Occasionally prospects just need a little nudge. Whether it’s a free BBQ or TV with the purchase of a car, or a gift card for responding, one fact remains: incentives work!

Direct mail can be expensive. The costs of printing, postage and production can really add up. That’s why many find it hard to shell out extra money for a free giveaway or gift to incentivize their promotion. It’s understandable to want to keep on budget, but it’s important to not lose sight of your end goal.

So what’s your goal? Well that’s different for everybody. For some people it’s something simple like a direct purchase, but for others it may be informational/educational, or to have someone call you for a quote or consultation. Now depending on your goal, incentivizing your promotion may or may not be the right move.

So where do incentives work?

  • Expensive incentives work well when your target is focused. For example, mailing everyone in the neighborhood a free $20 gift card could sink you, but giving a $20 gift card to a smaller list of upper level CEO’s may be enough to grab their interest and get you some responses.
  • Incentives work best when you are asking the customer for their time or interest. For example, if you are asking a prospect to fill out their contact details and answer a few questions, or view or read an informational package, an incentive would likely work great. Another example where incentives might work is if you are asking a prospect to take action, like booking an appointment to review your product.
  • Incentives don’t need to be expensive. In many cases, a coupon is enough to drive customers to act. Fast food chains use this strategy to great effect.

Remember to keep in mind your return on investment. Let’s use the following example.

Your mailing cost for a promotion is $2,000 and you usually receive about 40 leads. Now let’s say you offer a $10 gift card for anyone who responds. Because of the incentive, your leads double to 80, but in this case you have spent an extra $800 on incentives.

  • Without an incentive, you’ve spent $50 per lead ($2,000/40 = $50)
  • With an incentive, you’ve spent just $35 per lead ($2,800/80 = $35)

It’s important when you plan your promotions to run some estimates and see if an incentive might work well. It can often be the difference between a successful campaign and failing one.