Freebies, free samples, bonuses, welcome offers, and new customer discounts have been around for decades. On the face of things, these additional gifts to customers offer a way for a business to get its foot in the door and showcase its branding as an accessible and welcoming brand. However, there’s an obvious cost to this kind of marketing practice. All of this costs you money compared to what could be earned without the offers.
So, are free samples and offers good or bad for your business, and what needs to be considered before committing to offering bonuses and freebies?
Pros of offers for new customers
The primary angle to argue in favour of freebies and discounts is the principle of reciprocity. Reciprocity is a social construct that’s ingrained in the majority of the population and was key to the development of human populations into civilisations. The short form is that those who receive gifts or things of value feel inclined to reciprocate in an appropriate way.
When a customer receives a free sample that they like, they feel more inclined to buy the product – and perhaps a few variants of the product – that day. It’s like having a subtle moral debt, and businesses have leveraged this psychological inkling for a long time. Whenever you’re given free samples in a supermarket, it’s a brand looking to bank on reciprocity, as Verywellmind details, and most of the time, it works.
Reciprocity doesn’t just have to be free samples, though. Discounts can be just as effective if the customer feels as though they’ve received something of value. Free samples and discounts can do more than merely offer a boost to sales. They can also serve as valuable tools for product testing and market research. Offering new or perhaps odd products as free samples can help raise brand awareness and brand perception. Of course, for many businesses, the roughly 35 per cent chance of samples converting into sales is the big hook.
In October 2023, Bloomberg covered a resurgence in the art of the freebie. In the face of declining returns from online advertisements, major brands like Mondelēz (the brand behind Cadbury, Lu, and Côte d’Or) turned to going into stores to offer free samples. For businesses offering physical products, having a stand and giving out whole or samples of goods can have a positive impact on sales that day and get some good press for the brand.
Online, it can be a little trickier. Offering a freebie without a purchase would initially seem folly, but brands like Simply Cook have found success with giving freebies to those who’ll pay the postage fee. It gets easier with digital products. Online press like Forbes offer a few free reads each month, while entertainment platforms like Betway give bonuses to allow for more free play. Newcomers will get bonus funds or free spins for the games to try out the site and see if it’s for them. With these, the value is clear as the value is usually stated, such as a £10 bonus.
Cons of offers for new customers
Everyone who considers committing to a marketing scheme of freebies, discounts, or bonuses for newcomers always turns an eye to the potential costs. Whenever you give something away as a business, there’s a fear that reciprocity won’t kick in and a loss will be made. For small or new businesses, this can be extremely costly, so making the right offering that encourages repeat custom is essential.
On top of this, there’s a line of thinking that offering your products for free cheapens them. It’ll get your attention and raise some awareness, but people will naturally think that if the products can be given away for free, they’re perhaps not really worth their RRP. The price attached and held tells customers how valuable your product is, and so in some circles, like in luxury markets, samples can harm the brand.
For those who trust the stats and reciprocity principle, making this kind of plan work requires some delicate work. Discounts are usually the safer bet because you’re still getting a return on sales. Freebies can be very costly if the majority of those who take one don’t consider it to be valuable. Research has found that waiters and waitresses can see their tips increase by 23 percent if they offer a second set of mints. So, sometimes smaller gestures can be effective enough to encourage reciprocity while not breaking the bank in the meantime.
Freebies can be a daunting prospect, but if done well, they can work incredibly well for sales and branding.