Incentive marketing is a systematic process of organizing incentives in order to create a desired behavior. I'm sure you're familiar with it, but the phrase itself has been misused by many people. We are speaking of what's called "reward", not rewards.

Rewards are giving something free or given for a specific act. This is different from incentives. Rewards are well designed and well thought out and can be a lot of fun. But incentives, on the other hand, are done intentionally to push a certain behavior or strategy toward a goal.

For example, when I was working in the advertising field a colleague of mine used the incentive of free parking to get his marketing people to do a walk-through at their place of business to gain public opinion support for a new product line. He ended up giving away thousands of free tickets. And the reaction?

It turned out that these incentives were actually leading to a low sales conversion rate and a shift in focus to lower-margin products. Why? Because the incentive marketing company team did not know how to talk about their new product line, but the reward team did!

What's the difference between reward and incentive marketing? Well, the reward programs are designed to give something in return for some action.

I know that some incentive marketing programs come with the stated goal of gaining a certain number of leads (or sales) or of closing a certain amount of accounts. But sometimes, these programs have a shorter time period and a more narrowly defined objective. The people who sign up often won't actually be using the products or services. They might just want to get the cool t-shirt or free parking.

You can make the difference between the two by using the same techniques that you would use if you were talking to a customer's head. But, in the business world of incentives, I've found that the best strategy is simply to break down your target audience and then use words and phrases that describe them.

That's a good example of using an edge. Most small businesses are unaware of how to communicate with an edge, but they certainly do realize that many customers really aren't using the products or services they offer. And, they have the tools to help you, as the business owner, reach them!

Incentive marketing, like any other marketing program, can be very successful for small business owners. But to do it right, you need to be doing it the right way. Using words and phrases that actually resonate with your customers, the incentive marketing program needs to be described and then used, and then followed up by information that will change the behavior or attitude of your customers.

You might be trying to improve the sale-to-sales ratio at your local Walmart by putting up a large discount banner on the side of your store and saying something like "All Savings Guaranteed!" That sounds good to the customers, but it doesn't tell them anything. And the same holds true for many incentive marketing programs.

Let's say you have installed a new thing at your store. You tell all of your customers that they can take home the new system for free. But, it isn't until they try it, are they motivated to pick it up and use it.

Once they have tried it, they are then much more likely to use it's likely to turn into a repeat customer. An incentive marketing program that uses the right kind of words and phrases, combined with the correct reward mechanism is an effective, cost-effective method of improving the business and increasing customer satisfaction.