Promotional incentives- how effective is “free” stuff

Promotional Incentives- How Effective is “Free” Stuff?

Promotional Incentives capitalize on the consumer’s insatiable desire for all things free. Chris Anderson, editor-in-chief of Wired Magazine and author of “The Long Tail,” has turned the idea of “free” on its head with his new book, “Free: The Future of a Radical Price.”

In his book, he talks about how “free” is often used as promotional incentives. “Free” is often an integral part of marketing promotional incentives, used as a way to get people to try our products, to buy something else, to showcase our products or services, and even to do some work for us.

Here are the four basic iterations of “free” Anderson discusses in his book.

* Direct cross-subsidies – These are promotional incentives that get you to pay for something else. It could be a buy-one-get-one-free item at your favorite clothing store, or a free “prize” given to you by a car dealership in the hopes of getting you to buy a new car. It could even be a cell phone company giving you a free cell phone because you’ll pay for the minutes, the text plan, and the data package.

* The Three-Party Market – With three-party promotional incentives, someone else pays for you to have access so you can use the program or product, in order for you to be exposed to their product — your basic television and radio mass media setup. I get to watch NBC’s “The Office” for free, but I have to watch the ads that go with it. Or I can subscribe to a free trade publication that covers my industry, but with this promotional incentive, I have to make my name and address available to advertisers. The advertisers need us to consume that product, but we need the advertisers to pay for our access.

* Freemium – One of the promotional incentives we are most familiar with: we get a free sample to try a product: the food samples we get at our local market, as a way to entice us to buy the really huge bag of chicken nuggets. Or in the digital world, giving us limited access so we’re willing to pay full price for total access. Anderson mentions Flickr.com as an example of the freemium promotional incentives. We can use Flickr without paying a fee, but can only include a maximum of 200 photos in our general timeline. If we want to have all of our photos available, and/or we want some premium features, we need to pay $25 per year.

* Nonmonetary markets – The idea that people give away things with no expectation of payment is not one of your regular promotional incentives. Wikipedia is one example. Hundreds of volunteers have created millions of articles in 10 languages about a variety of topics. Wikipedia is free; it doesn’t charge for this access. Sure, they’ll take donations, and in fact, this past Spring, they had a donation drive to help cover the costs. But there’s nothing else. No banner ads (three-party market), no limited access (freemiums), and no direct cross-subsidies (“get Wikipedia free if you buy a copy of Photoshop”).

It’s this last version of “free” that most people are becoming used to, which can make your own promotional incentives campaign a success. Since marketing promotional incentives in the digital world is cheap and easy, there are different ways people can use them to promote their services (i.e. a Freemium).

One example of promotional incentives is when a consultant posts free articles on her blog as a way to not only showcase their knowledge, but to get a potential client to consider them. Or a book author who offers a free audio version of his book on iTunes and a Kindle version, knowing that if people get the free version, they’re more likely to pay for a real copy too. This is one of the latest promotional incentives to hit the publishing world, and one that more and more authors are using to boost their own sales.

What kind of promotional incentives are you using to drive customer traffic? How are you getting sales leads? Have you thought of using free items as a way to do this? Before launching your own promotional incentives campaign, consider all of the options.

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