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Thursday, September 13, 2018 — 12:06:34 (EDT)

Reward-based promotions outperform discount-based promotions, according to Aberdeen

Hawk Incentives issues new report and infographic from Aberdeen study of marketers’ sentiments on the role and effectiveness of promotions

Lewisville, Texas – September 12, 2018 – New research* completed by Aberdeen Group, a leading analyst firm, finds companies that offer consumers reward-based promotions to drive engagement and purchases are more likely to experience greater marketing promotion success and profitability versus those that offer discount-based promotions. Specifically, reward-based promotions can outperform discounts by driving better purchase intent and sales lift without damaging brands’ images from discounting.

These are among the findings of the study commissioned by Hawk Incentives, a Blackhawk Network business that provides incentives solutions, to assess the presence and impact of discount- and reward-based promotions among U.S. businesses. Reward-based promotions are defined as those that offer shopper incentives to encourage purchase or action; discount-based promotions reduce part of the purchase price at point of purchase.

“Businesses have plenty of choices when determining marketing strategy, but reward-based programs stand out as incredibly impactful options to achieve business goals and drive effectiveness,” said Theresa McEndree, Vice President of Marketing, Blackhawk Network. “These promotions enable businesses to encourage consumers to buy products while creating engagement that makes them more likely to make repeat purchases in the future. Consumer loyalty can be fleeting, but reward-based promotions offer businesses the opportunity to keep shoppers coming back while also encouraging revenue growth and building brand reputation.”

Aberdeen Group’s research findings were based on a survey of more than 200 U.S. businesses on the use and performance of reward-based and discount-based promotions. Key takeaways include:

Reward-based promotions can generate more annual company revenue and greater profitability per customer. Companies surveyed report an average year-over-year revenue growth increase of 36 percent that can be attributed to reward-based promotions as opposed to 28 percent attributed to discounts. Overall, compared with discount-based promotions, the companies surveyed that offer reward-based promotions generate a six percent greater average profit margin per customer (24 percent for rewards-based promotions versus 18 percent for discounts).
Businesses use reward-based promotions to achieve specific business goals. When selecting between reward- and discount-based promotions, businesses choose reward-based to foster customer engagement (58 percent), drive purchase intent (48 percent), drive sales lift and/or purchase frequency (45 percent) and minimize lost revenue potential due to discounting (44 percent).
Companies use reward-based promotions to elevate brand image. To create the impression of a premium brand image versus one that consistently discounts prices, 43 percent of companies surveyed consider using reward-based promotions. When directly competing with a rival on brand image, 44 percent of companies prefer to use reward-based promotions.
Marketers measure rewards- and discount-based promotion success differently. Of the marketers surveyed, 67 percent gauge reward-based promotion success on increases in customer retention and loyalty, as opposed to 55 percent of those that sponsor discount-based promotions.

“If a business is aiming to drive sales lift or purchase frequency, compete on perceived brand image or drive purchase intent, companies using well-planned and executed reward-based promotions typically perform better than peers using discount-based promotions,” said Omer Minkara, Vice President and Principal Analyst for Contact Center & Customer Experience Management, Aberdeen Group. “In fact, other research** has found that the majority of surveyed consumers—nearly 80 percent—prefer rewards in the form of prepaid cards to other incentives such as discounts or merchandise.”

Download the infographic for more details.

*About the “Next-Generation Promotions” Research

The “Next-Generation Promotions” research was a study conducted independently by Aberdeen Group on behalf of Hawk Incentives between February and March 2018. The sample size of 212 American businesses was comprised of companies with a self-reported average annual revenue of $4.5 billion, and included companies in the Fortune 500 and Fortune 100. A probability sample of the same size would yield a margin of error of +/-3%.

**“Reward Preference” is an online survey of 1,022 smartphone owning Americans completed by Leger for Hawk Incentives between February 10‒28, 2017.

About Hawk Incentives
Hawk Incentives, a Blackhawk Network business, is a leading provider of rewards and incentives to organizations across the globe, including many of the Fortune 500. We power an inspiring brand experience with proven delivery of customized rewards for consumer, employee, sales and channel incentive programs. Our expansive rewards portfolio includes multiple patents and industry firsts, including digital and mobile rewards. To learn more, visit www.hawkincentives.com.

Hawk Incentives, headquartered in Lewisville, Texas, is a division of Blackhawk Network.

About Blackhawk Network
Blackhawk Network Holdings, Inc. is a global financial technology company and a leader in connecting brands and people through branded value solutions. Blackhawk platforms and solutions enable the management of stored value products, promotions and rewards programs in retail, ecommerce, financial services and mobile wallets. Blackhawk's Hawk Commerce division offers technology solutions to businesses and direct to consumers. The Hawk Incentives division offers enterprise, SMB and reseller partners an array of platforms and branded value products to incent and reward consumers, employees and sales channels. Headquartered in Pleasanton, Calif., Blackhawk operates in 26 countries.

For more information, please visit BlackhawkNetwork.com, CashStar.com, HawkCommerce.com, HawkIncentives.com or our product websites GiftCards.com, GiftCardMall.com, Cardpool.com, GiftCardLab.com and OmniCard.com.

Source: Company press release.

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