No one ever became rich by giving things away for free… or have they?
Although it’s counter-intuitive, a well thought-out campaign that gives away a “freebie” can make you money. Increases in leads, customers, and sales have all been proven to result from giveaway promotions, and all for a fraction of the usual marketing techniques.
Using social media
How many times have you seen this or something similar on Facebook; “Tag a friend and you could both be in with a chance of winning!”
Or perhaps you have seen it on Instagram – a post encouraging you to follow an Instagram account to go in the draw for a giveaway?
It’s a brilliant marketing strategy because you get the customer to do all the work. By giving away a product or service, you encourage people to pass the word on, spreading your brand, merchandise and website through social media without paying a penny for it.
The more expensive the prize, the more people will want to win it, and the more shares and likes you’ll get. It’s self-perpetuating marketing, and the leads/conversions you’ll make from this one promotion will more than pay for the giveaway itself.
Gifts for everyone!
But that example is more like a competition than a giveaway. Is there any reason to give all of your customers something for free? Ask Coca-Cola.
In 1887 they gave out what is widely agreed to be the first ever coupon – a free glass of Coke. This encouraged people to both drink it and vendors to replace it. It was an unprecedented success, and within a few years the company had grown nationwide, and today Coca-Cola is the best-selling drink in the world.
The psychology behind free items
People are emotional buyers, and tend to purchase something on how it feels rather than the logic behind it.
Studies have proved that consumers would rather get something for free than get a discount, even if that discount is worth more.
This happens because people perceive getting something free as a gain, while a discount is viewed as just reducing the loss paid out of pocket. We’d rather gain than lose, even when it’s not in our best interests financially.
How to increase leads with a giveaway promotion
If you’re planning on giving away something to generate sales, then that’s exactly what you must do – plan it.
How you do it depends on your niche. Giving away free samples only works if you sell physical items small enough to post. It’s not much good if you’re an accountant. If your business is an online service, then webinars, free trials or subscriptions is a good way to go.
The key is to give away something that people in your consumer group actually want. If you sell skateboards, don’t offer free moisturiser testers. If you do offer a free skateboard to one lucky winner, then every skater who comes across your Facebook page will enter, tagging their friends along the way.
If just one of those friends tagged buys a board, then you’ve made your money back. If ten of them do, then you’ve made a handsome profit from one generous giveaway.
And it doesn’t have to be a physical gift. Downloadable content such as guides, templates and coupons can drive engagement of your brand. But it must be quality content. The more value a customer gets out of a freebie, the more engaged they will be in return. People are now wary of giving out their emails for fear of spam, so if you want them, you’ll need to give them something worthwhile.
This is how you generate leads online through giveaways. Offer something of genuine value, and in return you harvest email addresses of people who are interested in your service or product. This then leads to further conversations with potential customers, and eventually sales.
When it’s done right, offering a freebie can cultivate brand loyalty, generate leads to participate, and help you reach a whole new group of potential customers. And don’t forget, a good freebie-campaign will get your leads to fill out a form, so you have their details for further marketing.
Marketing is a key component of any business, but for a small and medium enterprise, finding the balance between spending and return on investment is tricky.
And marketing has changed a lot in recent years.
Not so long ago, marketing was about advertisements in magazines, radio, and TV. Only a few businesses were spending money on online marketing, and even then it wasn’t a significant percentage of their budget. Social media wasn’t even a thing people considered when planning a marketing strategy.
How to work out a budget
Five years ago, about 25% of the average company’s marketing budget was allocated for online use. Today it’s almost 50%. That’s because businesses have realised that with the right strategy, they can get more return online for less spend.
But how do you work out what to spend in the first place?
The answer is to work backwards.
Work out what each customer is worth to your business and work your way back through the process of winning a new client. Once you know how much the average client spends with you and the margin you make on that spend, you can decide how much it’s worth to attract new clients.
The Al Bundy Scenario
Here’s an example. Let’s say you sell shoes, and on average each customer spends $100 when they visit your website and you make a 10% margin on that spend.
Ok, so now we have a figure for each customer. The question now becomes, for each visitor who comes to your website, how many of them actually buy shoes? In other words, what’s your conversion rate?
Let’s say it’s one in ten. This means that to break even, you can’t spend more than $1 per visitor ($100 spend times 10% [your margin] times 10% [your conversion rate])
Of course, there’s no point in breaking even, but this is how you work out the value of each visitor. Once you have these figures, it’s then possible to create a budget for your digital marketing – a starting place to increase sales and profits.
Ark Advance can help
When it comes to digital marketing, we can help you create a budget that makes sense, formulate your online strategy, and set goals for conversion.
The next step is to bring that conversion rate up, so instead of one out of every ten customers buying shoes, it’s one out of eight.
On top of that, we work on bringing the average value of a customer up, so instead of spending $100 they’re spending $120.
This is how you slowly use the internet for your business, by building up from a solid foundation and setting achievable targets and goals.
Contact us today if you would like to know more about how we can help your business with its digital marketing strategy.