If you’re keeping up with your competition, then you may have noticed a recent trend in the software industry: bribery. Okay, so maybe it’s not the newest trick in the sales and marketing playbook, but more and more, software vendors are offering up big prizes and incentives just to get more eyes on their product (and hopefully, leads in their funnel and dollars in their pockets).
But does this strategy really work? Will a $25 Amazon.com gift card really make someone want to buy their software over yours? Could you even afford to shell out gifts and cash to every lead that comes your way?
Sure, it sounds like a good way to get more leads. But they’re probably not better leads, right?
Well, according to our research on incentives for software prospects, if you’ve gone down that line of thought and decided against them, you might want to reconsider.
This chart from WebMarketCentral Blog sums it up pretty well. Depending on what you’re asking of a B2B prospect, the quality of the lead generated from that offer is going to vary. If a prospect downloads a white paper, they’re probably not as qualified as someone who signs up to speak to a sales rep. However, the number of people that download that white paper is probably far greater than the number of people who ask to get a call from a sales rep. It’s your classic quantity versus quality dilemma.
When Do Incentives Work Best?
Incentives work best at getting offers that generate the highest quality leads (such as a landing page to sign up to speak to a sales rep) to convert at a higher rate. Your prospective buyers are busy, buried in emails, and have 100 other things on their to-do lists besides shopping for software. A gift card, an MP3, or a little extra cash might not make a completely cold lead want to all of a sudden buy your software. That being said, those gifts could certainly make a hot lead bump up a demo of your software from #78 to #8 on their to-do list. They may already know they need to research and eventually, buy software. They also already know they need to weigh various options before making a decision. If they see that they could get a little extra cash or a prize by throwing your software in the mix for consideration, why wouldn’t they? I know I certainly would!
What Actions Should You Incentivize?
You’ll know better than I do where your highest quality leads typically come from (and if you don’t, read our post on conversion tracking), but some of the actions that are ripe for incentivizing include:
- Watching a Demo: If your software’s value speaks for itself once a prospect sees it in action, offer an incentive to get more people to attend your demos. It’s best to ensure that the prospect not only signs up for the demo, but that he or she actually logs in/ calls in during the scheduled demo, and that he/she stays engaged throughout the demonstration. Example: Vocus’ Get $50 Barnes & Noble Gift Card for Watching a Demo
- Talking to a Sales Rep: Maybe you’ve found that the best prospects like to talk one-on-one with a member of your sales team. But when you offer to give them a call, they can’t seem to find the time. Sound familiar? If this is your situation, offer an incentive to talk to a sales rep within a defined timeframe- say, within the next week or the next month. It’s a surefire way to have your phone lines busy in no time. Example: TriNet MP3 Offer for Talking to a Sales Rep,
- Referring a Friend/Colleague: Sometimes, your best leads come from the people who know your software best… your current customers. If they really love your software, it doesn’t matter whether you pay them or not, your customers will sing your praises to friends and colleagues. The only problem—you never hear from those friends and colleagues (because you’re still stuck at #78 on their to-do lists). Encourage a customer to clue you in on their software-shopping friends by offering them an incentive to give you referrals. Make the deal even sweeter by also offering the referred lead an incentive if they end up buying your software. (That way, your customer knows they did right by their friend, and they may even offer up more referrals in the future). Example: Compendium’s Refer a Friend, Get a $25 Amazon Gift Card
- Closing Faster: If you have plenty of leads already, but they’re moving through the pipeline like molasses in winter, an incentive can act like Drano for your clogged pipeline… it’ll clear it right out! Incentivize slow moving buyers to act fast by taking advantage of a limited time offer, like a 20% discount if they close by the end of Q1. Example: Circus Ponies’ Holiday Bundle of Apps for $49.99
How Much Can You Afford to Offer?
Now that you have a few incentive ideas in your head, you’re probably wondering, how much can I afford to give away for these incentives? It depends on a few things, including but not limited to:
- Your target audience
- The average deal size/cost of your software
- Your close rates on those types of leads (i.e. who’ve watched a demo, talked to a sales rep, etc.)
- The typical lifetime value of a customer
- How much you’re spending to promote the offer
For more details on how to value a lead, check out our CEO, Mike’s post on determining a fair price for software leads. Once you’ve gone through his process and figured out how much you can afford to pay for a lead, you can determine how much of that cost you want to devote to the incentive gift. Remember, you’re going to boost the volume of quality leads and hopefully impact your close rate by offering the incentive, so the amount you’re able to afford may increase as you become more successful. Along the same lines, you may find that increasing the incentive amount doesn’t impact the volume of leads or it could even negatively impact your close rate (because those people are more interested in the swag than your software), in which case, you can simply decrease the incentive amount again and increase your profit margin. There’s no one right answer. For some people, a $5 drink at Starbucks is motivation enough to check out your product (especially if you send it on a dreary Monday morning), and for others, it might not be worth their time to do a demo unless you’re offering $100 or more.
One more tip on incentives: Our findings show that broader is better when it comes to selecting a gift. Not everybody has the same interests, so while I guzzle caffeinated drinks several times a week, some of my coffee-hating peers probably wouldn’t care that much for a Starbucks gift card. Cash is the gift that everyone can agree on (which can be given in the form of a pre-loaded debit gift card); however, cash offers can also come off as less legit (people aren’t so trusting of free money.) This is where knowing your audience really helps. Even if you know them well though, you should consider A/B testing your incentive offers with various gifts to see if one resonates better than the other.
Have you tried using incentives in the past? If so, which worked best and which flopped?
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