Home – New Forums Marketing mastery Offering customers incentives to spend – what do you think?

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  • #964381
    marsmac
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    Hi All,

    I’m trying to think “outside the box” and have come with a new idea that may help to grow my business. So if you could give me some feedback that would be much appreciated.

    This idea will assist retail shops, clubs, shopping centres increase sales by offering customers an incentive to spend more in the store.

    So for example, when a customer spends more than a certain amount, say $20, they receive a chance to WIN a prize.

    The prizes will be determined by the shop owner but could be $10 off next purchase, free coke, buy one pizza get the second for free etc. Not everyone wins.

    While I know this idea isn’t new (it’s like the scratches you sometimes get while shopping) I intend to use a vending machine to add an extra degree of excitement/mystery. So every time a customer spends over a certain limit, say $20 in this case, the customer gets one token to use in the vending machine.

    The benefits to the shop owner are: attracts new customers, customers spend more (on avg), get customers to return, chance for staff to upsell.

    Reasons why it may not work: it’s too gimmicky, it’s an idea that has been done before.

    If you have any comments I would really appreciate hearing them.

    Thanks,

    #1005272
    Benedict
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    Hi Martin

    This is a classic tactic and surely still has life in it.

    The theorist in me says, surely the product in itself should be enough to ensure a sale. If it isn’t then the product must be changed to be irresistible. Bolt-ons will be a short term fix, tear up margins and need to be escalated to stay of interest. Today a toothpick, tomorrow a BMW. Cash has no real value to people. Emotions however are everything. If the product elicits love then that will ensure sales.

    Practically, in a crowded market value adding is probably better. I remember a restaurant I was involved with back in the gold old 1980’s (oh how I miss the hair and shoulder pads) we gave a $5 “restaurant” bill (looked like US$ – “Wall Street” at the Movies I think) for every $X spent. The bills could be used like real cash, up to 100% if I recall correctly. This brought in trade, converted takeaways into diners and put vibe in the room. What it did to the bottom line I never new. The restaurant did fail over money in the end (as most do)

    So I think the hard road is, make the product elicit love and this should create you a lead that is hard to take. With the businesses you mention, this can be a bit harder to do because these businesses can be resistant to strategy change (lazy, tired , no passion). But consider:

    A basic Fish & Chip shop can make itself loved simply by making superb tasty (not prissy, new age) food wrapped in paper.

    A Bowls Club can put on good food and good (not ordinary, lame) bands to create a fun place to be.

    Retail shops can offer products or caring (not lip, fake) service unlike any other.

    Shopping centers can raise the vibe of the place by training every retailer that they will enjoy their day better if they enjoy their day! If you resent coming to work, don’t come. If you love coming to work then come enjoy your day at work. That is felt by customers. I walked through a center I was starting to promote just before opening and many of the retailers were out having a friendly chat to each other. There was a feeling of warmth there.

    I hope that helps you in some way (I did go on a bit didn’t I)

    :)

    #1005273
    competitions
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    marsmac, post: 4241 wrote:
    This idea will assist retail shops, clubs, shopping centres increase sales by offering customers an incentive to spend more in the store.

    So for example, when a customer spends more than a certain amount, say $20, they receive a chance to WIN a prize.

    The prizes will be determined by the shop owner but could be $10 off next purchase, free coke, buy one pizza get the second for free etc. Not everyone wins.

    I think this strategy works. To be fair to the shop owner, if the prize is $10 off next purchase, you may want to consider making it $10 off a minimum purchase amount as you don’t want the shop to make a loss on the purchase.

    As the idea is like a competition, where you can win a prize, you may want to check with your state’s relevant authority to see if you need to register it.

    #1005274
    peppie
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    Personally I would be very wary of prizes and incentives, unless they are VERY genuine sounding and come across with lots of credibility. My experience (and maybe just my feeling) is that “gifts” and incentives can be very hard to make work properly.

    I have basically given up on any such incentives. I did try things like discount if you present this card or donation to this cause etc. etc., but none of that seemed to work. Only in one case where it was to support an organisation people were a member of, but then, they were used to incentives to support that particular organisation.

    The BEST thing that has ever worked for me has been promoting the good value of my service/product. When clients have been able to see the value and benefit to them. As Benidict says, “Cash has no real value to people” and I would also add, most likely “gifts”, but we all like good value for our cash.

    #1005275
    Benedict
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    peppie, post: 4295 wrote:
    “Cash has no real value to people”… but we all like good value for our cash.

    Nicely put

    :)

    #1005276
    Lisa Murray – Biz Coach
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    Hi
    I’m interested in the vending machine part of the equation – how big will the machines be and where do you propose to put them? Most retailers I know are pretty big on turnover per square metre and may not be so keen on giving over floorspace to something that costs them money…

    Have you got out and talked to a few retailers about your concept? Great place to start in terms of seeing if your concept is viable.

    I know a few retailers who implement this strategy internally (sans vending machine) – they just import a few extra low cost / high perceived value items and give customers a choice when purchases are made above specific levels.

    Sorry if I sound like a bit of a wet blanket – my gut feel is you need to market test your concept sooner rather than later!

    cheers
    Lisa

    #1005277
    Lucki
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    Hi

    I would have to agree with Benedict, if the product is good it will sell on its own, as long as it appeals to the emotions and doesn’t come off as a direct sell.

    Personally, it wouldn’t make a difference to me as to whether I received the gift in an envelope over the counter or had to put a coin into a vending machine. The end result is there for both but probably more cost effective simply handing it out.

    As mentioned earlier it would be wise to chat to the other retailers to get their feedback and make an assessment as to whether this would be viable.

    It’s great that you’re thinking outside the box – that’s where all the fun stuff comes from.

    Cheers

    Lucki

    #1005278
    martinprint.com.au
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    Hey Martin,
    I was in a computer shop once where after I had paid was asked to spin a wheel (small wheel of fortune type of thing). The wheel was made up of numbers which corresponded to different prizes.

    Everybody was a winner! And that is what made the experience for me. I only ever went to that shop once as its a bit far from where I live but if anybody ever asks me about a computer shop Im sure to tell them about this once.

    The prizes were run-out lines and other cheap items. But it was something for nothing. It was a suprise as they didnt advertise the fact that they had this. Thats what made it.

    I have many times considered doing something similar on our website. It adds a bit of fun. Will boost word of mouth / referral business and make clients come back more often.

    Clever.

    #1005279
    marsmac
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    Hi everyone,

    Thanks for all your responses and feedback.

    The crux of my idea is to offer businesses a low cost way of increasing sales, attracting new customers and increasing customer loyalty. Can you do all that with a vending machine?? I intend to have a list of prizes the customer can win posted in the shop as well….adds a bit of interest and avoids the feeling that its a scam.

    Anyway, the vending machine only takes up a small space, like the size of an office water cooler and it doesn’t need electricity. So, it can pretty much fit in the shop of any business.

    The attraction is this vending machine has more than one slot so this adds options/opportunities. For example: one slot can be for $20 and over purchases while the second slot can be for $40 and over purchases. (you get a different token depending on how much the customer spent).

    Another example, if a shopping centre liked the idea of using the vending machine to promote their tenants, I can separate the different slots into different retailer categories like women’s fashion, food, books etc. Customers then use the slot which is most attractive for them.

    But you are right, the only way to see if the idea works is when you test it out on customers in store.

    Any business owners reading this forum interested in giving this idea a go?

    Thanks,

    Martin

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