There is something with the word FREE that attracts audiences from here and yonder like moths to a flame. They can't help it -- if they pass on the offer, they will be bothered for having to pass up an opportunity to get something without paying for it, even if they don't really need that product! Such is the Power of Free.
How Free Marketing Affect Us Psychologically
Why Does Free Work?
What Impact Does Free Have on Businesses?
Types of Free Marketing Strategies
How “Free” Leads to Profits
What Happens to Free When There is No Product Being Sold?
When Free Doesn’t Work
Why Customers May Avoid Free
6 Steps to Make Free Work for You
Examples of Effective Free Offerings
With the number of products and services available in the market today, it can be hard for brands and businesses to convince customers that theirs is the one to choose. This is why they experiment with several different marketing strategies, trying to gain people’s attention for even a few seconds, during which they can convince them to try their offer.
One of the most popular – and effective – marketing strategies can be seen in the word “free”. The concept is simple – when a consumer hears that something is free, they’ll be interested enough to give the product a try, even if it’s not something they typically use. After all, what have you got to lose? There’s a possibility that you might actually need that product in the future, so best get one now while it’s free!
While most businesses intuitively understand that free can be a powerful marketing tool, they tend to overlook just how powerful it can actually be. But how does “Free Marketing” really work?
How Free Marketing Affect Us Psychologically
Behavioral economics is essentially the study of psychology as it relates to the way economic decisions are made. It can be applied to the choices of both individuals and institutions, though we’ll mainly be looking at individual decision-making as we look at the power that the word ‘free’ holds.
Our buying decisions are ultimately our own – while formulae and other people can suggest what would be the better option to spend money on, we’re the ones who make the final purchase. This is why businesses spend money on marketing to individuals, attempting to find a way to resonate and connect with them.
Offering free products is one of the best ways to capture attention. The word free has a strange impact on a person’s psychology – it creates an emotional reaction, not just a logical one. As behavioral scientist Dan Ariely notes, saying a product that is free often makes us value it more, not less, during contact point (or when you are being sold to).
When making other purchases, we often think of the price as having a direct impact on quality. Higher-priced towels are softer than lower-priced ones. Higher-priced cuts of meat are tastier and more desirable.
When it comes to free products, however, this consideration tends not to hold true. Free is a category in and of itself and is thought about very differently.
While many markets think that discounts are the most convenient way to grab a potential customer’s attention, research reveals that free is actually far more compelling an offer. Customers are more likely to be drawn to a particular product if something else is offered with it for free. The Economist noted that, in one experiment, researchers sold over 70% more lotion when offered with a free product than when offered with an equivalent discount.
Why Does Free Work?
There are a number of reasons why free marketing works on customers, and it usually involves emotions. After all, we already know that it’s the emotions that are the main driving force behind a purchase.
Here are the primary emotions that Free Marketing is tugging at:
1. Sense of Fulfillment
One of the major reasons that free works on people are its effect on a person’s emotions. Through research, Dan Ariely argues that free products can actually make people feel happier. This increased sense of fulfillment affects their decision-making process, leading them to spend money where they usually may not have done so.
To display this argument, Ariely and his associates designed an experiment revolving around two pieces of chocolate: a lower-priced Hershey and a premium Lindt.
Initially, Lindt was offered for 15 cents, while Hershey’s was offered for a cent. Being known as a luxury brand, almost three-fourths of the respondents chose Lindt while the remaining chose Hershey’s.
Afterward, the price of both chocolate candies was reduced by a cent, leaving Lindt 14 cents and Hershey’s for free. Almost 70% of respondents switched to the cheaper brand! This means when something is free, it is valued more than the other.
While this displays that free products can indeed impact a person’s sense of fulfillment, it doesn’t show its impact on buying decisions. In order to study this effect, the researchers added a follow-on step to the chocolate experiment.
Another example of the effect that free products have on buying habits can be seen in the National Donut Day campaign in the United States. Originally created by the Salvation Army in 1938 to honor war volunteers, the event has since become a truly national event.
It is celebrated on the first Friday of June each year, with participating shops offering customers a free donut. Various national chains like Krispy Kreme, Dunkin’ Donuts, and Walmart participate, each featuring different donut-related offers.
Some brands offer free donuts without purchase, while others require a small purchase to avail of the offer. No matter what, though, most donut shops are crowded, with lines stretching for hours.
This can seem like counterintuitive behavior on the part of shoppers. After all, donuts themselves are a relatively inexpensive product, and spending hours in order to get one seems more like a waste of time than a good deal. That’s where the power of free comes in – the idea of getting something for nothing gives us such an emotional charge that we overvalue the free item and are willing to engage in unusual buying patterns in order to make the most of the offer.
Another reason the power of free is effective is due to the principle of reciprocity. This concept states that when a person receives something, they feel obligated to provide something in return.
When businesses offer customers something for free and are taken up on the offer, the person is likely to want to do something in return for the business. This is where sales come in. For example, by offering a free sample at a grocery store, a customer feels indebted and obligated to make a purchase, even if it is of a different product. As Ariely notes, reciprocity is an extremely strong instinct. It affects our behavior as customers even when we are not conscious of it happening.
What Impact Does Free Have on Businesses?
Like all marketing techniques, free is not the perfect option. While it may be positive for customers, the view can seem very different from the company’s side of things.
In business terms, nothing is free. When it comes to physical products, companies invest in making and storing the product and marketing it to consumers. Websites come equipped with server costs and site costs.
These, of course, do not take into account other related costs, ranging from payroll to marketing. Every product has a monetary value – if only to the business.
While free is an important component of marketing, it’s important to note that businesses should be careful not to over-leverage themselves by offering products for nothing. Free comes with an assumption that consumers will be drawn in and agree to make a purchase – of a related item or of the same item, but a purchase nonetheless. Businesses need to be able to offset the cost that free demands from them through these modeled sales numbers.
When carrying out Free Marketing, make sure that the cost of providing something for free equates to (or if possible, less than) the average cost of customer acquisition. That is the main purpose of Free Marketing anyway -- to acquire new customers and keep current clients happy.
Types Of Free Marketing
When we say free marketing, it’s not just giving something away for free. In order for you to maximize your products’, services’ and offers’ exposure, you need to employ a specific style. Here are some of your options when using free in your marketing strategies:
1. Free Samples
This is the most typical style of free marketing. Giving away free samples falls under Experiential Marketing, wherein the business gives a free sample or a free taste so that the product or service will leave a definitive mark on the consumer.
Membership-only retailer Costco is well known for offering free samples of products, to the point where people have been known to claim that they ate an entire lunch made up of free Costco samples. However, the real question is just how effective these samples are.
The effect on sales depends on the product in question, as well as the shop they are being sold in. However, sales have been known to increase as much as 2000% for some products and retailers.
When it comes to Costco, a report by The Atlantic shows that free samples significantly boost sales – by up to 600%, in some cases – they also make it more likely that a shopper will choose that particular product over something else. For example, when it came to yogurt, nearly 60% of people who sampled the product chose to buy as compared to only about 15% of people who didn’t sample the product.
2. Free Trials
Although very similar to Free Samples, Free Trials are for offers that are not physical products. It could be of services and intangible products.
A good example would be a free massage or spa sessions in a spa or health club. When it comes to intangible products, free trials could be free usage of an application for a limited period of time or free coins from an online casino.
Businesses benefit a lot from free trials because they get something in return: the customer’s contact information. A minimum of two pieces of information is required. The first one is the name, and the second one could be a mailing address, an email address, a home number, or a phone number. This gives the company an opportunity to reach out to a potential customer in the future.
3. Buy X Get Y
This style is a great way to introduce a new product to an existing clientele. Let us say you have a well-loved product that already has a steady stream of customers that regularly buy it. Then you have a new product that you want to introduce to the same customers. You can bulk them together in a Buy X Get Y promotion.
Giving the new product for free to those who purchase your bestseller has three benefits:
- Your regular customers will be happy to receive something for free. It is like thanking them for their loyalty to the brand.
- Your regular customers will learn of your new product and will have a chance to test them out for themselves.
- New customers will be interested in the offer because they will get several products at a reduced price.
4. Free Shipping
Several different businesses around the globe offer free shipping, most notably Amazon. There’s a good reason for this – while free shipping means that businesses must bear the brunt of logistics costs, it positively impacts sales as it encourages repeat purchases.
By introducing free shipping, Amazon saw an increase in sales around the globe. This effect holds true for other retailers as well. A 2014 Business Insider report notes that over half of all U.S. eCommerce orders were paired with free shipping. Stitch Labs shows data that indicates that free shipping results in a 10% revenue boost for retailers.
One way that businesses use free shipping to increase sales is by adding a free shipping threshold. In such a situation, not all shipping is free – it is only offered on orders that exceed a certain pre-set threshold. Because of this threshold, buyers are encouraged to purchase more, increasing the average order value.
NuFACE, a skincare brand, reported data that showed that adding a $75 free shipping threshold increases orders by 90%. Aside from the number of sales, it also had an impact on average order value, with this metric showing a jump of 7.3%.
5. Free Gift
Unlike free samples where something is given without the business asking for anything in return, free gifts are provided given that the customer qualifies.
For instance, Starbucks in various sites in Asia offers Starbucks planners and travel organizers for free, with a caveat that you can only get one once you buy a minimum of 18 coffees from the popular coffee shop!
Customers track their purchases using unique stickers placed on cards. Whether you are a regular Starbucks customer or an infrequent buyer, you may very well be enticed with the Moleskine planners, complete with stickers and even a whole calendar year of Starbucks coupons (which ironically will also bring you back to their shop).
Whether the customers actually use these planners still remains to be seen, but the promotion is so wildly effective that the company uses it as an annual promotion during the holiday season.
Another example of a free gift seeing extraordinary success is Wrigley’s Chewing Gum. The company was selling baking powder in 1892 when William Wrigley Jr. thought to include two free packs of chewing for every can of baking powder. The chewing gum became so popular that the company switched from selling baking powder to selling chewing gum!
How Free Leads to Profits
Free items sound like a great way to lure in customers, but do they really make an impact on a brand’s bottom line?
The short answer? Usually, yes.
There are a number of ways that brands can leverage the power of free to increase sales. There are several reasons for this increase:
- Customers are more likely to make a purchase after getting a sample for free.
- Customers are likely to place a higher value on it than they would have had they originally bought the product. This means they are more likely to pay a higher price for the product down the line.
- Customers value free items more than discounted ones, creating a larger audience for the product.
- It is possible to use free items to upsell other products. For example, a free shipping threshold encourages buyers to spend enough to meet it, and free gifts for purchases over a particular amount make it more likely that people will buy enough products to reach that number.
- Free items make it more likely that recipients will spend word-of-mouth information about the brand, allowing businesses to reach multiple potential customers without spending extra for marketing.
Why are You Being Offered Free When There is No Product Being Sold?
Aside from being leveraged to sell products, some businesses seemingly advertise services and products for free without receiving any obvious benefit from it. There are a number of reasons that this can be beneficial to businesses:
Gathering relevant information associated with the service.
An example of this can be seen in HubSpot’s WebSiteGrader. This free tool allows people to compare their websites to those of competitors and receive an analysis immediately. While it doesn’t seem like HubSpot is selling you anything through this tool, they are, in fact, gathering personal data such as your email.
This information will later be used to generate leads that are more likely to pan out than methods such as cold calls and emails. This falls under the Free Trial style of marketing.
Attracting new customers.
One example of this is seen in law firms. Most firms offer some form of free consultation. This allows them to draw prospective customers to them instead of having to pay marketing fees in order to reach them directly. In such a situation, free consultations serve as a form of passive advertising – and often even result in tangible clients.
Earning through other means.
A variety of websites advertise and offer all kinds of services for free. While these seem to offer nothing but positives to users, there’s actually a hidden motivation. These websites allow owners to gather personal data similar to what HubSpot has done with its WebSiteGrader.
This information can range from a user’s email and social media profiles to their name, phone number, mailing address, and even buying habits. Instead of using this information to generate leads, websites can then sell this information to other businesses, allowing them to make a profit.
Another way for such services to earn is by showing you advertisements. Advertisers pay them to get their products displayed, and you get a free service in exchange for “watching” the ad.
The same concept applies to free programming on TV. You watch a television show for free, in exchange, they show commercials in between.
When Free Doesn’t Work
While free can be an effective marketing strategy, it is not a universal one. In essence, not everything offered freely can yield positive results as there are cases in which such a strategy can backfire on the business.
Here are some instances when Free Marketing might not work (and we are saying “might” because there is still a chance that it’ll work when balanced with the right strategies):
One of the major things that businesses must determine is who their target audience is. If the product they offer does not have mass appeal, free samples can have more of a negative effect than a positive.
This is because people tend to make use of free offers even if they have no need for the product or have no plans of using it. By offering something for free, businesses essentially attract samplers who likely do not intend to actually spend money on the product.
Roger Dooley illustrates this concept with the help of a simple example. Consider a company that sells premium cat food. A customer who does not own a cat may decide to take a sample and give it away to a friend or use it to feed stray cats. They will not, however, convert in terms of a paying consumer for the business.
Instead of marketing the sample as free, charging a small fee – just a couple of cents and significantly lower than market costs – will help the business reach its target audience. It will ensure that uninterested people don’t take advantage of the offer and make it more likely that people trying the samples are ones who will convert to actual sales.
Another situation in which free may backfire is in the case of products where the consumer must return to the product over a period of time. Entrepreneur Ramit Sethi illustrates this effect in his Business Insider article.
Sethi notes that he once tried offering an online course for free. However, what he saw was the people who took up the offer would often never log on to the course. This became a problem for him because of the way he – and others – viewed his business.
When the product you’re selling demands an investment of both time as well as money from your clients, there is always a risk that people will sign on to your offer but then never follow through. When something is priced as free, there are also no consequences of not following through on your own part of the bargain – in this case, spending the relevant time on the course.
As soon as there’s even a minimal charge, however, people are motivated to offer their own time and attention to the product. They have made a tangible investment into your product and are motivated to ensure that they get something out of it.
The Luxury Conundrum
While free offers can be useful to a number of product-focused businesses, there is one category of brands that often stay strictly away from this marketing style – luxury brands.
Most high-end luxury brands such as Burberry and Louis Vuitton come with an expectation of expenses on the side of the consumer. People expect and plan to spend a significant amount of money on these products – and brands are invested in keeping things this way.
It’s well-known that such brands rarely, if ever, advertise offers and discounts to the general public. There are several reasons for such a strategy, including the worry that such offers can negatively impact the company’s brand equity. The same reasoning applies when it comes to offering free products – part of the draw of owning a high-end brand is the knowledge that you spent a lot of money on the product and that only a handful of people can do the same. This gives the brand a level of exclusivity. Hence, offering items for free affects this attraction.
Similarly, too, is the fact that these brands have never needed to use such a marketing strategy. High-end, premium brands have far less competition than the average business. Combined with a strong brand identity and brand loyalty, this means that customers are willing to spend – and keep spending – on their products even without the initial attraction of free.
Why Customers May Avoid Free
It seems like a simple exchange – offer something for free, and customers will come. However, things don’t always work in such a linear fashion.
There are a number of situations where people will choose to avoid free products, especially if it wasn’t something they were looking to spend money on in the first place. The reason for this is simple – just as free can have a cost to businesses, it can have a cost to customers as well.
There are a number of factors that can make free products and services seem unappealing. These include:
If the product you’re offering is something that requires a significant amount of space to store, you may find customers turning away from your offer. Storage space is at a premium for both individuals and businesses, and the last thing customers need is something that prevents them from investing in a product they actually need.
As noted, products that have a time cost to them may not make the best free samples. Some of them, consumers simply do not return to, like Ramit Sethi’s online course.
Others, however, customers may outright avoid. Take, for example, if you’re offering free herb seeds or free plants as a promotion for your product. Plants require time and effort to grow on the part of the consumer, and they must be monitored to ensure they don’t die. While people interested in your product will likely still buy it, your free promotion may not have the impact that you wanted – because plants require a significant time commitment from your potential customers.
Similar to time, the amount of effort a person needs to go through in order to take advantage of what you are giving for free will have a huge impact on your promotion. For instance, if it takes ten clicks to get to the page where the free offer actually is, you can expect people to drop halfway through. It is simply too troublesome!
Some companies operate on the freemium model, offering services for free with additional, paid add-ons. This is most common in the world of mobile and video games, though it can be seen in other businesses as well.
This is, undoubtedly, a successful business model for many of its adherents. That said, such models come inherent with the knowledge that most of their users will not convert to paid users – because they are there for the free services and can do without the add-ons.
If the free products you’re offering require monetary investment from your customers, there’s a chance that a majority of them will avoid it or simply take advantage of the free portion.
Take, for example, free website trials. These usually require customers to input their credit card details and, unless canceled, start billing consumers as soon as the trial runs out. Many users are aware of the fact that they may not always be diligent enough to remember to cancel at the end of the free trial and so avoid signing up in the first place. If you’re running such a website, you lose out on the opportunity to gather supporting data such as email addresses that you can later use to generate leads.
6 Steps to Make Free Marketing Work for You
Now that we’ve looked at situations where free doesn’t always work, the next question you’re undoubtedly asking is how you can make it work for your business. There are a few principles you should keep in mind when considering whether or not free offers will be beneficial for your business.
1. Consider the Purpose
Make sure you’re not just offering free samples or products because everyone around you is doing it. Your offer should have a purpose and an aim. Being clear as to what these are will help you determine exactly what you should offer and whether or not free is the right choice for your business.
2. Know your Target Audience
Another important factor to consider is exactly who your target audience is. If you want to avoid the issue mentioned by Dooley (mentioned above), your free offers should be targeted at the people who are most likely to buy your product.
Depending on the items you sell, this can be a large scope of people – if you sell consumer goods like snacks, for example, your target audience is likely people who like to eat snacks, which is most people. If your products are more niche, however, you will have to adjust your free marketing strategy.
This is where creating a marketing persona is of the utmost importance. Read our in-depth guide on how to create a target persona before you proceed with your Free Marketing Strategy.
Say you sell hockey equipment and want to offer a free roll of hockey tape for potential customers to try. You cannot advertise this offer at your local supermarket. You will have to focus on sports stores and hockey rinks, as well as online forums where you’re likely to encounter hockey players. In this way, you don’t waste time, energy, and money advertising free products to people uninterested in your niche.
3. Establish Metrics for Success
Free samples will only be as successful as the effect they have on your business. You will need some way to measure this effect.
If you are an online service, you could track whether a free service led to a higher click-through rate. Online retailers can experiment with seeing whether products paired with free samples had a better conversion rate than similar products without free samples. Physical retailers can check to see whether a free offer led to more sales of one product while the offer was active as compared to when it was not active.
No matter how you measure success, you need to have a way to analyze whether or not a free campaign was effective for your business. This will help you determine whether or not you want to continue with the campaign or end early.
4. Determine the Free Offer’s Necessity
If you want a free campaign to work, you must offer a product or service that people will actually be interested in. For example, a free campaign in which you offer a beach towel for free along with a purchase is unlikely to work in an area that sees long, harsh winters and is not close to the ocean – in such a location; there is simply no demand for beach towels.
Additionally, the product that you are giving away should be of quality. For example, if you choose to give away low-quality slippers for free after a purchase over a certain threshold, people may initially be happy. However, when the slippers break, they will link your brand to the cheap slippers, which can lead them to think that other products you sell are similarly substandard. This will affect your brand reputation and make them unlikely to buy from you in the future.
High-quality products, on the other hand, will endear your business to potential customers. They will be more likely to be willing to shop at your business, as they will trust that you have more of the same, well-made products to offer them.
5. Include Your Branding
No matter what you give away for free, it’s always good to include some form of personal branding in it. This ensures that people will be reminded of your company every time they look at the product or think back to the service you offered them.
This helps them develop positive associations with your brand. Additionally, every time they consider the item of service in the future, they will be tempted to spend money at your business.
6. Plan a Follow-Through
This is particularly important for online businesses. If you’re offering something for free, you likely see consumers who take advantage of this offer as potential future leads.
However, these leads will not be effective if you have no way to contact them in the future. When providing free offers online – whether they be for products or services – it’s always a good idea to collect customer data at the same time.
This data can be as simple as the customer’s email address or more detailed to include information such as mailing address, phone numbers, name, and so on. All of this information will make it easy for you to contact them through mailing lists or direct emails in the future to nurture the lead and encourage them to continue patronizing the paid section of your business.
Examples of Effective Free Offerings
To glimpse at how effective free marketing can be when done right, let's have a look at these strategies employed by companies from different industries:
Burger King’s Scary Clown Night
In 2017, Burger King launched their Scary Clown Night campaign on Halloween, accompanied by a promotional video. Through this campaign, they offered a free Whopper to the first 500 people who visited their stores dressed in a clown costume.
The campaign itself played on several factors, including the success of the movie It, a spate of scary clown sightings across the United States, and the burger chain’s rivalry with competitor McDonald’s. While there were certainly other marketing factors that contributed to its success, it is also a testament to the power that the idea of "free" holds.
Though they only offered to give out 500 free Whoppers, the chain saw over 110,000 customers dressed as clowns visit their stores around the globe. The result? Global sales for the night increased by over 15%!
Free has an impact on digital offerings as well as physical. Software website Corcentric experimented with two different options when determining a CTA for their home page. One told users to click to ‘Get a Demo,’ while the other advertised their offer of a ‘Free Demo.’
A two-week test revealed that the website saw an over 99% increase in the click-through rate. This effect is documented in the marketing efforts of a number of different websites, including GetResponse, Billund Airport, VenueSphere, Viadeo, and more.
(images from VWO)
Sonoma Valley CBD
Free trials are fairly common in the Health and Nutra niche in the affiliate marketing industry. This is because most of these products require recurring purchases. Take for instance the Sonoma Valley CBD offer for a free trial bottle. This is one of the top native ads based on the findings of a native ads spy tool called Anstrex.
A customer who takes advantage of this free trial will be required to input not only his name, contact number, and delivery address; he will also be asked to place his or her credit card information for the shipping charge.
The customer will definitely receive a free product, but he will be placed in a product subscription wherein he will receive Sonoma Valley CBD on a monthly basis and will be charged in full for the product, until such time that the customer decides to cancel.
As is noticeable, although an item is given away for free, the company gains a paying customer, and they will reap the benefits come the next few months.
Free PDF Viewer
As we’ve mentioned in a previous section, some companies gain something by providing a free service, even if not directly. Take, for example, this free PDF viewer. It is a Google Chrome extension that helps users view PDF on their browsers.
While the service is free for the user, the provider or maker of the extension earns by showing the user ads. The user may not have noticed it, but the maker provided this information in fine print, so upon using the tool, the user agrees to being shown ads in exchange for the free service.
Combined with a limited-time offer (or otherwise called the Urgency Principle), subscribing to a service for free can easily entice users.
This landing page by Flirt Date encourages users to sign-up quickly while the offer is still free. The perceived value of the free offer increases because of the time element.
This is another example of a top-performing landing page as unearthed by a native ads spy tool, this time Adplexity.
As you can see, the pre-lander entices potential online casino players with a promise of 100 Free Spins. With this number of spins, you are bound to win something, right? But in order to join or to get your free spins, you will also be required to download the app, complete the sign-up process, and maybe even add your credit card details.
We all know gambling can be addictive. Once you get hooked, you’ll try it over and over (you’re so close to winning!) that you won’t even notice that you’ve used up your free spins and that you’re actually buying more.
Final Thoughts on Free Marketing
If you’ve seen an ad for a product that is “free,” then you know the power of free marketing. This concept has been around since the word was coined, and it still works as well today as ever before. It can be applied to any type of marketing strategy – from print ads to digital ads to native advertising strategies. If you know what you're doing, you can certainly reap a lot of profits using this technique.
Free marketing is an interesting topic, and there are many different ways to use it in your business. We’ve covered some here, but if you want help incorporating this concept into your native ads strategy or other areas of digital marketing, we can certainly give you a hand. Just reach out to us via email@example.com.