Also referred to as an incentive program, an incentive scheme is a formal scheme that is usually put to use when a company wishes to promote a certain kind of behavior or action amongst its customers. The key to be noted here is it is time specific.
This means that the scheme lasts for a fixed duration or time period only and then it expires or is terminated by the company. This can be done so while dealing with company workers as well as while dealing with customers that you wish to attract in order to increase the sales of your firm. An interesting way to understand this concept is simply that you pay a certain amount for the desired result.
7 Types of Incentive Schemes
1) Employee Incentive Schemes
This implies a certain kind of incentive scheme that is used for employees. The target here is to improve the performance of the employees of the company. Every company depends on its employees for its smooth functioning.
But, what often happens is that with time, the enthusiasm of the workers keeps decreasing. In such a situation, it is needed that they remain motivated to work hard. Thus, incentives are provided to them. The main motive here is to make the employees feel a healthy sense of competition amongst themselves, reduce stress as well as make work fun. Also, the incentives may be a bonus, that is a monetary reward or extra holidays. It totally depends on company to a company regarding the incentive scheme they use.
2) Consumer Incentive Schemes
Your consumers are the pivot that keeps your company running at all. Every business exists for the sole reason of profit. If there is no profit, the firm is bound to shut down. However, with the profits pouring in steadily, it is obvious that it can be used for further investment. Thus, the customer is literally regarded as God.
The idea behind incentive schemes for customers is that it helps you to rapidly promote your company and expand the customer base. While the target clients can be lured with lucrative incentive schemes, the existing customers can also be retained. There is a sense of achievement that customers feel when they receive incentives such as a free product, discount on their purchase if they buy more than one item, and so on and so forth.
3) Points Program
If you have ever shopped online or even visited a supermarket or departmental store, you will know exactly what I am talking about. Usually, the customer can either have a card or an account in which their points are added each time they shop form the particular location.
This means that with each purchase, a certain number of points is earned, depending on the number of items purchased and the total billing amount. Once enough points have been collected, you get a benefit such as a feed product or a certain percent discount. This is somewhat similar to the reward points you earn when you book tickets with certain airlines and pay by card. Also, this encourages loyalty as well as sales because the masses believe that they will also be receiving benefits in the long run.
4) Sales Incentive Schemes
The motive behind these types of incentive schemes is to increase the sales of the company. That means, the number of people who purchase your products will increase and so will the number of sold units. Thus, a Sales Incentive Plan is needed.
This can also be called as SIP in short in the world of business. This can divide the program of action into certain divisions such as targets for months, quarters or even years. In fact, each member of the sales teams is also motivated because of the benefits they receive if they are successful in their endeavors. This is one of the most direct incentive schemes that can exist. It is a clear relation between why the company extends such offers and what it expects of you in return.
5) Dealer Incentive Schemes
Dealers are also very important in the chain of your product sale. This is because they are the ones who get you the products from the manufacturers. Thus, incentives are also great and actually very needed if you wish to keep them on their toes and active all the time.
There cannot be any chance to slack behind or your competitors may take over the market even without you realizing it. Thus, incentive schemes help every company to ensure their hold over the market position and their status, reduce the cost of sales and also make space for the launch of new items and services under their name.
6) Online Programs
This may be a little tricky for you to understand if we go by the traditional definition of it. Thus, let’s proceed with an example. Have you come across websites on the internet where you can earn incentives each time someone uses your referral code? Yes, that is what I am talking about when I speak of online programs as incentive schemes. They help the website grow as well as you get benefits. A chain reaction sort of thing is formed in this case where everyone in the chain benefits from one another.
7) Incentive Websites
There are several websites which give you gifts or other offers each time you are able to successfully complete the stated tasks or refer it to others. Usually, it is noted that these sites are sponsored by others in order to gain publicity and draw the masses.
The reason why these sites are chosen is that they have a huge fan base and it is assumed that people will definitely avail of it. For example, Myntra is an online shopping site where you will often hear of certain top brands engaging in incentive schemes. This is because Myntra has successfully been able to establish a market in India and online buyers flock to their website for instant fashion trends.
Thus, there can be monetary rewards as well as non-monetary rewards in case of incentive schemes.