10 Reasons Rewards Are Better For Your Brand Than Discounts

Jun 23, 2021

When you’ve got targets to meet or soon-to-be-outdated stock to shift, running a discount promotion seems like the obvious answer. It’s a quick way to increase sales. Plus, all your competitors do it, so you should too – right?

Not necessarily. Growing your brand in the long term also means maximising profit and brand equity. But discounts can have a negative impact on both by undermining price integrity, reducing product value and eroding consumer trust. Ultimately, it’s an unsustainable marketing method.

There is another way. Studies show consumers prefer to get more, rather than pay less. By switching discounts for rewards, you can transform your sales promotion into a magical brand moment  for your customers. Not only will sales sky-rocket, you’ll also increase your brand equity along the way.

Here are 10 reasons why rewards are better for your brand than discounts.

1. Rewards create an emotional connection with your brand

Consumers make decisions based primarily on emotions, so it follows that building emotional connections benefits your business.

Let’s be honest: discounts are no more than a pragmatic consideration for consumers. But creative rewards can fuel positive associations with key emotional attributes such as fulfillment, identity, enhancement, ritual, nostalgia, and indulgence. As a marketing strategy, it offers so much more scope.

2. Rewards meet the needs of your customer

Fifty-one percent of consumers say their relationship with a brand starts when they feel the brand understands them and their desires. As a marketer, you know your ideal customer almost as well as you know yourself (and if you don’t, check out this article on creating customer personas). What are their goals? What are their pain points? Where do they sit on Maslow’s Hierarchy?

Discounts offer very little in the way of personalisation. But with creative rewards, you can use these insights to come up with a campaign that meets your prospects’ needs and kick-starts their relationship with your brand.

3. Rewards showcase your product

When customers are shopping for a product, they’re thinking about how that product can improve their life. What are your value propositions? What’s your unique selling point?

Unlike discounts, creative rewards can be customized to highlight these benefits. Differentiating your offering in this way prompts consumers to consider foremost the value of your product or service, as opposed to merely the price – leaving your brand less vulnerable to comparison and discount-sparring with competitors.

4. Rewards increase awareness of your brand

You spend time and energy developing your brand and making sure it’s consistent across all platforms. Yet, discounts can actually undermine your brand ethos. With creative rewards, you can create a tailored offering that aligns with your unique brand purpose, mission and values – increasing brand visibility and loyalty along the way.

It’s not just consumers who’ll notice, either. Retailers are drawn to brands who bring something new to the table, rewarding them with greater presence in stores, online and in advertising campaigns.

5. Rewards maintain your brand’s price integrity

By reducing your product price, however temporarily or intermittently, you permanently lower the perceived value of your product. You train consumers to avoid full-price purchases and wait for the next price drop.

Unlike discounts, creative rewards grow your market share while maintaining your brand’s price integrity. So you can avoid the dangerous discount spiral that squeezes profit margins and leaves your brand wide open to lazy threats from competitors.

Unlike discounts, creative rewards grow your market share and help your brand avoid the dangerous discount spiral. 

6. Rewards add value to your offering

Unlike discounts (which reduce perceived value), promotional rewards actually increase the perceived value of your offering. In fact, RIX’s research shows consumers believe rewards are up to five times more valuable than their actual cost.

Why should you care? Higher perceived value makes consumers less price sensitive and paves the way for up to a 16% price premium on products, along with increased loyalty, according to a report by PWC.

7. Rewards increase buyer satisfaction

The mental accounting model in behavioral economics explains how a reward becomes an additional motivator to buy a product, and gives customers more satisfaction when they do. It also leads to higher quality perception, leading customers to believe they got the best deal without compromising quality.

8. Rewards increase brand loyalty by nurturing trust

Discount promotions can make loyal customers who make full-price purchases feel betrayed. What’s more, offering too many discounts can reflect badly on the health of your business, making consumers wary of spending their money with you.

Creating rewards tailored to the needs of your target audience proves you appreciate them and want to improve their lives. Offering something extra also makes your brand appear generous and forms positive associations. If your customers genuinely believe you’re giving them value (rather than trying to get value out of them), they’ll be more likely to trust your brand – which sews the seed for loyalty.

9. Rewards tap into the ‘halo effect’

The ‘halo effect’ describes people’s tendency to form a positive impression of something because it is associated with something else that they know and like. If consumers aspire to a particular lifestyle, they’ll feel positive about anything they consider instrumental to getting it. Offering creative rewards allows you to position your product in a way that appeals to these appetites.

Not only that: if consumers feel a positive emotional response from something your brand says or does, the halo effect suggests they’ll generalize these feelings towards your brand as a whole. With 76% of customers who are emotionally connected to a brand preferring it over a competitor, and 73% of consumers willing to pay more for a product if they love the brand, this can only be a good thing.

10. Rewards let you tap into the experience economy

Research shows 76% of consumers would rather spend their money on experiences than on material items. Even if you sell products, rewards are a tactical way to position your brand in the experience economy – thus tapping into this trend, rather than succumbing to it.

Plus, experiences are a form of social currency shared in person and online as a way to establish identity and form social bonds, in a way that products aren’t. Bundling your products with experience rewards makes your brand part of that conversation.

Unlike discounts, there’s almost no limit to what reward promotions can help you achieve. Yes, they can increase sales and market share quickly. But they can also increase brand loyalty and engagement, encourage upselling and bulk-buying, or even lead to increased POS display space.

When it comes down to it, if every other brand in your market offers discounts, refusing to do so might be the only way to get noticed.


At RIX, we work with you to create rewards that transform your sales promotions into magic brand moments, empowering you to increase sales and market share in the short term, while boosting long-term brand equity.

Want to see how we can rid your brand of discounts? Get in touch.

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