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Incentive Solutions: Programs that Grow Market Share

Devin Ferreira | September 26, 2018

You’re probably familiar with the phrase, “The best defense is a good offense.” While it’s often trotted out in the context of sports—suggesting that the best way to protect your team or your goal is to go on the offensive—the world of sales is also no stranger to these types of metaphors. Just look at sayings like “the ball’s in their court” or “this deal is a home run.”  

One area where this idea of “going on the offensive” is surprisingly apt is when your primary business objective involves increasing market share. After all, if your market is saturated with competitors selling similar products, it can be difficult to find ways to attract and maintain customers who are looking to purchase with their discretionary funds. The big question is always, why should they choose you over someone else?

For this reason, companies often have to decide how aggressive they want to be with their market strategy. Whether it’s to take an “offensive” approach that puts pressure on competitors in the name of bold customer acquisition tactics, or to feature a more “defensive” strategy that builds on customer retention and adapts to changing market trends rather than trying to set them.

An “offensive” market strategy often includes things like slashing prices to undercut competitors or attempting to penetrate new, emerging, or underperforming markets. It seeks to differentiate an organization in the eyes of new customers, usually directly at the expense of competitors. But in lieu of a dramatic price drop or a comparative attack ad, incentive programs can be a great way to lure new customers away from the competition.

While price wars can become a dangerous gamble of addition through subtraction, a well-designed incentive strategy can achieve similar results without threatening your bottom line. By implementing a program that’s focused on increasing market share, you can supplement and improve the competitiveness of current products and services, providing a much-needed competitive advantage.

Offensive Incentives

But what does an “offensive” incentive strategy look like? And how can it help you capture an even greater share of your market?

Incentive programs can serve a variety of functions, and not all of these would fit into an offensive marketing or sales strategy.

For example, a group travel program aimed at reinforcing customer loyalty would actually be a better fit in a “defensive” business plan. That’s because group travel is typically designed as a tool for rewarding existing top performers, rather than for enticing new ones.

On the other hand, a points program can more readily be constructed from an offensive viewpoint by providing an answer to the question, “How do I get my foot in the door with customers who normally wouldn’t have a reason to do business with me?”

Another great offensive tactic for increasing market share involves special promotions.

These types of short-term incentives can do a variety of things, but one of their primary functions is to help organizations grow market share. Their versatility allows a company to offer special promotions as one-off incentives to new or potential customers.

They can also be used to supplement an existing points program, through the integration of things like gamification tools or quarterly sweepstakes to improve engagement and give customers yet another reason to direct their discretionary spending towards your products and services.

These types of programs provide customers with the reason to keep coming back—a sample of what you’re offering without them having to commit too much time or money to something they’re not familiar with.

And, of course, rewarding them for spending those discretionary dollars with you and providing you with their ever-valuable customer data.

The same holds true for mid- to lower-tier customers. You know the ones, those who might do a little bit of business with you, but probably not enough to really move the needle. These middle 60% of customers typically provide shallow account penetration for your business, but it’s not because there aren’t dollars there to be spent.

Rather, the more common explanation is that these customers feel disengaged from your company. For this reason, keeping this target audience engaged via a points-based or short-term incentive strategy can be one of the most effective ways of gaining a bigger slice of this rather large pie. 

Whether your program participants are logging in to your program portal to see the status on their latest claim, frequently surfing your redemptions page for the program’s most updated rewards, or checking their emails for recent marketing communications, points-based or special promotion programs keep your company top of mind.

With the multiple touch-points and often ongoing nature of these programs, they can serve the purpose of actively and deliberately seeking to acquire a greater share of this audience’s mind—and ultimately the market ecosystem that they inhabit.

Conclusion

While you may be happy with your current share of the market, most companies would agree that there’s always more of the pie to be had.

With an offensive incentive strategy, you are building on the idea that your business isn’t content with what it already has, but intent on finding new and innovative opportunities to acquire more customers, and more from your current customers. To borrow one final sports analogy, are you doing everything you can to maximize your market share, or are you leaving points out on the field?

 

Sources 

https://info.hmiaward.com/smash-the-pareto-principle-a-guide-for-how-to-cost-effectively-capture-the-most-from-small-to-mid-sized-customers-exclusive

http://blog.hmiaward.com/incentive-solutions-why-pick-special-promotions 

http://blog.hmiaward.com/the-history-of-gamification 

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