One preference, however, has stayed the same since the invention of commerce. When offered free stuff, consumers reliably and consistently take it. In fact, the power of free is so strong that it also makes consumers act irrationally. They'll leap at it, fight for it, and even pay more in response to it.
The Power of Free
A recent New York Times article offered some useful insights into consumer reactions to free offers. The piece, excerpted from This Is Your Brain on Sports by L. Jon Wertheim and Sam Sommers, examined what happens when free T-shirts are randomly tossed or shot into crowds at games.
The free T-shirts aren't worth much to begin with. Though they promote the home team, they aren't collectors' items, they're often available at concession stands, and they usually bear the logo of a team sponsor (which further diminishes their market value). Compared to average ticket costs in the NFL, NHL, NBA, and MLB, those T-shirts don't come close to covering the price of admission. Worse still, the shirts aren't even guaranteed to fit.
Nevertheless, fans—including season-ticket holders who pay thousands of dollars a year for access to every game—will jostle, elbow, and climb over each other to claim the apparel. One resulting lawsuit years ago called "shooting free T-shirts as projectiles into an unsupervised crowd of spectators" an "abnormally dangerous activity."
Teams still do launch free T-shirts into crowds, though—and for good reason. Doing so brings fans into the arena and, more importantly, keeps them there to spend their money on food, drinks, and other concessions.
The power of free extends far beyond the fields of play, influencing people in a variety of situations. Consumers will...
- Participate in lengthy surveys to get "free" movie tickets
- Choose no-annual-fee credit cards over cards with small annual fees but much lower interest rates
- Endure supermarket waiting lines just to try small (but free) servings of a new snack or beverage
Savvy retailers understand the attraction of in-store giveaways.
Wal-Mart, Whole Foods, Costco, and other stores use them as retention tools. Their regular customers now expect freebies. As a result, the real estate in these stores' aisles has become valuable enough that stores can charge brands to hand out free samples—under the retailer's logo.
Brands willingly pay that price, too. The hardest loyalty-building step is getting customers to try a product. Offering samples freely to a steady flow of prospects already in buying mode is a simple, effective way to cross that barrier.
A positive first impression also makes consumers feel more favorably toward the brand in the long term. Better yet, these complimentary gifts often create a reciprocal effect; recipients feel obliged to repay the kindness by purchasing the product.
Three Freebies You Should Offer
The problem for online retailers is how to transfer that up-close, personal, in-store experience to the comparably detached medium of online shopping.
Online customers can't try your physical wares immediately... However, there are several ways to make the power of free work for you in an e-commerce setting:
1. Free Shipping
This is the most obvious and most common use of a free online offer. It's been proven to work for retailers and shoppers alike. In addition to fulfilling online shoppers' increasing demand for free delivery, the deal provides instant savings, just as in-store samples do.
Better yet, online shoppers consider it worthy of reciprocation; they typically spend more when they know they won't have to pay shipping charges.
2. Free Samples
Just because you can't impress customers instantly doesn't mean you shouldn't try to impress them at all.
Brands have been doling out free products for decades, and online marketing channels can be far more cost-effective than direct mail. You can also target potential customers with greater accuracy, thanks to the explosion of consumer data.
If your product is valuable enough, you'll want to get it into as many prospects' hands as possible. Offering complimentary samples online will do just that.
3. Free Trials
If you're not yet offering a subscription package, you should consider one. I say that not because my firm, Clarus Commerce, tailors subscription programs for a variety of companies, but because interest in subscription-based businesses has never been higher among investors, consumers, and, in all likelihood, your rivals.
With the competition for consumers' subscription dollars growing, you need to prove the value of your service. Offering customers free access for a limited time is an established, effective method to get them to try it, as Clarus's owned-and-operated FreeShipping.com, Amazon Prime, and other offerings have demonstrated.
The idea of profiting by giving things away sounds paradoxical, but free offers are such powerful tools for retailers because they stimulate similarly contradictory instincts in consumers. Shoppers are irresistibly drawn to promises of "something for nothing," but they also feel compelled to return the favor—and then some.
Offering consumers what they love and accepting their resulting gratitude will help you build lasting, prosperous bonds with them.
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