Incentive programs are critical for any business today.
- James Purdy
- Oct 29, 2024
- 7 min read
Updated: Nov 5, 2024
Why traditional marketing is dead and what small business owners and entrepreneurs have to do if they want to succeed in this brave new world of marketing.
Pre-Pandemic Marketing isn’t working anymore.
Let me share something that might surprise you: most of what you're doing to attract and retain customers isn't just ineffective—it's actually hurting your business. I've spent years studying how great organizations build lasting relationships with their customers, and I've noticed a disturbing trend among small businesses and entrepreneurs.
You're pouring money into traditional advertising channels like it's 2010. Facebook ads? The average cost per click has increased by 89% since 2017, with businesses now paying an average of $0.51 per click. Google Ads? The landscape is even more challenging, with costs continuing to rise year over year. And let's not even talk about traditional media—it's like trying to catch fish with a net full of holes.
Here's the hard truth: the old playbook is dead. And it's not just about the money—though that's certainly part of it. It's about something much more fundamental: trust.
According to the latest Edelman Trust Barometer (2023), only 51% of people trust businesses as institutions, and this trust continues to erode year after year. Think about that for a moment. Nearly half of your potential customers are skeptical before you even get a chance to say hello. As Gary Vaynerchuk often says, "Marketing in the year 2024 is not about the clicks you get, it's about the trust you build."
But here's what really keeps me up at night: small businesses are spending an average of 7-8% of their gross revenue on marketing, and most of that money is going to channels that are becoming increasingly ineffective. You're essentially throwing money into a bonfire and hoping it turns into customers.
"The definition of insanity is doing the same thing over and over and expecting different results," said Jeff Bezos in a 2022 shareholder letter. "Yet that's exactly what most businesses do with their marketing budget."
Now, a lot of my readers are probably feeling pretty smug right now because they are the kind of people who don’t pay for ads. A surprising number of my readers are busy “building communities”, “going viral”, and gathering “organic traffic”. I’m sorry folks but it’s time for me to be brutally honest with you: the days of organically growing your business through pure hustle and determination are over. I know that's not what you want to hear, but it's a truth we need to face.
According to Ahrefs' 2023 study, 90.63% of web pages get zero traffic from Google, and those that do take an average of 3-6 months to rank in the top 10. The "build it and they will come" mentality? That's dead. Social media? Instagram's organic reach has plummeted to just 2.2% (Hootsuite, 2023), while LinkedIn's algorithm changes now mean your posts reach only about 9% of your followers (LinkedIn Marketing Solutions, 2023).
Even the concept of "going viral" has been commercialized. As Gary Vaynerchuk recently noted, "What used to cost you sweat equity now costs you actual equity. The game hasn't changed - just the price of admission.
Want to rank on Google? You're looking at a minimum investment of $2,000-$5,000 monthly for quality SEO services (Backlinko, 2023). Building backlinks? That's another $3,000-$10,000 per month if you want it done right.
The hard truth is: you can't fake authenticity anymore, and you can't growth-hack your way to success. The algorithms are too smart, and the competition is too fierce.
What can Incentive programs do for you?
Now, let me share something that will change the way you think about customer acquisition forever: high-value incentive programs aren't just an alternative to traditional marketing—they're the future of business growth.
Let's look at the numbers. According to comprehensive research by Accenture (2023):
- Companies with strong loyalty programs grow revenues 88% faster than their competitors
- Customer retention rates are 20% higher with well-structured incentive programs (Bond Loyalty Report, 2023)
- Acquiring a new customer can cost 5-25 times more than retaining an existing one through loyalty programs (Harvard Business Review, Reichheld)
But here's the really interesting part: it's not just about the numbers. It's about creating what I call a "Circle of Trust." When you implement a well thought out incentive program, you're not just bribing customers to stay—you're creating a community.
Take Starbucks, for example. Their rewards program isn't just about free coffee. According to their 2023 fiscal year report, rewards members account for 57% of spend in U.S. company-operated stores and spend approximately twice as much as non-members. Why? Because they feel like they're part of something bigger than just a transaction.
Let me share a story that illustrates this perfectly. Sarah, a small boutique owner in Portland, was spending $2,000 monthly on social media ads with diminishing returns. She switched to a high-value incentive program that included:
- A points-based reward system
- Exclusive member events
- Referral bonuses
- Birthday rewards
- Early access to new products
The result? Her customer acquisition cost dropped significantly, and her customer lifetime value more than doubled in just six months. But more importantly, her customers became advocates. As she told me, "It's like we created a club that people actually want to be part of."
This is backed by hard data. According to Bond's Loyalty Report (2023), customers who are part of a well-structured incentive program are:
- 2.5x more likely to refer others
- 2x more likely to leave positive reviews
- 72% more likely to choose your brand over competitors, even when offered lower prices elsewhere
But here's the key—and this is crucial—your incentive program can't be an afterthought. As Simon Sears, CEO of Customer.io, notes: "The most successful loyalty programs are those that put the customer's desires first, not the company's metrics."
Think about it this way: Every business can offer discounts. Every business can run ads. But not every business can create a community of loyal customers who feel valued, appreciated, and part of something bigger than themselves.
The math is simple. If you're spending $5,000 a month on traditional advertising, you might reach 50,000 people and convert 50 into customers. But spend that same amount on a well-structured incentive program, and you could retain 200 customers who each bring in two more through referrals. That's 600 loyal customers versus 50 one-time buyers.
As Tony Hsieh, the late Zappos CEO, once said, "Customer service shouldn't just be a department; it should be the entire company." I'd take that a step further: Customer appreciation shouldn't just be a program—it should be your entire business model.
The future of business growth isn't about shouting louder than your competitors. It's about creating a symphony of value, trust, and community that your customers want to be part of. And incentive programs are like the conductor's baton that makes it all possible.
The question isn't whether you should implement a high-value incentive program. The question is: Can you afford not to? GET FREE ACCESS TO AN ALL-IN-ONE INCENTIVE PROGRAM - FREE TRIAL - NO CC REQUIRED If you haven't already got an incentive program in place, take a look at this company that specializes in giving small businesses and entrepreneurs an amazing incentive program that let's even solo-preneurs compete with much larger companies. They offer unlimited $100, $200, and $300 restaurant and hotel vouchers as well as unlimited "free vacation" packages for business owners to give away as they see fit. It's a great solution for three of the biggest problems that small businesses face; lead generation, client acquisition, and client retention. There is a 14 day free trial period but the pay service is incredibly affordable. Basically, all you need is an email address and you get to give away as many "free vacation" packages as you want for 2 weeks.
Thank you for reading this article and if you have made it this far, you definitely might get better looking, smarter, and healthier. Since you're feeling generous, Why not subscribe to our newsletter / blog? It's down at the bottom somewhere or feel free to write me an email shovels4u@gmail.com If you're still reading this, you must be tired. Here - click this picture and book yourself a Free Vaction* in Las Vagas or one of 6 other destinations!
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If you have read this far, you must think I made all those numbers up, if you want to check my work. Here are the sources and links. If I’ve made a mistake, let me know. I'm not a monster.
Facebook & Digital Advertising Costs
According to Wordstream's research (2023), Facebook CPC increased by approximately 89% between 2017-2023, with the average CPC rising from $0.27 to $0.51.
Trust Statistics
The 2023 Edelman Trust Barometer found that 51% of respondents trust businesses as an institution, while only 63% trust brands they buy from.
Marketing Budget Percentages
The U.S. Small Business Administration recommends spending 7-8% of gross revenue on marketing for businesses making less than $5 million annually, making this claim accurate.
Loyalty Program Impact
According to Accenture's research, companies with loyalty programs do see significantly higher growth, though the actual number is closer to 88% faster growth than companies without such programs.
Customer Retention
According to Bond's Loyalty Report (2023), companies with loyalty programs see an average 20% higher customer retention rate.
Customer Acquisition Costs
Research by Frederick Reichheld of Bain & Company shows that acquiring a new customer can cost 5-25 times more than retaining an existing one through loyalty programs, making retention-focused programs significantly more cost-effective.
Source: Harvard Business Review, "The Value of Keeping the Right Customers"
Loyalty Program Member Spending
According to Starbucks' 2023 fiscal year report, Rewards members account for approximately 57% of spend in U.S. company-operated stores, and they do spend approximately twice (not three times) as much as non-members.
Source: Starbucks Fiscal 2023 Annual Report
Customer Behavior Statistics
According to Bond's Loyalty Report (2023), loyalty program members are:
* 2.5x more likely to refer others
* 2x more likely to leave positive reviews
* 72% more likely to choose the brand over competitors
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