Cash incentives for new customers don’t pay

9 Nov

The appeal of using a cash incentive to drive in new customers can be strong. After all, it’s instant traffic. And you may hope that once someone becomes a customer, they’ll fall in love with your service/ convenience/ whatever and stick around for years to come.

Resist the urge.

You’ll annoy your existing customers. (Unless the majority of them received an incentive of similar value when they first came in.)

New customers won’t fall in love with you afterwards. Cash incentives bring in people that care about their wallets, not smiling staff that know their name. Once the cash disappears, so will they. (Unless your brand is build around value and your rates/prices are best-in-market. Then a cash incentive supports that positioning.)

You start a price war and downgrade your industry into price-based commodity. If you’re not the biggest player in your industry, competitors’ price offers will beat yours. At that point, no one cares about your smiling staff anymore.

What to do instead? I like the idea of matching competitors’ new customer offers. It equalizes price so that it’s no longer a factor in the customer’s decision making. Now you can be the preferred choice based on whatever your positioning is. One simple guarantee can underpin all your advertising, freeing up ad space to talk about what you really want to talk about – your brand.

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2 Responses to “Cash incentives for new customers don’t pay”

  1. Doug Brown November 9, 2010 at 12:54 pm #

    Great points Shane. I think it’s especially irritating to existing customers. I remember the great incentives TD offered new customers a few years back which left their current customers – the ones who were paying the fees – to put out a massive “Where’s the love?” protest.

  2. brainstormingconsultants November 9, 2010 at 3:08 pm #

    Can’t afford it, don’t buy it. Pay cash for almost everything.

    I’m not cheap just frugal. Don’t like being in debt up to my eyeballs and really nothing to show for it, so if a retailer is going to give me a cash incentive then I’m all for it and I might even be back if “they” don’t piss me off.

    To be honest I have’nt been in a store lately that gave lousy service, restaurants on the other hand, their not fairing that well. I’m not naming names but when I walk out without leaving a tip they might get the message.

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