Building Incentives Into Your Business Offerings

Incetives Blog
Planning Business incentive Strategy

When building a business be it online or offline, you should always think about how you can attract customers by offering something extra to your services – something free.

The world of business in nearly any industry or niche will have its fair share of competition without a doubt. There are the major players that you must get around to start with. Most of the larger businesses can offer lower prices because of they have designed their business to consider economies of scale.

What are Economies of Scales in Business?

If you take a building company for example. Let’s say they have been running for several years. This business has probably built up a huge client base and done properly has customer or clients that will not use anyone else. 75% of your customer base should be loyal customers; essentially repeat business.

With a regular income guaranteed from these loyal followers, the company will have money to play with. They will also have more buying power than smaller businesses with less money coming in. That buying power alone allows them to purchase common materials used to build all manner buildings in bulk. We all know that when you buy in bulk, the general rule of thumb is the price comes down.

This means with cheaper material; the company can offer more affordable services. Something the little man generally is unable to do.

In addition to this, the shipping of material in bulk is often cheaper overall. Yes, of course as 20-ton truck will cost more than 10-ton truck, but when they are shipping or transporting in bulk the cost per ton being transported is actually less. More money saved and more costs shaved off their base costs.

As a result, the company can still make large profit margins while offering lower prices. This is exactly the reason we do not see vegetable shops or butchers quite as often as we used to. That is because the large super markets can undercut them in price. They can process and package food much more effectively and by better machinery to output more food.

Again, the outcome is the same as the building company. The economies of scale (scale meaning size and economies meaning the economic cost) will allow the bigger companies to offer better deals.

business Strategy Wheel
Strategize Incentive Offerings

How Can You Beat the Big-Name Competitors?

One of the best ways to do this, is to offer something for free. Now your competitors may also already be doing this. However, usually the offer something that is not unique or is just one incentive that may not suit everyone.

For you, the little man just starting out, it is best to look at ways to offer niche incentives. Maybe packages that appeal to a different group of people. For example, at www.naga128.com, they offer incentives for a wide variety of customers in Malaysia. There are plenty of websites like theirs out there offering the same deal because the businesses they deal with already have set deals. There is not much flexibility at all.

Nonetheless, they have found a great way to get around it. They offer great customer service with different ways to get in touch with them. WeeChat, email, telephone, and Facebook.

Customer Service Is a Huge Incentive

Prior to becoming a blog writer, I worked for a software development company in Thailand. Now this is one tough industry to crack. One of the ways that we managed to get customers over our much larger competitors was just being contactable.

Our customer services (and still is at this company) was something that we took pride in. In terms of incentives in the IT and software development industry, there is not a hell of a lot that you can offer that someone (a competitor) had already thought of. However, we knew that communicating with our customers and potential customers alike was one incentive to sign up to us.

We were a small company so the customer got to speak directly with the marketers, coders, sales persons and more. It made them feel special and it worked! Our feedback from surveys, Social Media and PR circulations was 99.9% positive. Yes, there are always those 0.01% of people that just cannot be made happy no how many loops you jump through to keep them happy. That is something that you will have to deal with and this is where our second incentive came in.

Money Back Guarantees

This is not the easiest of incentives to offer. Who wants to take the time and effort servicing a client only to give them their money back? It just doesn’t work! Well at least not with all products. There are some services out there a full 100% satisfaction refund or money back guarantee will not negatively affect the business – these are far and few between.

We did however figure out a way around this. That way around was to make sure that we at least covered a large percentage of our costs. We did this by offering a 50% money back guarantee and you get to keep the work we did.

How many refunds do you think we had to issue?

Out of more than 1,000 clients we had 1 refund issued to a guy that was out of his depth when it came to project managing a software application production. We natured him most of the way, which ended up costing us time and money. In the end though it was better to offer the refund (and more cost effective) then continue with this individual and his company.

Overall – many of our customers signed up to our service because of the satisfaction guarantee.

  1. It gave them almost a risk-free investment that they could fall back on financially if the job was not up to scratch
  2. They know that we do not want to give them their money back – so they also know we will work our hardest to make their project work
  3. Most of the time businesses and their intentions are inherently good – they are not looking for a refund – they are looking for a job well done. In the future if they need our services again, they know we are the go to service provider for them.
  4. All the while our customer service was better than everything else throughout their contract

Look For Ways To Beat Your Competition

To round this up, an incentive is anything that adds value to your service or product offering. There may be times where your competitors appear to have covered every angle. However, if you dig deep enough, you will find a niche area that you can use as your unique sales proposition. This could be put across in a brochure, email, business meeting or however it is you manage to bring in leads or present your services/products. It has to say, “THIS IS WHY WE ARE DIFFERENT!”.

Thank you for reading and if you have any questions or would like to share your similar experiences, please email us and we may even publish what you should say by adding your experiences to this blog.