Incentive: The bacon of marketing tactics
A marketing incentive is a lot like bacon. No one’s going to argue that it doesn’t taste good. It’s easy enough to make. And it is a quick fix for almost any recipe. Yet, if you were to eat bacon with almost every meal, you end up bloated and unhealthy … like General Motors before the government bailouts.
GM’s failure surely had a lot of causes – relying on the margins from block-long SUVs that go out of style when gas prices (shockingly) change, cultivating an incredibly adversarial workforce – but some of the blame must be pointed at incentives. After all, paying people to buy your cars because the product does not have enough true value is not a sustainable business plan.
Incentive has its place … at the end of the line
That’s why the MarketingExperiments Landing Page Optimization Online Course teaches that, if you want to create an effective experimentation plan, we recommend you first test the other elements in the Conversion Sequence before testing the impact of an incentive for additional improvement.
And that makes sense once we look at the MarketingExperiments definition of incentive: an appealing element – such as a discount, a bonus or special offer – introduced to stimulate a desired action.
Perhaps that seems obvious, but there is one major word that is not in that definition – value. The offer or product should have a value proposition all its own. An incentive is simply used to “tip the balance” of emotional forces from negative (exerted by friction elements) to positive.
Of course, after eating broccoli, Swiss chard and salmon all week, you’ve probably earned some bacon and flapjacks on the weekend.
Likewise, once you have tested the other elements in the above-mentioned Conversion Sequence to the point that you have a fully optimized page and find the new treatments are consistently underperforming the control, then it is time to test incentive.
We recommend first testing low-cost incentives, for example, a digital product. Then test incentives that may have a high cost, but have a correspondingly high value.
This margin between the cost and the perceived value is key. The ideal incentive will have a low cost to you, but a high value to your potential customers. To accurately measure the return on the incentive (ROIc), you simply subtract the cost to deliver it (C$n) from its profit impact (P$n).