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Why Giving Away Freebies Can Help Your Business

May 18, 2017 | Rita

While it may seem counter-intuitive at first, giving away freebies is a great and easy way to increase business. From samples to full products, anything you can offer to people for free will make a lasting impression and cement your company’s name and image in customers’ minds. Remember; consumers love freebies. Here are some of the reasons why giving away freebies is a boon for any business.

Recipients Feel Obligated to Spend More

There is a principle among marketers known as the ‘reciprocity principle’, which simply states that the sense of obligation to reciprocate a favor occurs even if that favor was never requested in the first place. By offering consumers something for nothing, you create a subconscious obligation from them towards your company. A great example of this is Free Slurpee Day, which is an event run by 7-Eleven.

On free Slurpee Day, customers can walk into any 7-Eleven and get a free 7.11 ounce Slurpee, no strings attached! It might seem like, while this is obviously good advertising for 7-Eleven, it would ultimately cost them money, although considerably less than most nationwide advertising campaigns. But on the contrary, according to USA Today Slurpee, sales in fact increased by 38% despite the chain giving away over 4 million Slurpees.

This sales boost was driven by two factors; firstly the free giveaway enticed people who otherwise wouldn’t have normally shopped at 7-Eleven to enter the store, and secondly those people made additional impulse purchases while in there. Many people also returned after trying a sample Slurpee to purchase a full sized one.

People Who Receive Something for Free Are Willing to Pay More for It Later

One of the oldest tricks in the retailer’s handbook is the use of psychological pricing. We automatically assume that cheap products are inferior to more expensive ones. However, more recent studies suggest that this goes even deeper and that when a product is given away for free alongside a purchase of an expensive, high quality or luxury item, consumers will be willing to pay more for the free item when sold on its own. This is because when we see an item with its price tag we automatically subconsciously assign it a value based on the dollar figure, but with an item for which this figure is hidden or less prominent we assign it a value based on the item we are paying for. Thus, a freebie given away alongside a high quality item is considered to have a similarly high value.

We Prefer Getting More to Paying Less

Discounts are a great way to drive up business and the losses incurred as a result of discounts are offset by the increased volume. This is partly due to the fact that consumers prefer getting more to paying less; when items are discounted, consumers will buy more of them and end up spending more than they would have without any discounts because the extra money spent still results in them ending up with more goods. Similarly, when offered freebies alongside their purchases, consumers will buy more. A great way to run such a campaign is to make your own certificates that customers can redeem when making a purchase to receive free goods.

Ultimately, giving away freebies results in greater profits and consumers being more willing to splash out on your products. It is a great way to increase business and raise your profits.

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Categories: Life

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Comments

  1. Dena @ Batch of Books says

    May 18, 2017 at 8:18 pm

    Great points! I’ve seen a lot of thoughts on freebies, but I haven’t heard of the things you pointed out. Like, I didn’t know that people would pay more for a product that was given away for free alongside something expensive. Interesting tactic!

  2. Angela Saver says

    May 19, 2017 at 12:50 pm

    I agree its a great incentive to get customers! Great tips!

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