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In response to publishing business models undergoing radical change in recent years, successful publishers are experimenting with new strategies and tactics to grow their subscriber base, retain existing subscribers, engage readers and create more value for advertisers. Creative incentive marketing using reward programs are extremely effective and affordable for publishers working to grow and/or maintain their subscriber bases while also increasing profitability.

WHAT IS INCENTIVE MARKETING? Incentive marketing uses offers designed to motivate a subscriber or prospective subscriber to take a desired action. A wide variety of offers are used within incentive marketing programs including free subscriptions, discounts, trial periods, tchotchke gifts, gift cards and extended subscriptions to name just a few. Incentive offers are limited only by marketers’ creativity and, of course, return on investment (ROI) projections. Often, incentive marketing is used to motivate subscribers to subscribe. However, as we will explore within this paper, incentive marketing can be used very effectively to influence a variety of behaviors beneficial to publishers.

PSYCHOLOGY OF NON-MONETARY INCENTIVE OFFERS When presented with an incentive promotion, subscribers astutely assess the value of the incentive. Is the reward, i.e. the incentive, worth the investment of the purchase and/or the effort required to act on the offer? Within the field of psychology, this assessment is known as the “expected utility” of the award. Is the investment or effort required perceived to be positively related to the value of the incentive? If the answer is “Yes”, consumers will respond favorably. When the answer is “No”, your offer will generate lackluster interest. When the value of the incentive is slightly or very ambiguous, the perceived value of the award tends to be higher. Given that non-cash incentives are more difficult to assign an exact value, there is greater ambiguity which helps to create a higher perceived value.


PSYCHOLOGY OF GIFT CARD INCENTIVES. AREN’T GIFT CARDS THE SAME AS CASH? Given that gift cards have a fixed monetary value; it is reasonable to question whether or not consumers will perceive a gift card offer to be the same as a cash offer. However, there are four important factors contributing to gift cards being perceived to have greater value than cash incentives:

-10% Co-branding



Longer-term value



Brand awareness is a very significant influence within

Arguably the greatest value a gift card provides a

the consumer experience; therefore, by offering leading

recipient is that a gift card “permits” or “justifies” the

industry brand gift cards marketers increase the value

purchase of products or services that the consumer

and attractiveness of the offer. In addition, by offering

may not normally buy. Gift cards facilitate the purchase

gift cards for brands consumers are already familiar

of a treat or luxury item that might be outside the

with, publishers can benefit from that awareness

subscriber’s budget (e.g. – the choice of Outback

and have an easier time creating excitement for their

Steakhouse, Olive Garden, the Cheesecake Factory

program. Finally, given the greater perceived value of

or some other restaurant allows participation in a

leading brand gift cards, publishers can often lower the

dining pleasure they may not have otherwise allowed

actual value of the gift card, lowering program costs,


while maintaining desired perceived incentive value (e.g. – “Subscribe today and receive a gift card from Target,

Longer-Term Incentive Value

Walmart, The Home Depot or Amazon”). As mentioned above, the downside of cash incentives


is that they are a singular moment in time and are not separate from a purchase. Gift cards provide the benefit

Monetary offers, which usually take the form of

of extending the value of the promotion and of the

discounts, cannot be separated from the purchase

publisher sponsoring the promotion over the period

resulting in very short-lived value for the marketer. The

the gift card is redeemed. Then, after redemption,

consumer may have been incented to take a particular

the subscriber continues to remember the offer and

action, but there is no lasting benefit for the marketer

the publisher whenever they use or interact with the

beyond that moment in time. With a gift card as the

item that was purchased with the gift card (e.g. – the

incentive the subscriber has multiple benefits as well as

subscriber purchases a blender and may recall the

positive branding opportunities (receiving the gift card

newspaper helped enable the blender purchase).

in the mail, putting the gift card in a wallet, and using the gift card at a retailer or restaurant).


INCENTIVE PROGRAM OPPORTUNITIES FOR PUBLISHERS Publishers should work to incent behaviors well beyond new subscriber acquisition. Of course, new subscriber acquisition is incredibly important and gift card incentive programs work well for these efforts. However, some of the areas publishers can incent include:

• Subscription renewals

• Advanced subscription renewals

• Longer term subscriptions purchases

• Enrollment in auto-pay

• Digital edition subscription enrollment

• Participation in an advertiser programs

Publishers should map the full range of subscriber, reader and advertiser behaviors that will contribute to profitability and create incentive programs for each one of these behavioral leverage points.

FORMULAS & GUIDELINES FOR INCENTIVE PROGRAM DECISION MAKING In order to know how to structure an incentive program, return on investment (ROI) and payback period (PP) calculations appropriate for each program are helpful to create offers and to, over time, adjust factors to optimize results.

Value of New Subscriber Acquisition For new subscriber acquisition incentive programs, the Lifetime Value (LTV) of the Subscriber is the most appropriate calculation. For the purposes the LTV has two primary components: 1) Subscription revenues specifically associated with the individual and 2) the increase in overall newspaper ad value due to increased readership/distribution. For the below calculation only revenues specifically associated with the subscriber are considered due to industry variations related to ad revenue (geographic, demographic, sociographic, subscription type criteria).

LTV = (Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Subscriber)

For example, if a newspaper publisher’s 13-week subscription price is $83.85, the subscriber repeats this purchase 4 times throughout the course of the year and a new subscriber maintains a subscription for an average of 3.75 years, the calculation would be as follows:

$83.85 (Value of 13-week subscription)

X 4 (Number of 13-week subscription purchases over the course of the year)

X 3.75 (Average number of years a new subscriber is retained)

$314.47 New Subscriber LTV


How Much Should You Spend on Incentives? Although setting effective incentive amounts for your specific

Value of Auto-pay Enrollment

business will require experimentation, the following are

Lifetime Value (LTV) of Subscriber X

guidelines for consideration. As in any organization there are

Average Additional Subscriber

multiple competing priorities for each usable dollar. With that

Retention Period if Enrolled in

in mind and because we believe all expectations should be

Auto-pay – LTV of Subscriber =

conservative in nature we recommend the following parameters

Value of Auto-pay Enrollment

when deciding on the appropriate spend:

- B  ehavior change promotions (Auto-pay enrollment, early subscription renewal, etc.) should have an expected

$314.47 (LTV) of Subscriber

X 1.42 Y  ears Average Addition Auto-pay Subscriber

promotional “lift” of 315% to 405% versus a control group

Retention (92% subscriber

where no promotional incentive is offered subject to the

retention using Auto-pay and

same other population variables (e.g. – instead of having

62% subscriber retention

1,000 subscribers enroll in Auto-pay the organization can

when paying by personal check)

reasonably expect to have 3,000 to 4,000 subscribers enroll in Auto-pay during the term of the promotion).

- LTV of Subscriber

- S  ubscriber acquisition promotions should have an incremental sales “lift” of 32% to 40% versus a control group where no promotional incentive is offered subject to the same other population variables.

$132.00 Value of Auto-pay Enrollment

Incentive program ROI should fit into one of these rules of thumb:

• 5% of total sales revenue excepted to be achieved from promotion

• 5 -10% of incremental sales revenue

• 12-24% of incremental profit

• 15 -25% of cost savings in a cost-reduction program (an auto-pay incentive is an example of an increased revenue and cost lowering promotion)

Subscriber promotions are subject to the ABC (Audit Bureau Committee) and its governing rules to ensure a publication does not risk a reclassification of subscriber revenues to excessive subscriber rewards. That said, for subscriber acquisition a promotional gift equal 25% of the subscription purchased falls within ABC guidelines and also acts as a noticeable and desired motivator for the prospect. With gift card promotions, the participation of national brands (restaurants, retailers and gas) lend additional promotional credibility enabling the organization to not have to pursue larger promotional gifts to motivate action. As it relates to basic subscriber behavior promotions (Auto-pay enrollment, advanced subscriptions, etc), statistically, the utilization of national brands (restaurants, retailers and gas), enables the organization to have the promotional program noticed and participated in for lesser reward offered (e.g. – “Receive a $10 gift card from Subway, Chili’s, Exxon/Mobil or Kohl’s” will outperform a $20 discount or free subscription months valued at $25 to the subscriber).



1. Deliver gift cards in a custom printed envelopes

6. Make sure your gift card incentive amount is aligned

promoting the next step you would like the

with the action you are asking the subscriber to take.

subscriber to take. For instance, a subscriber

For example, a $5.00 gift card for participation in

receiving a gift card for converting on a new

a 30-minute survey is likely not enough incentive.

subscriber offer could be offered another gift card

However, a $5.00 gift card for participation in a 5-10

incentive to enroll in auto-pay or to refer a friend.

minute survey is perfect. “$5.00 for 5 minutes” offers work well.

2. For paper statement subscribers, promote your offer via statement inserts - the nominal cost for

7. Clearly communicate three pieces of information to avoid frustrating subscribers.

4 color/2 sides is usually less than $.02 per insert.

3. For electronically billed subscribers, promote your offer via a call to action (CTA) within the statement email.

4. Make your offer easy to understand and easy to

a. A  re they eligible for the incentive?

b. How do they participate?

c. W  hen and how can they expect their gift card?

act upon. Use images of the gift cards offered, rather than solely brand or retailer logos, to help clarify the offer.

5. If you are fielding a research study, give every

8. Think through cross-sell opportunities by establishing the series of actions you would like a subscriber to take over time. This is a double edged sword here, as most reward promotions encourage one action,

participate a gift card. Small gift card offers for all

one reward. Be careful to not dilute the power of the

participates outperform drawings or sweepstakes

offer with cross-selling opportunities.

where only a small number of people win. Consumers have both “I never win” mentalities and sometimes are skeptical than winners are actually selected at all.

9. Use both online and offline channels to promote your offer. Don’t forget about your social media channels.


10. Establish goal performance metrics for the program.

12. Use seasonal opportunities to build exciting gift card

After all, if you don’t measure it, you can’t manage

incentive programs. For example, run a “back to

it. Never let “what if we have too much success”

school” new subscriber campaign offering gift cards

become a stumbling block. If one subscriber

that are great for back to school shopping during

enrolling makes the organization $30 then 10,000

July and August while a Valentine’s Day promotion

enrolling will make $300,000. The accounting

offering restaurant gift cards or a New Year’s

department will be thrilled with that “problem.” Be

resolution campaign after the New Year offering

careful about mixing goal performance metrics. For

sporting goods retailer gift cards. In these cases,

example, if 65% of your subscribers are already in

timing is everything with date specific programs and

auto-pay, a huge lift really isn’t as possible due to

extensive lead time is necessary. For example, to

saturation. Experiment with incentive campaign

run a Valentine’s Day specific program, the program

lengths but always, always, always make the

needs to be designed, marketed, the subscriber

promotion “time certain” to motivate the subscriber.

needs to pick their reward and the rewards need to

Some studies show that offering a consistent

be fulfilled so that they arrive near Valentine’s Day.

program for a year or longer can increase program

In many cases, it is far easier to run a “Take your

performance in comparison to short programs.

honey out” reward that is not date specific.

Regardless of your opinion on program length, offers that are too consistent run the risk of

13. Subscribers many times associate their own dollar

becoming an expectation rather than a behavioral

value with a “theme” allowing the program sponsor


to offer fewer dollars while appealing to their inherit value. For example, in a “lunch is on us” when you

11. Think of ways that you can work with advertisers to

enroll in auto-pay promotion, the actual reward

create an offer together. Are there opportunities for

is a $5 gift card. In reality, consumers consistently

both you and an advertiser to achieve a business

associate a value of lunch as $8. By offering $5 for

result together lowering program costs for both

lunch instead of $8, the organization is receiving a

of you, increasing effectiveness for both of you

40%+ perceived value increase at no real cost.

and advancing advertiser value and loyalty? For example, if the Olive Garden is a current advertiser,

14. As good as it is to reach back to existing subscribers

is there an advertiser benefit to offer Olive Garden

to change a behavior, it also pays to incent new


subscribers IMMEDIATELY with the same gift to avoid having to chase them at a later date. In some cases, it makes sense to run an “always on” promotion (e.g. – subscribe today, get your newspaper for only $19.95 per month and also receive Lunch-on-Us when you enroll in Auto-pay”).


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