The Costs and Benefits of a Free Gift

March 14, 2017 by Brian Lawrence

They say that nothing in life is free. This especially holds true to “free gifts” from businesses. Anyone that has ever been tricked into a time share meeting through a free gift or buffet meal understands this. You probably wouldn’t give away free gifts to cold leads that weren’t prospects. And you might be more apt to gift a customer that has booked you. In actuality, offering a free gift can attract a lot of attention, especially if that gift has a high perceived value.

gift-548284_960_720A wedding business found a resource where they could purchase silver toasting goblets that cost the business $7.50. They enthusiastically advertised and promoted the offer. In one year, they gave away over 500 free pairs. The thought of throwing $3,750 away is an overwhelming expense, but let’s examine the other costs of marketing and advertising to compare.

Let’s say that the year before they introduced the free gift, they exhibited at bridal shows, did email marketing and direct mail, and advertised on The Knot, Wedding Wire, or several wedding magazines at a total cost of $10,000. That year, the business had 125 customers come in from those resources and booked 60. Meaning that each lead cost $80 and each sale cost $166. But it’s okay, their average sale was $5,000.

The next year, the business did the same marketing and advertising, but added in their free silver goblets ($13,750 total) and met with 500 customers, booking a total of 150. Sure, some people just showed up for the free gift. A smart businessperson will weed them out, cut their losses by giving them the gift, and not waste valuable time. Each lead cost $27.50 ($13,750 divided by 500) and the cost of a sale decreased to $91 ($13,750 divided by 150). So even though they spent more money, they increased their sales, which resulted in their actual cost-per-sale in marketing dollars being less than what they would have been had they spent less.

This approach could work for a DJ & Entertainment business that has sales staff and the capacity to do volume. It will not work for a DJ who can only book one event a day and see one prospect at a time. But it does make you stop and think about the perception of giving something away for free and how it can actually increase your sales revenue.

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Brian Lawrence Brian Lawrence (21 Posts)

Formerly partners with wedding industry guru Alan Berg, Brian Lawrence is one of the industry’s foremost authorities on marketing in the wedding industry. Brian has consulted with many local wedding professionals and as well as national brands. A speaker at WeddingWire World and Wedding MBA, he is the author of “The Wedding Expert’s Guide to Sales and Marketing” and has helped thousands of industry professionals with his marketing insights through personal consultation, books, seminars, blogs and articles, and speaking engagements at leading industry conferences. For more information go to www.brianlawrence.com or contact Brian at brian@brianlawrence.com or 201 244 5969.


Filed Under: Business, Sales & Marketing, Weddings