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 GMT+0

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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