The power of something for nothing
I’ll bet you some of the richest women in the world go to the cosmetics counter to
get the free this or that with their cosmetic purchase.
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Rich Harvard grads buy lottery tickets too.
Japanese millionaires choose which Vegas casino they’ll lose a ton of money in based on the freebies they get. No one is immune to
the lure of “something for nothing.”
Investors Business Daily recently reported on a consumer survey regarding
advertising in which a whopping 73 percent of the consumers said “freebies” pique their interest in trying a new or different product more so than anything
else.
Cosmetics empress Estee Lauder is generally credited with inventing the “gift-with-purchase” strategy used so frequently with cosmetic sales today. This is one of the very
best marketing strategies for virtually every marketer to use.
Readers Digest’s sweepstakes, Publishers Clearinghouse, etc., live off of the public’s hope of getting something for nothing.
When you consider all this, doesn’t it make sense to try and appeal to this very basic, controlling emotion?
After the trade show in New Orleans ended, I read a few comments regarding the
lack of give-aways at this year’s exhibit compared to those in years past.
Perhaps the sluggish economy was to blame… or it could be that business owners need to reevaluate the power of a carefully
calculated freebie.
At this year’s Design and Engineering Show in Chicago, I witnessed a gaggle of engineers all
vying to get free metal rulers with inch/millimeter conversion tables on the
back that were being distributed at an electronics trade booth.
Each engineer willingly submitted his business card to get his name stamped into
the steel.
These engineers tripped over each other to get the free item, while the company
providing the freebie collected a pocket full of qualified sales prospects. How
can you argue with that?
Over the years, I’ve talked with cleaners who refuse to use discounts and coupons to promote their
businesses. The truth is they could very easily boost their sales simply by
offering “something for nothing.”
Years ago, I bought a Nikon from Bob, my camera shop owner. As I was leaving the
store, he tossed me a freebie… a lens care travel kit.
“It’s perfect for a guy on the move. My compliments,” he said.
The lens cleaning kit was the first of many goodies I got from Bob. Other items
included batteries, videos, an anti-static whisk brush, a camera strap, a photo
album, a photo stand and more. He even gave me a credit card-sized mini
survival tool (with 10 functions).
Since then, he’s done many unusual things to add value to his business.
For example, he offers free photography classes to anyone who wants to learn how
to get the most out of their new equipment. At these classes, he gives away
free digital cards so attendees can test their newly acquired skills.
To my knowledge, Bob has never yet run a sale. Instead of cutting prices and
reducing his margins, he always gives away something for nothing… and it pays!
If you’d rather not discount or give away coupons, take a tip from Bob and offer a
premium. A premium is something given free or at a reduced price with the
purchase of a product or service.
Marketing guru Murray Raphel gives this advice, “When faced with a choice between reducing prices or giving something away free,
give something away free.”
For years, Murray was in the retail clothing business and he used this example.
You sell suits for $300.
Putting them on sale for even as little as 20 percent off means a $60 loss in
profit. Instead, give the customer a $25 shirt and a $15 tie — free! Your cost is only $20. You make an extra $40 on the transaction. The
greater the discount, the greater your loss.
Here’s how it works in a drycleaning plant. Most cleaners today think nothing of
offering $10 off on a $30 order. But what would they say if they were asked to
give away a $10 premium for the same $30 order? They’d call you crazy. After all, it costs $10 to buy the premium item.
However, any cleaner can afford to give away $10 in service. Right? Wrong.
At the end of the day, the $10 in free service is still $10 that didn’t make it into your cash drawer. So, in fact, $10 in free service still costs
$10. In reality, it’s $10 you lost.
But here’s the real beauty of the premium. What if you could get a popular item with a
perceived value of $10 and spend just $3 if purchased in quantity?
Two things. First, you would be exercising some marketing creativity by breaking
out of the discount syndrome that all cleaners seem currently stuck in.
Second, you’d be $7 ahead on that single transaction. Multiply that transaction by “x” number of visits and you’re big money ahead at day’s end.
Want to add a premium offer? Consider the following:
1. Be different. Don’t do what everyone else in your industry or community does.
2. Know your customers. Speak their language to find something that appeals to
them.
3. Provide something with a perceived value (like the conversion table).
Handled intelligently, premiums can boost your bottom line without breaking the
bank.
If you’d like some ideas on good premiums, call or send an email to
bill@makmarketing.net.
