How can you avoid the risks of relying too much on incentives for retention?

The sales planning department of one of the larger organzation I worked for, created an Incentive program purely on 'Revenue Size'. Heavily discounted but "large revenue customers" fell into the 'Let's incentivize them further' category. Rapidly backfired as they asked for further discounts and even threatened to leave if we didn't. The psychology behind this was, if we were able to incentivize them after those massive discounts, we were probably able to give them more. Lesson learnt: Incentivize good behavior (Loyal customers) and do not reward bad behavior.

I find it much more rewarding to work directly with the customer to understand their primary needs and identify any pain points with their current practices. Once that diaglog gets rolling within their team, I like to identify what areas warrant the highest focus. Truly understanding the customers pain points, while being able to provide an adequate solution, while displaying transparency and compassion, goes father than incentives. Incentives typically are not permanent. However, establishing a solid business relationship on a foundation of trust, compassion, and real solutions, allows for a better roadmap to success. Shuting your mouth and listening to your customers' needs will bring more rewards than incentives in the long game.

Know your customers business, anticipate customer requirements and offer niche solutions and expertise. This not only makes customers more dependent on the service you offer but also makes it difficult for them to find it elsewhere. This is one of the approaches which can minimise incentives and create value propositions.

It's all about Knowing your customer's pain point and exceed their expectations. Then you will see how your customers will be singing your praises and referring your products/services to friends and relatives.

Complete and accurate Customer Data, enriched with behavioral data is essential to build proper customer segments. Moreover, the definition and the recognition of the 'profitable' customers is required to develop the optimal incentives.

Incentivizing can also go terribly wrong. This is what happened in my experience. One of competitors relied excessively on their discounts and freebies. They overlooked what they now considered "minor issues" like being responsive to what they considered little changes or being non responsive to support issues. It was like they gave a luxury car but didn't bother with the steering wheel. So this over reliance on incentives massively backfired. The customer felt disrespected. This is where we swept it and won the customer.

Incentivizing shouldn't feel like a reciprocal exercise to the customer and instead must show care and how you are adding value and championing the customer experience. I worked on a retention campaign many moons ago for a telecom operator. My team was tasked with calling existing customers and offering them rewards (free calls/texts/data). This may have looked like a pointless exercise or giveaway at first, but the idea behind the campaign was to gain customer feedback and ask them survey-type questions without the usual "we are calling you about a survey." The customer appreciated the freebie, but the information gathered was priceless.

Customers stick around when they feel valued and respected. No doubt. But there's some confusion here. I've witnessed competitors luring customers with flashy offers because they confuse value and respect with freebies. Genuine connection and responsiveness builds relationship and trust. This is the secret sauce for customer retention.

In my experience, being the customer’s trusted advisor can outweigh incentives. Once a customer trusts you and your insights and they’re able to see increases in their ROI, that’s what matters most. They end up valuing you as their advisor and the company that’s providing the solution. Simultaneously, it solidifies their loyalty because they feel as though there is a mutual interest/investment. Incentives can be used if there are rumblings of decrease in spend or utterances of possible cancellation. However, if the solution(s) are solving their problems then retention should not be an issue and incentives are not needed…keep them in your back pocket.

A good customer retention strategy should focus more on the product and service than on incentives alone. A greater focus should be placed on those who provide the service and maintain the quality of the product. As a result of the treatment they received from a service provider, I have observed customers returning to a store often. Building human connections and showing empathy are crucial.

this is one of the major problem we do have with online forex broker. i am in this field and will restrict myself to only this industry they overdo incentive leaving the most important aspect of the business which are; 1. Responds time to customer request, report or challenges. 2.efficiency of their services 3. communication prior to any form product update 4.Working with their affiliate at various region to know customers complains and satisfaction on each of their products or services. 5 Feedback Mechanism is zero etc

Incentives should never be used as a tick-box exercise or because "others are doing it." Instead, make it personal, creative and beneficial to your customer base. For example, incentivise loyalty, occasions, and customers reaching a particular milestone. If possible, segment and offer diverse, tailored incentives to achieve the maximum effect.

Incentives must be woven around key moments in a customer's journey. Rewarding our partnerships Rewarding prompt actions Rewarding loyalty We now score customers on how Incentivizable they are instead of the other way round. Over Incentivization gets in the way of sustainable growth, customer retention, and Loyalty.

Gamified incentives make customers sort of work for a prize. We value things we work or pay for more than free stuff with no effort. Gamified content could come in the form of quizzes

Reward process standardization: Reward criteria has to be set clear, and it should be given equally to clients who achieve certain business milestone, in other words it should be fairly distributed. If clients discover unequal treatment complementing same achievement, subsequently it will damage reputation

Incentive program design is both a comprehensive and technical task. To this end, approach it with the same energy and effort you would do with your core activities. As this is often a considerable expenditure to the business, the volume, value, targeted reach and expected results must be researched and prepared beforehand. Be creative and avoid overcomplicating these or making them too hard to achieve. Look at past data and see whether continuous or campaign-specific incentives better fit your product/service offering.

This reminds me of my early days. We were obsessed with our monthly churn rate and threw incentives at customers like confetti on a parade. Never measured the impact or ROI - just assumed more free stuff must equal more loyalty. Lesson learnt the hard way: The key? Don't just hope and throw; test, measure, and refine. Play around with different offers, experiment with varied channels, and adjust your incentive's tempo.

You can measure the efficiency of incentives using control and treatment groups in order to identify the incremental value of your actions. Additionally you can measure the before -after behaviour of these customers in main crucial kpis like churn and revenues.

Incentives should be used as a means to learn and improve, not as a shot in the dark, therefore it is crucial to implement strategies that ensure effective use of incentives such as: • Controlled testing of different offers, channels, or segments • Optimizing incentive frequency, timing, and amount Taking these actions can help any company strike the right balance of incentives whilst avoiding excessive costs and motivating customers.

Make retention part of your daily process. This can’t be an afterthought. Work it into your normal activities and build on it from there. Once you start a process, tweak it little by little until it works. Once that happens find peers that have good ideas that you can adopt. Small changes make big impacts

The best way to experiment is to over-deliver on every promise. If value received is more than the offering, it becomes hard for customers to switch. And one way I've learned to do this is by giving away small services competitors charge for and monetize the problem they will encounter after solving a particular one

The race to keep a customer isn't as intense as most folks picture it. I've watched customers leap to competitors lured by a shiny price tag, only to come hopping back in three months. Why? Maybe because the hustle sales teams show to slash prices doesn't quite match their zest in replying to an email after sealing the deal. So many of these stories.

It's odd to see this discussion happening, it seems to distract from how retention should actually work. Customers should want to buy you product again because it did what it was supposed to, and they had a good experience while using it. This seems like a last resort, and an end, not a means.

To avoid the risks of over-reliance on incentives for retention, focus on building a strong foundation of value and engagement. Prioritize delivering excellent products or services that genuinely meet customer needs. Foster a positive customer experience and cultivate meaningful relationships. Invest in personalized communication and support. Continuously seek feedback and act on it to enhance satisfaction. While incentives can complement retention efforts, they should not be the sole driving factor. Strive for a well-rounded approach that emphasizes value and relationship-building.

The term 'customer value exchange' is mentioned often in my world, for good reason. We need to identify and layer all the ways to boost value and exchange for better business results. Start with defining what value means from different perspectives and go from there. Another point of reference: from the strategies, systems and processes at head office, to interactions across touch points there is one question we need to ask when prioritising: "What's in it for the customer?"

Treat every customer as if it is their first time visiting or talking to you. Customers may look or act like they know what they want or what services you provide but in fact not really know.