Rustic gift box with red ribbon, free stuffWe all love a good freebie, but many of us do not know why it is important for our businesses. We have probably all seen other businesses giving away free products or services in an effort to promote their brand and increase sales. But why does this work??

The simple answer is it shows off the value of your product, service or experience in a more effective way then any other method, even if it is only a small offering or a limited version.

There are a number of other benefits such as people talking about your brand and share offerings on social media.

It also helps creates a positive brand association, because we all love free stuff and it makes us happy.

Finally because making a decision whether or not to purchase an item is slightly scary, the free offering helps to remove some of the feelings around the risk and fear for your potential customer.

But the more complex answer points us to psychology and the obligation to give when you receive, this can be referred to as “the norm of reciprocation”. After we are given something we fill compelled to give something back either right there and then, or in the future.

Restaurant bill with mintsThere was a study conducted in restaurants that tested this theory. When the waiter/waitress brought the bill they also gave a gift, a mint per diner. You may have experienced this and it is surprising to find out how it affects the tips left.

When 1 mint was given per diner tips increased around 3%.

And 2 mints per diner saw tips increased around 14%.

The final experiment looked at how the gift was given, the waiter/waitress would give 1 mint each. Then go to walk away, but turning back to the table and say, “for you nice people here are some extra mints”. This caused an increase in tips to around 23%.

This little experiment showed the affect of giving a gift but also the importance to make it personal.

The obligation we feel makes us more likely to say yes and to pay more for a product or service.

One way you can use this on your website is to offer a free eBook with every newsletter sign up, “the norm of reciprocation” works here by fulfilling the need to give as you have given them the eBook and they have given you their email address.

You can also use free phone calls, free trials or if a subscriptions service offer a free entry level.

Please do not confuse free stuff with discounts, free stuff is an added bonus such as a 50% more biscuits free in a pack, a discount is the same with a smaller price 50% off your pack of biscuits. It is better to give something for free then to give a discount, as it keeps or increases the value of your product. But that is a post for another day.

So remember it is good to give free stuff and where you can make it personalised.

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