Use reward-based promotion over discount-based promotion to get better returns

New Ideas in MarketingEssential news for marketers, summarised by YouGov
October 27, 2021, 5:05 PM UTC

Aberdeen surveyed 100 Australian firms, mainly in financial and retail sectors, and another 300 in the UK, US, Canada, Latin America and Mexico.

The study found that companies using reward-based promotions get 8.6% better returns on marketing investment (ROMI) than companies using discount-based promotions. Additionally, sales increased attributed to reward-based promotions are 47% higher than those won by discount promotions, or a 4.7% increase vs 3.2% increase.

Australian businesses reported the lowest ROI on all marketing campaigns, from promotions to advertising, across regions at 39.2%. In contrast, marketers reported an ROI at 48.9% globally, while marketers in the US, UK, and Latin America reported 55.2%, 53.5%, and 47.5%, respectively.

Companies using reward-based promotions of various types get redemption rates that are 10% higher than discount promotions. Additionally, marketers’ preferences for digital reward-based promotion over discounts and coupons were mainly due to the aim to generate brand loyalty. But, despite the report’s conclusion that reward-based promotions return better benefits in terms of marketing payback, most brands surveyed report evenly mixing both types of promotion.

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