It is not a new concept to give a gift when you ask for something i.e. “Signup and get $20 off” or “get a free coffee when you buy 10”. It works to a certain point but is it something we can optimise?
Give gifts with no strings attached ?
Why? To increase word of mouth! This works especially well for B2C but can be modified to successfully work for all the B2B out there.
Word of mouth is and always has been the best form of marketing and with social media that message gets amplified.
The research in this email is brand new, from a study conducted in April of 2021!
Recommendation
To encourage positive word of mouth, give customers free gifts with no strings attached.
Give gifts after customers have purchased something, so they don’t feel it’s a trick to make them buy more – or when it’s clear the reason isn’t attached to a hidden agenda (e.g. because it’s their birthday month).
Effect
- Gifts of appreciation given to customers increase word of mouth
- The more conditions attached to a gift (e.g. you must spend $20) the weaker the effect.
- In a similar way if gifts are dependent on the customer completing some sort of action (e.g. share on Instagram, tag a friend etc..) word of mouth is weaker. There’s a trade-off between encouraging customers to do something specific and increasing word of mouth.
- For example, customers of a bakery were given an unexpected free macaroon after filling out a survey and encouraged to take pictures to post on Instagram:
- 62.7% took pictures when they were told the free macaroon was a gift from the bakery. 19.6% started following the bakery’s Instagram account.
- 44% took pictures when they were told the free macaroon was in exchange for filling out the survey. Only 8% started following the bakery on Instagram.
- The effect weakens and can even backfire when people suspect there’s an ulterior motive behind the gift (e.g. to get them to buy more) this happens when:
- The gift is given before a purchase, rather than after (ever been to a timeshare pitch ?)
- People do not like or distrust the brand, because they assume the worst.
Why it works
- People like to feel valued and appreciated when a company gives us something with no strings attached
- When we feel that way, we like to support those that appreciate us.
- One of the main ways we do this is by spreading the word.
Limitations
- The researchers used 7 experiments in different contexts to test the effect and it is well grounded in previous research. So, it is generalised to most situations.
- The study focused on B2C context, but it is likely to work in B2B too.
Steps to implement
- Are you already giving gifts away to customers in exchange for something? (e.g., their email address). Test, giving it away randomly with no strings attached and measure the increased word of mouth.
- If it is your first time giving something away, start on a small scale and measure how much growth it generates. Based on that you can budget for the cost of gifts and include it in your marketing strategy.
- You can make ‘gifts’ random to add an additional element of surprise.
- Personalise gifts. Use data to determine which gifts would appeal most to customer groups.
- Make sure to frame the gift as something you are giving away as a sign of appreciation, not an exchange.
Got 3 minutes to spare a week? Practical marketing tips delivered direct to your inbox, best of all it takes 3 minutes to read. Our 3-minute marketing email is research backed, tested by top institutions around the world. Learn more.