How does a frequent-user incentive differ from a premium?

Question

Quizplus · Accepted Answer

The Answer is A frequent-user incentive and a premium are both marketing strategies used by companies to encourage customer loyalty and increase sales, but they operate in different ways and serve different purposes.

A frequent-user incentive, also known as a loyalty program, rewards customers for their repeated business over time. This type of incentive is designed to encourage customers to continue using a company's products or services by offering them rewards based on the frequency or volume of their purchases. The rewards can take various forms, such as points that can be redeemed for discounts, free products or services after a certain number of purchases, or access to exclusive events or offers. The key aspect of a frequent-user incentive is that the benefits increase as the customer continues to engage with the brand on a regular basis.

For example, a coffee shop might offer a loyalty card that gives customers a free coffee after they purchase ten cups. Or an airline might have a frequent flyer program that allows passengers to accumulate miles that can be exchanged for free flights or upgrades.

On the other hand, a premium is a marketing tactic where a company offers an additional item or service for free or at a reduced price as an incentive to purchase a product. The premium is often given immediately with the purchase and is used as an enticement to make the sale more attractive. Premiums can be related to the product being sold (such as a free toothbrush with the purchase of toothpaste) or they can be unrelated (such as a free tote bag with a magazine subscription).

Premiums are typically used to stimulate short-term sales and can be particularly effective in attracting new customers or encouraging existing customers to try a new product. Unlike frequent-user incentives, premiums do not necessarily require the customer to make multiple purchases or to demonstrate loyalty over time.

In summary, while both frequent-user incentives and premiums are used to promote customer loyalty and increase sales, they differ in their approach and objectives. Frequent-user incentives reward ongoing customer loyalty and repeated business, while premiums are used to entice immediate purchases by offering an additional benefit at the point of sale.

How Does a Frequent-User Incentive Differ from a Premium