How to make more money by giving stuff away: 3 keys to economical promotional giveaways

By: Jack Winston

Bozuko continues to roll out to forward-thinking Boston-area businesses as we expand our Free Beta Program.   As we spend every waking hour talking to businesses about how to make more money with Bozuko, 2 things have happened.  First, we have less time to blog (sorry for the long delay between posts). Second, we have had the chance to speak to a lot of marketers and business owners about what goes into a great promotional giveaway.  While every business is different, the following 3 key basic ideas from micro-economics are universal:

1. Keep variable costs of your giveaway low.  This does not mean you should be cheap – just that you should think creatively about what you can give away that does not cost substantially more than the additional revenue you would add from attracting a new customer.  For some businesses, it could be a free iPad.  For others it could be a $1 Amazon song download.

The best giveaways are those that cost you NOTHING in terms of variable cost.  Free movie ticket, Free Yoga Class, No Cover charge, Free parking.  All of these things may represent lost revenue opportunity, but didn’t cost you a thing.  Free fountain soda, upgrade from small to large pizza, upgrade from standard to deluxe car wash, may cost a few cents.  If you brainstorm for a few minutes, you will find something valuable you can giveaway that doesn’t take much – if any – money out of your pocket.

“But wait,” you may ask, “why would I want to miss out on that revenue?”  The only rational reason is that if you CAN MAKE MORE MONEY by doing so.  This is possible if your promotion is so fun that it encourages people to come back regardless of whether they won or lost.  Even cooler, is when you design your promotional giveaways to drag revenue from complementary goods.

2. Drag revenue from complementary goods.  Many things that you give away are destined to be consumed with complimentary goods.  For instance if you give away 1 free movie pass – odds are that person will bring a friend (paying full price).  And they certainly are likely to buy a popcorn and soda (at full price).  Or you give away 1 free large popcorn – which is physically impossible to consume without a beverage (purchased at full price).  A pub gives away free hot wings – requiring (full priced) beer.   There are many examples of how to leverage complementary goods in building profit into promotional giveaways.  If necessary, you can force complements within the prize description – e.g. free coke with purchase of large sub.

While giving something away may mean lost revenue opportunity if that person was going to buy the product anyway, you can ensure that each giveaway actually drags along profitable business.  If you find the right formula, you can afford to increase the number of giveaways which will make your campaign even more exciting and lead to more customers who come just to play.

3. Give away something – don’t discount your core product.  One of the well known drawbacks of discounts is that customers get trained to expect them.  It is better to give something away entirely than it is to offer “50% off.”  If you can’t give away something in its entirety, give away a set amount of credit.  $25 of free merchandise with purchase of $25 or more.    Or, buy 1, get 1 free.  Groupon has started doing this with most of their deals because one of their (many) criticisms was that they train their new-found consumers to expect a very low price making it hard to convert them to full paying customers.  You want your customers who win a prize to return because 1) they had a great experience and 2) they have a chance to win again.

There are other elements to a great promotion.  Great promotions need to be fun, need to leverage your brand, and need to tap into social networks  – all of which we believe Bozuko is unparalleled in its ability to help you with.  Use these 3 keys to economical giveaways to design great Bozuko promotions.

If you are having trouble thinking of what to give away, let us know (by emailing or replying to this blog) and we’d be glad to brainstorm.

If you haven’t checked out our free mobile app for iPhone and Android yet, you need to.  If you are a business and you haven’t checked out our Free Beta Program, you need to.  Even if you are not ready to launch a campaign, just play with our easy-to-use campaign builder and let us know what you think (you need to be an admin of a Facebook page with a place associated with it).

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