Incentive marketing: 7 strategies to win and keep customers
By Amy Rigby●6 min. read●Jul 21, 2026
If you've ever added an extra item to your cart to unlock free shipping, collected freebies on your birthday, or accepted a gift card in exchange for hearing a sales pitch, you’ve been swayed by incentive marketing.
84% of U.S. businesses employ this influential tactic, spending $176 billion annually on things like merchandise and gift cards.
Incentive marketing includes everything from cashback offers and rebates to attendance incentives and loyalty programs. It can move prospects further down the funnel and create lifelong brand advocates.
This article covers seven highly effective incentive marketing strategies, along with actionable tips for getting started.
Key takeaways
Incentive marketing uses rewards to encourage specific buyer behaviors such as making a purchase, referring a friend, or leaving a review.
The most effective incentives are tailored to the customer journey. Cashback, discounts, and demo incentives help win first purchases, while loyalty and referral programs turn existing customers into loyal brand advocates.
Incentives work best when they actually change behavior. Target buyers who are on the fence, like cart abandoners or lapsed customers, rather than those who were going to buy anyway.
The strongest incentive programs start with a clear goal and match the reward to the size of the ask and the audience.
What is incentive marketing?
Incentive marketing is a promotional strategy that rewards prospects or customers for taking a desired action, such as making a purchase, completing a survey, attending a sales demo, or referring a friend. Rewards can take many forms, but the most common include gift cards, cashback, discounts, merchandise, or exclusive perks.
Let’s say you run an Instagram ad featuring a video of your product with a call to action to “buy now.” That’s regular marketing. Running that same Instagram ad and offering a 15% off promo code is incentive marketing. The reward is what sets it apart.
7 incentive marketing strategies to motivate prospects and customers
What motivates a first-time buyer isn’t always the same as what motivates a returning customer. The most effective incentives are tailored to where someone is in the marketing funnel. Each strategy below notes the stage where it tends to work best.
1. Cashback offers and rebates
Marketing funnel stage: Decision, loyalty
A cashback offer, also known as a rebate, is a partial refund given after the customer makes a purchase. While it’s typically cash, you can also issue a rebate as a Visa prepaid card, gift card, or store credit.
Why are rebates effective?
Shoppers feel like they’re getting a good deal: A rebate signals upfront savings, even though many buyers never redeem it. Tremendous research shows that rebate claim rates hover between 38 and 60%.
Sellers protect their profit margins: Because not everyone redeems, rebates allow businesses to keep a higher percentage of profits than they would with discounts.
2. Discounts and coupon codes
Marketing funnel stage: Decision, loyalty
Unlike rebates, discounts are applied at the point of sale, either automatically, via a promo code, or with a voucher.
Discounts are effective because they:
Deliver instant gratification: Shoppers see the savings right away, while the benefits of a rebate can feel uncertain and far in the future.
Nudge hesitant buyers to make the purchase: 77% of shoppers have bought something they weren't planning to just because of a coupon or discount.
Discounts come with tradeoffs, though. They can:
Hurt profit margins: A discount lowers the price for everyone who buys, so you absorb the cost on every order. You get an instant bump in sales, but it comes straight out of your margins.
Harm brand perception: When you slash prices, you can unintentionally signal to consumers that your product is low quality. A rebate rewards the buyer without affecting the sticker price.
3. Event attendance incentives
Marketing funnel stage: Awareness, consideration, decision, loyalty, advocacy
Events are a versatile marketing tool because they work across the entire funnel. But getting people to actually show up can be a challenge.
That’s where event incentives come in. The right reward gives people a reason to:
Register and attend: Getting someone to register is easy. Getting them to show up is harder. Providing incentives like a raffle prize or gift card can be the difference between packing your webinar with people and presenting to a thin audience.
Stay engaged: Using incentives after your event begins is a great way to keep people’s attention and encourage participation. For example, sprinkle in a couple of quiz questions throughout a webinar, and send a $10 gift card to everyone who answers correctly. People are more likely to participate when there’s a reward on the line.
4. Demo participation incentives
Marketing funnel stage: Consideration, decision
B2B buyers are flooded with messages from sales reps asking them to demo their platform. That’s why many marketers use participation incentives to cut through the noise.
It usually looks like this: a LinkedIn DM or cold email offering a $100 gift card for taking a demo call. The reward gives prospects a reason to act now, nudging a lead who’s “just looking” toward a decision.
The main concern is that a gift card might attract freeloaders who want the reward and have no legitimate interest in the product. But when Tremendous tested this on LinkedIn, the results showed the opposite:
Response rates more than doubled
Cost per qualified lead decreased by 81%
Lead quality actually improved
The key is using tight audience filters and qualification criteria to weed out unserious prospects.
5. Win-back campaigns
Marketing funnel stage: Loyalty
A win-back campaign aims to reactivate customers who haven’t engaged with your brand in some time. Typically, this means it’s been a few months since the customer has opened your emails, visited your website, or made a purchase.
The challenge is that when a customer has lost interest, sending them more of the same type of communication isn’t going to win them back. An incentive gives them a reason to look again. A fresh, exclusive offer stands out because it’s not the same message they’ve been ignoring. That novelty can be enough to catch their eye and convince them to return.
6. Loyalty programs
Marketing funnel stage: Loyalty
Brands use loyalty programs to encourage repeat business by rewarding members for their purchases. These programs might offer points that are redeemable for rewards, members-only benefits like free shipping, or cashback on purchases. The incentive gives people a reason to keep coming back.
Loyalty programs work because they:
Gamify shopping: Take Starbucks Rewards, for example. Members earn Stars on every purchase that build toward a free drink. There are also bonus-Star days and status tiers that members can unlock as they spend more. It turns a routine coffee run into a game of collecting rewards and leveling up.
Make members feel special: Perks like early access, members-only events, and exclusive product drops reward customers for their loyalty. That sense of recognition builds strong brand affinity and encourages repeat business.
7. Referral programs
Marketing funnel stage: Advocacy
There are loyal customers, and then there are advocates: those who are the first to buy your latest product, post about it on Instagram, and rave about your brand to others. The right incentives can help you turn more customers into advocates.
A referral program offers gifts, recognition, discounts, monetary rewards, or other incentives to customers who refer new business. These programs work because a recommendation from someone you know carries more weight than any brand’s marketing.
PayPal is a classic example. Before it became one of the world’s largest payment platforms, it was a new technology that few people knew about and was struggling to gain traction.
In 2000, PayPal launched a referral program that paid users to sign up and refer others. It grew the business from 1 million users to 5 million in less than a year.
How to get started with incentive marketing
You don’t need a massive budget to get incentive marketing right. What matters is how you design your program: the reward you choose, who you offer it to, and when. Get that right, and even a small, inexpensive gesture can deliver results.
Whether you’re launching a new incentive program or optimizing an existing one, here are some tips to keep in mind.
Start with the goal, not the incentive
Define the behavior you want to drive, then pick the incentive most likely to inspire it. Looking for a quick boost in sales? A discount can do the trick. Trying to re-engage inactive customers? Consider a targeted win-back campaign with an exclusive offer.
When the goal doesn’t point to an obvious reward, monetary options like gift cards, rebates, and cashback are a safe default because they appeal to a broad range of people. Non-monetary incentives like physical gifts or perks can be effective for building brand loyalty, but they’re a bigger bet on your understanding of your audience.
Match the reward to the size of the ask
A quick, low-stakes action like taking a survey or leaving a review only needs a small nudge. A $25 gift card or a raffle entry would likely be enough to motivate action. A bigger commitment, like sitting through a demo or attending an event, requires a bigger reward. Over-reward a small ask, and you waste budget. Under-reward a big one, and no one bites. Striking a balance takes some trial and error to perfect.
Target the right people
An incentive delivers the most value when it changes someone’s behavior. Offer a discount to someone who was already going to buy, and you lose margin on a sale you already had.
Instead, use data like purchase history or browsing behavior to identify people who might be on the fence. Lapsed customers or leads that have gone quiet are all strong candidates for an incentive.
Time incentives for the right moments
An incentive can land differently depending on when it’s offered. For example, a discount is much more effective when offered while somebody has a full cart than in a marketing email weeks later. Trigger incentives around key moments: an abandoned cart, a free trial that’s about to expire, a customer that just hit a milestone, or a subscription that’s up for renewal.
Putting incentive marketing to work
Incentive marketing works because it gives people a concrete reason to act, and it’s flexible enough to fit any budget and funnel stage. The fundamentals are the same across programs: know what action you’re after, be strategic about who you target, and pick a reward that fits your audience.
From there, it’s a matter of testing and learning. Start small, track what is and isn't working, and scale the tactics that resonate with your buyers.
