Why Some Retailers Prefer Reward-Based Promotions

Author: Jen King

September 14, 2018

Many US retailers would rather give out a rewards-based promotion—like a gift card or rebate—rather than offer a standard discount. 

Such is the case according to a March 2018 study from Hawk Incentives, a rewards and incentives provider, commissioned by Aberdeen Group, a technology and services company. 

A plurality of retailers surveyed (43%) said they use reward-based promotions because they don't want to appear like they're consistently offering products at a discount—they want to create the impression they're a premium brand. Others (44%) turn to reward-based promotions instead of coupons or other "percentage off" offers because it won't hurt their incremental sales. 

Though the study found that some retailers are shifting from discount- to rewards-based efforts, it also indicates that "there's a time and place for both strategies."

By and large, there's been relentless pressure on retailers to discount, mainly because consumers are focused on making sure they're getting the best price they can while shopping. 

You can even say that discounting has become so widespread that consumers have come to expect it. A recent study conducted by Valassis, in conjunction with The NPD Group, found that many consumers are on the lookout for deals throughout the customer journey—whether it was something they planned to buy (42%), something they didn't even intend to purchase (26%) or a coupon that "planted a seed" to entice a transaction (25%).