47 per cent greater increase in sales compared with discount promotions; and an average 57.5 per cent greater increase in annual revenue compared with discount promotions.

When it comes to the reasons why companies are using reward-based promotions, 56 per cent said they are wanting to drive purchase intent and 53 per cent are aiming to foster customer engagement as the main reason.

Digital rewards were deemed even more effective with the survey revealing the main reason brands chose this form of promotion being for the ease and convenience for customers to claim rewards (53 per cent) and the ability to personalise rewards for customer preferences (49 per cent).

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