Australian businesses are reporting an average 27% higher return on marketing investment by using reward-based promotions compared with discount promotions, according to new research by Aberdeen Research. 

In addition to greater ROI, close to half (49%) of businesses reported a year-on-year increase in sales as a result of offering customers rewards rather than discounts, with 31% of those increasing sales by between 3% and 10%.

The Australian data was part of a global research project commissioned by Blackhawk Network that surveyed small, medium and large businesses.

Blackhawk Network senior marketing director for Asia Pacific, Marc Cheah said with Christmas just around the corner, many businesses are now looking at their marketing promotional strategies to help drive sales.

“All businesses are keen to tap into the increased consumer spending that happens in the lead up to Christmas and this research suggests that reward-based promotions deliver better sales results,” he said. 

“But more than that, the research showed that this form of promotion delivers longer term benefits by generating greater customer loyalty and the ability to use data from digital reward redemption able to be linked to membership, loyalty benefits and branded applications.”

The survey data highlighted increased customer loyalty with Australian companies reporting an average 2.6% year-on-year lift in customer satisfaction attributed to reward-based promotions. 

Further, the data revealed greater benefits from reward-based promotions compared with discount promotions including 10% greater redemption by customers, an average 8.6% greater return on marketing investment, an average 47% greater increase in sales and an average 57.5% greater increase in annual revenue.

Digital rewards were deemed even more effective with the survey revealing the main reason brands chose this form of promotion being for the ease and convenience for customers to claim rewards (53%) and the ability to personalise rewards for customer preferences (49%).