by Alex Palmer | September 27, 2016

New research finds that gift cards and personalization can make for powerful consumer incentives -- but get that type of customization wrong, and instead of boosting loyalty you'll alienate customers. The study, titled "Incentive Research Paper," came from digital rewards platform Virtual Incentives, and looked at how incentives impact brand perceptions, along with the influence of aspects such as gender, age, income level, and political affiliation.

The report found that just two out of five respondents had received a personalized incentive, but 56 percent of those said it raised their esteem of a brand. A majority of respondents said they felt a personalized incentive made them feel respected as a customer. The findings also pointed to a slight risk in brands that personalize their incentives, with 16 percent of respondents saying they found it "creepy." 

This could be mitigated by the type of personalization brands offer their customers: 63 percent of respondents said they preferred a reward based on purchase history, while far fewer cited purchase location (24 percent) or use of name (23 percent) as personalizations they would rather have. 

"The majority of people in our study preferred incentives that were personalized and this approach improved perceptions of brand engagement," said Michelle Andre, vice president of marketing for Virtual Incentives. "Customers felt that the brand really cared about them when receiving a reward that was geared toward their shopping and browsing histories. Thoughtful personalization approaches will help brands fare better when it comes to consumer engagement and loyalty."

Also affecting award preferences: education and income levels. The higher those were for consumers, the greater interest they expressed in incentive programs of all kinds. Incentive programs were also found to correlate with more expensive purchases -- the research found that 20 percent more of consumers with an income over $50,000 said they would purchase a more expensive item if they received an incentive.

Regardless of income or education level, the study found that about one-third of consumers preferred open-loop gift cards (such as Visa- or MasterCard-branded cards that can be used at any retailers that accept those forms of payment). 

"Customers appreciate incentives that are convenient for them," said Rebecca Brooks, founder of Alter Agents, which designed the study and provided analysis. Brooks pointed out that one in three of the respondents to the study said they preferred an online prepaid gift card, such as Visa or MasterCard, that could be used at any online retailer over any other type of incentive. "We found that Incentives that put customer convenience and needs first are the most powerful."

In addition to Alter Agents, Virtual Incentives also partnered with research technology firms Voxpopme and MindField Online on the study.