Wednesday, May 6, 2015

How Giving FREE MONEY To Your Customers Will DOUBLE SALES

The next marketing technique I want to talk about right now is what I call FREE money, a marketing technique so magnetic and effective it shocks me that I rarely see businesses and websites doing it. Essentially what you do here is tap your database, create some action and get them to visit you and open their wallet.
          At one of my bar establishments back in the late 90s, once a month I would do a mailer to my database (yes … even bars keep a database to market to, the good ones anyway). In that mailer I would enclose a photocopy of a $10.00 bill with my picture on it and this $10.00 was good at my establishment for anything on the menu, but it had a deadline, usually 2 weeks after they received it. I would send out about 1,000 of these mailers, with the whole direct mail campaign costing me roughly $400.00 in postage and photocopying (remember, stamps were only 32 cents back then). Of that 1,000, I would get about 300 that took me up on that offer, which was $3,000 in perceived value, but my profit margins were so high that the true, real cost to me was more along the lines of about $400 in total product I had to give away. So all told, I was financially into this marketing campaign a total of $800.00. That’s $400 for the postage and printing and $400 for the beverages and food I gave away with the $10 coupons. My sales? Each person on average spent $20 above the $10 coupon, which generated $6,000 in revenue for me, and taking out the $800, it made me $5,200 in profit. Why? Simple. When people have money in their pocket, they have got to spend it and with deadline attached it made it that much more enticing. (MORE GREAT TECHNIQUES HERE)
My wife, Paula, gets all excited when her favorite shoe store sends her a $10 gift certificate every now and then. She bugs the heck out of me to take her there so she can use it and the damn gas to get there costs more than $10, and then she ends up spending another $300-$500 when she is there. All for a simple $10 gift certificate!!

How you word it is crucial as well. People appreciate gift certificates more than they appreciate coupons and when you do send it out, let your customer know it is to thank them for their business, and not just anyone is getting this special gift. By personalizing it and wording it as a certificate, you immediately increase traffic by 28%. You can also use this technique for your website by emailing your best customers and including a certificate or special code, and by doing this once a month, you will add a MINIMUM of an additional 15% in revenue to your bottom line. Free money in your customers' pocket with a deadline attached is a very powerful magnet in drawing them in to do business with you.
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  1. I have heard of this concept. I typically will give a discount offer after the 3rd time that a customer shows up, but does not buy anything. I am giving them 20% of the cost of their transaction and 87% of the time that is the point when they buy.

    1. I agree with this tactic. In terms of sales, they will always outweigh any cost to send out a coupon or whatever, that is why companies are still doing it.

  2. Coupons are a great way to bring a customer back to spend even more. This example is done by so many companies it has become a normal thing. Great post!

  3. A percentage off coupon is like gold to some shoppers. They will not shop without one and that is ok for them AND for us.

  4. Very good point and example of how it will work on a customer. Knowing there are very few people that will choose to spend the amount the discount is for, you can increase your sales. If you have an experienced sales staff, you can really bring the dollars in if they are up selling the entire time.

  5. Old concept that has been around, but is STILL very effective today! Great post, with examples and things like that show us how to implement the practice!