Giving away free stuff, whether it’s goods or services, can be a powerful marketing tool for any small business. But, like any other strategy, it should not be executed without a plan.
Here are some tips for using freebies to attract customers — and some pitfalls to avoid.
Use freebies to give customers and prospects a sample of your offering. “Whether it’s a service or a product, sometimes it’s hard for customers to understand the tangible aspects of what you sell until they get a ‘hands-on’ idea of what it is,” says Amol Waishampayan, digital creative director for Stream Companies.
His advertising agency has given away lessons or “boot camps” to help potential clients understand some of the subject matter before they engage in a formal relationship. “Some of these do convert into full-time engagements, meaning that some level of return on investment will exist,” Waishampayan says.
He recommends pairing a free-sample strategy with a major marketing push. “That way, you are creating this allure and a promising message of what you sell, shaping a certain impression onto your potential customers. When they get a chance to fulfill that [even with just a sample], it completes their grasp of what the experience with your product or service might be like.”
Marcia Layton Turner, author of The Unofficial Guide to Starting a Small Business adds that the internet can be part of your giveaway strategy. For example, “companies like Home Depot and Lowe’s provide free guides to building a patio or staining a deck.”
Turner says that, whereas freebies once consisted of throwaway items or inexpensive services, companies now invest a lot in offering high-quality samples of their work. “Those free special reports better have the best, most practical information in them in order show potential customers why hiring that company is the best choice. And when they do, converting a prospect to a customer is an easy process. When they don’t, prospects are irritated that they wasted their time.”
Smaller businesses might also consider offering a free video. “Prospects become customers in record speed because their confidence in you rises sharply after seeing your freebie.”
There are some key pitfalls to avoid with freebies, especially if what you are fundamentally selling is a service. “As a small agency, we used to do free projects all the time just to build our portfolio,” Waishampayan says. “However, we found that these projects had the highest rate of failure because the type of services we provide have an inherent collaborative nature with our clients. When they are not paying for it, the naturally pay less attention to it, meaning it drags on and on, and in the end everyone loses.”
He cautions, “Free samples work when done in moderation, just to give customers a tangible idea of what your product or service is like. Never give too much away or you lessen your value.”
You also want to be mindful of your budget and your time, Turner says. “You may offer a free 30-minute consulting session to wow prospects with your ideas and discover afterward that your prospect wasn’t serious after all and you wasted a bunch of your time. Or you might invest a lot of money in a free CD or workbook, pay to have it mailed, and then never hear from your hot prospect again.”
Courtenay Madsen, owner of Courtenay J Designs, started doing a monthly giveaway of hand-stamped jewelry via her Facebook page earlier this year. Every Facebook fan receives a sterling silver necklace in the month of their birthday for free. They also get a coupon code for 15 percent off their next purchase.
“I have seen an increase in Facebook fans, some 75 to 100 fans, and sales as well. Since the giveaway, I would say that I receive about four or five orders a month from people using the birthday discount code. Then there are people who are coming back and ordering for a second or even third time after that,” Madsen says.
“I was nervous that a lot of people would ‘like’ my page, get their necklace, and then ‘unlike’ my page, but that hasn’t happened. People have done a great job of telling their friends about their freebie from me. The giveaways have been worth it for sure.”