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6 Reasons Giving Away Free Stuff Can Work For Your Small Business

by Emily O'Shaughnessy

Earlier this week I had dinner plans with a good friend. Out of habit, we began driving to our “go-to” restaurant at Market Street, but at the last minute I remembered hearing about a new bar that opened up at the nearby Waterway.  We decided to check it out, and I’m glad we did.

Bar Louie is a cool bar with a good atmosphere. I’ve since learned it’s a chain, although it didn’t have that “chain feel.” The weather was perfect and we grabbed a spot on the patio. And there we sat. And sat some more. No one came to greet us. I wasn’t too bothered at first because we were busy catching up, but after nearly 15 minutes I was annoyed and started to regret our decision to try something new. Had we gone to our old standby we certainly would have had drinks by now.

We contemplated leaving, but in the nick of time our friendly waiter greeted us, profusely apologizing for the wait. Then he told us that because it was grand opening week, every single guest received a free martini and small plate. That was a nice perk we weren’t expecting. Suddenly I wasn’t so mad anymore. Funny how it’s easy to forgive when something is free. Our waiter recommended one of their signature drinks, a cucumber martini. Definitely something I wouldn’t normally pick, but because it was free I decided to give it a shot. Nothing to lose, right?

Over drinks and appetizers, we talked and enjoyed the night. I discovered I’m a big fan of cucumber vodka (who knew?). After that first round we each ordered another (not free). More people began trickling in, and soon the place was packed.

As we enjoyed the food, drinks and atmosphere I couldn’t help but think about this grand opening promotion from a marketing perspective. Giving away free stuff isn’t new. But it’s one of those things that sometimes works and sometimes doesn’t. Sometimes giving away too much lessens the perceived value of the brand. Other times it’s a genius hook to get people to try a product/service/martini they normally never would. Overall I think it’s a great strategy, especially for a new business trying to raise awareness in their community. But it must be done right. Below are six benefits to giving away free things – good things to consider when deciding whether the strategy is right for your business.

6 Reasons Giving Away Free Stuff Can Work For Your Small Business

1). Free stuff creates a buzz. In today’s day and age, it doesn’t take long for news to travel. Soon I started to see Facebook posts and tweets about the free drinks and apps at Bar Louie. People were making plans to get there before the grand opening specials ended. People like free stuff, plain and simple. And they’re more willing to pay more attention if they hear something from a friend. The power of social media.

2). Encourages people to try your products/service/experience risk free. This is a benefit if you want to prove that you have something different or better to offer. People are more likely to try something they normally wouldn’t if it is free and without commitment. That’s why my gym offers a complimentary one-day pass to people considering membership. My daughter’s ballet encourages the kids to take a “trial” class to see if it’s something she’s interested in before committing. Free samples at the grocery store? Same concept. The idea is that if customers try something and like it, or have a positive experience, they’ll buy and then come back for more.

3) It’s the hook that gets customers in –  so they’ll stick around and spend more. Sure, there’s always a few that will order the bare minimum and leave. But most will stay for awhile and order more. Why do so many restaurants offer “Kids Eat Free” days? Because kids don’t dine alone. Their parents have to bring them and eat, too. The cost of a child’s plate is minimal in comparison. It gets the entire family in the door, so they spend money at your place instead of a competitor down the street.  I’ve seen a number of local restaurants promoting free appetizers for Tax Day – another way to get people in the door.

4) Customers are more forgiving when something is free. Just as I immediately forgot how upset I was about the long wait at Bar Louie, people are more forgiving if they feel like they’re getting a bargain. That’s not to say you should use it as an excuse to give poor service, but it can be an advantage for a new business trying to work out the kinks. While the employees struggle to learn the ropes, figure out the new computer system and adjust to the learning curve, you have a set of customers who are a little more willing to go with the flow. Just don’t take advantage of them.  If they leave with a negative perception, they may never come back. And of course will tell all their friends. Ah, the power of social media again.

5) Positive Brand Association. People love to get something for free, no strings attached. It makes them happy and brightens their day. Buy doing this, you can create a positive association with your brand.  Customers remember how special they felt and think highly of you. It’s also about positioning. Sometimes offering a completely FREE appetizer is more appealing to a guest than 15% off their meal, even though the percentage discount might be an actual greater dollar amount. People perceive that they’re getting something for nothing, which makes them giddy.

6). Creates a buying habit. By offering something free, people are more likely to give your business a try. And once they’ve been – assuming the experience was positive – they’re more likely to come back. We all know it’s harder to gain a new customer than keep a current one, and that buyers are creatures of habit. They go with what they know and feel comfortable with. Part of the challenge of a new business – or even an established business – is driving traffic (foot traffic to a retail location or traffic to your website). So now that your location is part of their consideration set, you’re much more likely to gain their repeat business in the future.

Only time will tell if Bar Louie’s grand opening strategy worked for them. But I know I’ll be back – after all, it’s the only place I know that offers cucumber martinis.

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