Incentive Marketing Is Peaking: Are Discounts Eroding Brand Trust? 

If you ask any marketer, one of the quickest ways to increase short-term sales is through discounting. However, with all the brands promoting limited-time offers, 50 percent discounts, buy-one-get-one free, etc., the question is: are incentives hurting or helping brands? 

 Incentive marketing has been a tried-and-true growth tool for many years, but in 2026, something feels different. People are exhausted. Discount fatigue is 100% real. Additionally, brand trust (the one thing that drives long-term loyalty) is diminishing. 

Let’s examine the psychology, data, and strategy surrounding this pivotal point in marketing history. 

Why incentive marketing became a default strategy

Incentives and discounts are effective because they appeal to primary human tendencies. There are two main reasons for this, according to psychologists: 

• Loss Avoidance-The negative feeling we get when we don’t receive savings we were expecting. 

• The expectation of a reward-Elements that are “free” are desirable. 

When these factors are combined, promotions become irresistible if the offer seems unusual and desirable. Early incentive marketing felt wise and calculated because of this. It increased conversion rates by triggering dopamine in consumers. 

Unfortunately, this approach to promoting hasn’t changed in years; most companies’ first choice is to give a discount because that’s usually successful in getting an individual to purchase. Consumers are now bombarded with offers in the marketplace. 

Creative incentives: Beyond “take 20 percent off.”

All incentives are not the same. The most impactful of those types of incentives currently available have some things in common; they are all imaginative in nature, experiential rather than monetary, and have emotional connections. For example: 

• Loyalty programs with tiers that allow members to access experiences rather than just discounts. 

• Gamified contests that reward members for participation by giving them ‘community’ status. 

• Discounts and/or promotional items that can be redeemed through collaboration with artists or charities. 

• Surprises and delights to reward members on significant dates. 

When delivered properly, this type of incentive is perceived by members as being valuable, rather than desperation-driven. They build an identity and create a connection to it; pure discount incentives seldom do. 

The incentive marketing association’s view

Companies such as the Incentive Marketing Association (IMA) have been advocating for wise reward utilization for many years. Their study results show that relevance is more important than quantity when it comes to incentives. 

Numerous studies conducted by IMA have shown that when the incentive is linked to a person’s taste and a meaningful experience, the customer develops a strong bond with the brand. This demonstrates to the customer that the brand appreciates its customers, not just wants to sell them something quickly. 

Discounts as a marketing strategy: Short-term wins vs. long-term costs 

Let’s say upfront discounting is effective. It helps to speed up the buying decision process, move inventory off shelves, and re-engage customers who have not purchased from you in a while. The downside? What works today can damage your brand in the future. Three challenges to consider: 

 1. Erosion of your brand equity: Customers begin to see your brand as a commodity driven by price rather than a choice based on value when discounts become the standard. Premium placement is negatively impacted. Expectations are reset. Before you know it, consumers will only want to purchase when it’s affordable. 

 2. Erosion of consumer trust: Authenticity and consistency are the foundations of trust. Frequent sales can undermine trust in the brand’s value offer and indicate instability (“Why am I paying more today than yesterday?”). Discounting places too much emphasis on price at the expense of the promise, because confidence is based on the promise. 

3. Promotion fatigue: Frequency is more important than just discounts. Customers grow numb when every brand sends offers. Opening rates decline. Engagement drops. People stop paying attention. In crowded markets, marketing fatigue is becoming a bigger problem. What used to be exhilarating turns into noise. 

4. The cost of brand loyalty drops: Savings-based loyalty is enduring—until a greater deal appears somewhere else. Preference, not cost, should be the foundation of true loyalty. If discounts are what keep clients loyal to you, they can be taken away by competitors who have more money. 

A new playbook: Incentives that build trust 

To what extent are discounts reducing your brand equity and surety in your business? Smart marketers have begun to look for alternatives to traditional discounts by creating new ways of doing things. Here are some alternative incentive systems to help businesses and their customers establish honesty, trust, and growth: 

Value-first rewards: Although you may be thinking of offering “20% off”, consider giving your prospect free consultations or providing them with exclusive access to your content or giving them early access to your new products. These value-added services do not take away from the price point of your product. 

Experience-driven rewards: Instead of offering discounts, they provide customers with an experience. Examples: Invitations to VIP events. Access to an exclusive community. Limited edition collaborations. The memory/association created from a one-time event is much stronger than that created by a discount. 

Cause-linked rewards: Many consumers are passionate about specific issues, and they want to align their purchases with their values. By providing a reward that aligns with their values, you can help establish your company’s values while deepening the emotional connection with the consumer. Examples: For every purchase, donate a meal; for every purchase that reaches a particular milestone, plant a tree. 

Tiered loyalty programs: From flat discount programs to tiered programs (bronze, silver, and gold), establish an aspirational loyalty program using tiered prize eligibility to develop an aspirational loyalty vs. discount-seeking customer base. 

Case in point: when incentives work without cheapening the brand 

Look at brands that have mastered creative incentives: 

NikePlus: Exclusivity Over Discounts: Early access to limited-edition releases, community fitness activities, and customized training materials are some of the ways NikePlus honors loyalty. Nike creates a strong sense of community by prioritizing exclusivity and experiences over price reductions, thereby increasing lifetime value and fostering a deeper connection. 

Sephora Beauty Insider: Loyalty as Community: Beyond points and discounts, Sephora’s Beauty Insider program grants early access to debuts, invitations to exclusive events, and membership in communities of beauty experts. The result is loyalty that goes beyond savings and is based on belonging and individuality. 

When to use discounts—and when to skip them

We’ll continue to see discounts. Discounts are ideally used to: 

• To launch a new product line 

• Clear out seasonal inventory 

• Provide rewards to new/beginning customers 

As important as discounts may be to marketing, they should not be your primary form of incentive/s. Think of discounts as amplifiers, not building blocks. 

The bigger picture: Trust as the ultimate ROI

While discounts may bring customers in one time only, loyalty is based on building relationships with customers based on trust, authenticity, and providing a value proposition that cannot be easily copied by others.  

Brands that use incentives to increase value rather than providing lower prices will result in stronger long-term relationships with their customers. Discounts should be used to enhance your marketing strategy, rather than simply being used to cut the price; they should be your last option, rather than your first option. 

Trust trumps transaction… 

Cut to the chase

The use of incentives is changing. Our society is changing from one in which consumers are just consumers to one in which they are believers. Brands will develop equity, strengthen trust, and garner loyalty that outlasts any temporary promotion if they use innovative, real rewards rather than cliched discounts. Because in the end, people don’t just want a deal. They want to feel valued. 

Frequently Asked Questions (FAQs) About Incentive Marketing