What is the power of Free Offers?

Free sample, Free trial, Free first month subscription, buy 1 get 1 free, free for the first 100 to sign up – how many of these ‘free’ offers do you see on a daily basis?
Quite a few right? ‘which clearly demonstrates the adoption of freemium marketing and sales strategies are highly efficient at doing their job in swaying purchasing behaviour.

Free offers and free items have been used historically for centuries across all industries. Grocery retailers might offer a free food sample, music streaming services might offer a free stripped-down product and subscriptions might offer a month’s trial if you sign up for a longer period.

On paper, this might seem wasteful or more so an avoidable cost for firms. However, there could be a number of reasons why companies would want to offer free trials:

Dissatisfaction is nullified
Builds consumer spending potential
Increases perceived value for money
Creates confidence in the brand and in the consumer’s decision

The risk of dissatisfaction is nullified

The right side of the human brain, responsible for more rationale thought, thinks in logical ways, and from an economist’s point of view, the opportunity cost of taking something for free is very appealing, especially when the offer is for something which holds high value and/or addresses key wants and needs. This could eliminate the risk of dissatisfaction for the consumer if the product or service they are receiving hasn’t cost them any money, as the perceived value is much higher.

A great example of dissatisfaction being eliminated is offering free add-ons for meals. The consumer who purchases the meal isn’t expecting a freebee so when they are served their free dessert perhaps as a birthday surprise they feel warmer to the brand(assuming they enjoyed their meal). As an added value component the consumer might then feel obligated to return to the establishment simply due to reciprocity.

Reciprocity is also going to have an effect on the consumer emotionally. Having just received something for free (or having something done for you for free) makes customers instinctively feel obligated to do something in return, such as going on to subscribe to the service they were offered or purchasing the product which they just sampled.

Source (https://chartmogul.com/blog/make-trial-to-paid-conversion-rates-meaningful-with-cohorts/)

Consumer spending increases

When offering discounts, coupons or free deals a consumer’s purchasing power will increase in a way, as they will likely be willing to spend more money over a longer period l. In some cases, consumers justify making more purchases due to having received something for free, flexing their purchasing power and getting the best deal for themselves.

With consumers purchasing more stock during discount periods and free offer periods, the power of free demonstrates how it can boost sales and revenue.

Cash points or rewards

Another valid strategy for implementing free offers would be doing reward/cash rewards that come with making purchases.

Local coffee shops and breweries may give you a small card that gets stamped with every drink you purchase. Eventually, after a certain amount of coffee you might be given one for free for being a loyal customer.

This incentive can really help when competing with local competitors. Consumers get drawn into making repeat purchases and returning to the business that is offering them a free drink after X amount of purchases.

In most supermarkets owning a loyalty or rewards card can have the same effect. With a membership card to the supermarket, you might be offered discounts on certain products or cash points. With cash point rewards consumers will eventually be getting products for free as they must have already spent some money at the supermarket.

This psychological tactic of getting consumers to make several purchases from the business before being given something for free builds on the reciprocity principle. As much as humans are instinctively drawn to show reciprocity for receiving something for free they will also feel the need to be given something in return for their loyalty. This is exactly where cash points and rewards become effective.

Why bother trying everything for free?

Indeed that is the final question to ask at this point. If everyone offers something for free, why bother trying it all? Most free offers come with a purchase or an engagement catch or may be difficult to opt out of. Some don’t and offer an easy opt-out (if you remember to cancel the subscription or your card is charged following the trial).

Before considerable thought is put into a freemium or free giveaway strategy the overall product offering and relevancy of creative should first be scrutinized. Paperplanes have run extensive tests that outline that in some instances no extra incentive at all (let alone free) is required to trigger a purchase. Simply getting the product combinations right on your tangible media can drive greater conversion and strong er basket value!

Paperplanes programmatic direct mail utilises website customer data and activity to automatically create personalised promotional content which is sent to the individual’s homes shortly after their digital interaction. Mixing the best of digital data use whilst cutting through competitive online space and bidding costs and getting almost instantly read by the recipient.

Paperplanes programmatic campaigns work best with freemium or % discounts where campaign results show staggering 30% conversion rates, 500% website traffic increases, and 5x cheaper CPA compared to social media and email marketing.

If you want to learn more about which promotional offers may work best for your company and how a promotional campaign can result in the form of programmatic direct mail, get in touch with the button below for a free consultation!