Let’s face it: everyone loves a bonus. When was the last time you heard a job offered bonus payments as part of the employment package, and you thought, ‘No thanks, I’d rather do the same job and not get a bonus’?
Employers offer bonuses to incentivize staff and make them feel that their input directly affects the profitability of the organization they are working for. In employment, bonuses are usually related to hitting team or individual targets or can relate to overall company performance.
Whether your salary package includes potential bonus payments or not, once you start looking, you will notice bonuses and promotions everywhere. When we go to the mall, superstore, local shop, or online store, we are on the lookout for bonus packs that give us extra or free products. Bonuses are promotional devices that brands and products use to entice us to choose them over the competition. In terms of the marketing mix, they are one of the mechanics that fall under the ‘Promotions’ umbrella.
Marketeers have long since worshipped at the alter of the marketing mix and its 4 Ps:
- Product
- Price
- Place
- Promotion
These are the cornerstones of the marketing plan, and no matter what industry you look at, the same basic principles apply. They want to sell you a product, and you will be persuaded to do so if the price is right. In order to be exposed to their product, they have to get it in front of the customer (place), whether online or in a bricks-and-mortar establishment. All things being equal, what will often tip the balance between which product a consumer buys is the promotional offer.
These promotional offers come in many guises, but one which is frequently used is a bonus. The other common alternative is a price reduction. A bonus gives you more (for the same price), while a price reduction offers the same at a reduced price. The problem with price reductions is there is only so far that prices can be dropped before there is no profit margin left. While massive retailers might be able to undercut their competitors with ‘loss-leading’ price promotions, for most products and services bonus offers are usually more sustainable in the long run.
Bonuses can be used to attract new customers, promote brand loyalty and shift more of the product or service. For years, the classic bonus promotion has been the BOGOF (Buy One Get One Free), where product packs are bundled together. Sometimes, they are physically ‘bundle-wrapped’ together. With electronic point-of-sale technology and store loyalty cards, many brands now offer these bonus promotions without the need for products to be physically banded together. The wizardry in the till calculates it all when the customer goes to the checkout. Increasingly, these offers are only available on the presentation of a loyalty card which then triggers the offer. The advantage for the retailer is they now know what you like to buy and can target consumers with similar offers in the future.
You might find this type of bonus offer on personal hygiene or food products. The trouble is, on products that do not have a short shelf-life, you tend to accumulate products when they are on offer and then use them until they run out, so you do not make any additional purchases. Recently, bonus offers like these on perishable food items have attracted a lot of criticism as brands have been accused of either fuelling obesity or encouraging food waste. However, if the retailer has used the promotion to collect market data, you can be sure that you will see future Money Off Next Purchase and other bonus offers appearing on your loyalty card.
One industry that uses bonuses very effectively is the online casino sector. In this highly competitive market with thousands of games and hundreds of operators to choose from, every casino is looking for a way to get players to come to their site. However, they do not want just to attract them once. They also use different types of casino bonuses to ensure the site is sticky and encourage customer loyalty. With so much choice, it is easy for customers to hop around and keep trying out all the free bonuses without committing to one particular site. Therefore, as well as welcome bonuses, which the sites use to get players to their site in the first place, they also offer ‘no-deposit’ bonuses.
On casino sites, bonuses are usually made up of a combination of free spins and no-deposit bonuses that can be used on slots and other casino games. These sites want players to stay on for as long as possible and try out their games. No-deposit bonuses offer players the chance to try out games and win real money without staking any of their own. Online casinos also offer monthly, high-roller, device and game-specific bonuses. This promotional technique is widely used across this industry, and a savvy punter will always be on the lookout for what is available.
Financial Markets
In general, bonuses are a promotional offering that gives customers more. They are also used in financial markets to promote particular products and services. These can include referral bonuses when one investor recommends a product to a friend or other incentives to invest. Incentives could include attractive initial interest rates or low fees. In the financial services market, these types of offers are highly regulated, particularly around high-risk investments, and there are stipulated cooling-off periods and obvious risk warnings.
Marketeers use bonus promotions because they work. There are some incredibly exclusive brands, however, that have built up such a prestigious reputation that they do not offer these kinds of offers. These exclusive organizations’ brand positioning is that the customer is able to do business with them; their product on its own is the bonus! There is a kind of reverse psychology at play in these cases, but these top-end marques are few and far between.
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