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Article 5: Put Premiums and Incentives To Work
Premiums and incentives are a time-tested form of marketing promotion used by businesses to gain a competitive advantage and meet a variety of other marketing objectives. These may include:
Increasing sales and revenue Reinforcing and rewarding customer loyalty Building mindshare among customers and prospects Adding value to customer relationships Educating target audiences
In recent years, the premiums and incentives industry has exploded. Hundreds of premium promotion agencies and premium development, production and fulfillment companies have emerged to help companies create and execute effective premium and incentive programs.
Practically speaking, premiums and incentives are two separate things, says Jim McCraigh, a direct marketing consultant and the author of “How to Write Words That Sell” (Salt River Press, 2005).
“An incentive is a giveaway that’s used to encourage people to buy your product,” he says.
For example, any sports fan has seen the ads for Sports Illustrated magazine offering fleece pullovers, autographed footballs and championship commemoratives along with paid subscriptions to the magazine.
A premium, on the other hand, is a promotional product usually emblazoned with the company’s name and/or logo that is given away at grand openings, trade shows and similar events. Coffee mugs, calendars, calculators, caps, pens — the list is practically endless.
“The primary purpose of an incentive is to sell a specific product,” says McCraigh. “For example, I give away a free report (17 Ways to Save Money on Printing) when people buy my book on my Web site. But the primary purpose of a premium is to build mindshare and help people remember your business.”
With premiums, the most important question is whether or not the items will be valued and used by your customers.
“If people just toss them in a drawer or throw them away, then you’ve wasted your money,” says McCraigh, so you should plan your premium giveaways very carefully.
You can spend as much or as little on a premium or incentive program as you want, but be aware that giving away items perceived as cheap or useless can actually do more harm than good. A reputable premium promotion agency can provide valuable help in choosing the right items and structuring your premium or incentive program.
When used wisely, premiums and incentives can be effective tools to help you influence customer purchases, manage inventory and build brand recognition.
“But you need to know your business and your numbers,” says McCraigh. “Don’t use them haphazardly just to get business in the door.”
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