Big brands have been giving away free samples forever as a way to get new customers. Back in the day they use to have booths stationed at grocery stores handing out samples. The evolution of that has been street teams giving out product samples in big cities, sporting events, and concerts venues. They’re still giving away free samples – albeit full-sized – hoping to gain market adoption of their product.
What I’m seeing now is an evolution of that same idea brought online in a more streamlined way. It’s being made easier and more affordable due to the amount of social content and influencer data to track and measure the impact of these campaigns.
The Future Is Free
Look at how Freemium is changing the way consumer Internet products go to market. Just recently, David Cahill wrote a compelling comparison between Carbonite (paid) and Dropbox (Freemium) business models to acquire a new customer. Carbonite spends up to $97.00; Dropbox, $1.20. Why? Dropbox gives their product away for free (up to 2GB) and enhances their word- of-mouth reputation using a clever incentive referral program that leverages word-of-click marketing. Both the originator and recipient get exclusive value – free 500MG of space on top of the 2GB – if the recipient signs up.
Instead of buying users via ads, affiliate programs, and search marketing, you could try giving away free product to your target customer base and trust that the positive referrals will increase awareness of your brand and consumers’ purchasing decision. This may sound crazy, but it’s not. It just requires a great product or service, a way to measure the impact, access to your target market and the deep understanding of your business metrics to test it. Products that are not remarkable won’t be able to capitalize on this approach since the “wow” factor won’t be present.
Measuring The Impact
The key to measuring is closing the attribution loop, something that Groupon has solved on a local level and typically gets overlooked by naysayers, in the local space. Having the ability to attribute new business from coupons is only the beginning to the future of Gift Marketing.
As more businesses learn to measure their customer acquisition cost (CAC), lifetime value (LTV) and retention – they’ll be better armed to try different marketing tactics including gift marketing, the idea that you can acquire a net new customer by giving away free product. Just like Freemium in the consumer internet space is still very knew and the metrics and tactics are still being perfected, we see gift marketing becoming a viable channel for all businesses to acquire customers either directly (sampling) or through their existing customers (referrals).
Accessing Your Target Market
Big brands have been doing this forever – they call it product sampling. They usually work with an agency who can help identify “influencers” or consumers in the target demographic. Then, they ship free stuff to them. Over the years, entire companies have developed around this concept. Examples are BzzAgent and Klout (with their perks program).
Some of the more creative brands are implementing “Social Sampling”: they build a microsite with an app that lets consumers redeem free products, and gift them to friends using social channels like Facebook and Twitter. They seed these through email lists or viral apps on Facebook. It’s the beginning of the future in marketing for all businesses.
Finding consumers based on demographic profiles has never been easier and will be even easier for brands wanting to give stuff away. Just look at the Facebook ad platform, or some of the re-targeting platforms that let you buy ad impressions for users who match your target demographic or have shown purchasing intent for your product. How about a Twitter search using keywords, influence filters and location? The problem of getting in front or getting direct access is solved.
Window of Opportunity (It’s Now)
As with all marketing media, over time consumers will grow weary and get fatigued. As more companies start doing it, some will abuse it, others will spend without measuring and eventually the cost benefit ratio will tip out of favor for marketers. The good news is that it’s just beginning and it’s going to be a huge opportunity for at least the next 10-15 years. New technology and infrastructure will emerge to make it even easier to manage and track and the best companies will prosper most as they truly have something great their customers will want to share.
I hope you’ll join me in redefining how customer service, loyalty and new customer acquisition is done in the future and the best practices that will certainly need to be defined as more businesses give it a go.
Gift marketing is now.