We all love getting something for nothing but are those business free giveaways really worth the hassle and the cost, or do they just get thrown straight in the bin?
At first sight it might seem counter intuitive to spend money on products which you will hand out to people for free, but there is a science behind it and different types of gifts illicit a different response.
Thank you gifts to customers
One of the obvious business gifts are thank you gifts to existing customers – these could be sent out after a purchase but can also be sent out annually just in recognition of their ongoing customer loyalty.
Some companies choose to send out gift baskets or hampers to all customers at Christmas, for example, as a gesture of goodwill and acknowledgement of their loyalty.
A free gift like this works well to remind customers of your brand and keep your company at the forefront of their minds. You can even get items with your branding on when you buy from promotional goods companies such as promotionswarehouse.com.au
But the main free gifts which your business should be giving away should be ones which will bring in new customers:
A free sample of your product to try
When consumers are given a free sample and actually receive a product into their hands, research has shown that they respond in a surprising way, almost feeling obligated to actually buy the product which they have just been given free.
Psychology shows that even when we have no requirement to accept the free sample, consumers very often react by then going and buying the product they have been given free.
A free offer day
Many companies now offer a “free theme day” so coffee shops would offer one free coffee to every customer on a particular day – it has to be a no strings offer, rather than buy something and get something else free.
A drinks company in America recently ran this type of gift offer and found that while they gave away millions of drinks, their sales went up 33% on that day because people who got a free drink then bought an even larger one as well.
It’s the psychology that we think if we get something free we should give something back.
A free gift with a luxury paid-for product
Research has shown that people perceive low-priced items as of lower value and quality potentially, whereas if you give away a free product, with something that has a high price tag, the free item is also viewed as of high value and quality.
So if you are launching a new product line then giving away free versions with a higher value product is a great way to introduce it to new customers. This way they will still perceive the free item as being of value, and are far more likely to pay a higher price for it again, further down the line.
An offer to receive more product for free
Along the lines of viewing cheaper items as being of less value, research has shown that consumers also view discounts negatively and see it as just a reduction of a cost.
But on the other hand, if people thing they are getting more of a product for the same price, they see that as added value, so rather than offer 50% off, you should offer 50% more free.
In a marketing study, consumers were offered the choice of a discount off their morning coffee, or a percentage increase in the amount of coffee and they all opted for the extra coffee, even though the discount was actually better value.
A mystery gift when you buy a product
Consumers love the idea of receiving a free gift from a business, even if they don’t know what it’s going to be, and they are more likely to buy the product to receive the gift, than if the gift wasn’t offered at all. This is a gift style often handed out by perfume and make-up companies and it works by creating a feel good factor for the consumer.
Studies have shown consumers will spend more, to get the mystery gift because it adds that fun factor to the purchase and creates an emotional spending response.
Giving out gifts from your business to potential customers can have a real impact on sales and on customer retention, so while it may appear on the surface to be a waste of money, much research has shown consumers respond very positively to free offers.
Giving away free gifts also creates a feel-good factor among customers and leads to them talking about the products on social media, whereas giving a voucher or discount coupon, doesn’t have the same impact at all. So companies looking to enhance their word of mouth reputation really need to look into free business gift giveaways.