Anyone who’s ever run a business knows how hard it is to get noticed, and the challenge only increases when you’re operating online. When you have a physical store or office, you can take advantage of the location: you can put up signs, run local ads, partner with nearby brands, etc. Within the digital world, you have no such opportunity. Physical location is mostly immaterial, and you must battle against countless other brands (which is why most plans fail).
Due to this, you should seriously consider every marketing option on the table. If there’s a decent chance that something will bring in some fresh business, you can’t afford to overlook it. But that doesn’t mean that every tactic is right for you. After all, every promotional method comes with its fair share of risks and costs. To get something, you need to give something.
That’s particularly relevant to the tactic we’re going to look at in this post: that of offering free incentives to tempt people to your business. It can be a great option, but it can also cause some problems — so how are you supposed to decide whether you should use it? Well, you can figure it out by answering some key questions, and we’re going to cover them. Let’s begin.
Do you rely on long-term customers?
Some online businesses inevitably have a lot of churn (chiefly used for Saas), which is to say that they don’t retain their customers for long (or only see intermittent interest from them). Those businesses rely on constant promotion and huge profit margins to make their money, knowing that they don’t need to focus on personalized customer experiences or loyalty schemes.
Others, though, function near-exclusively through bringing in leads and turning them into long-term customers. It’s these businesses — chiefly in the digital sphere, but not exclusively — that are best positioned to use free incentives effectively, and it’s all due to the difference between the value they lose and the value they produce.
If you give someone a free month as a trial and they sign up for one month before leaving, they’ve effectively had 50% off — but if they end up sticking around for two years, you’ve ultimately given them a relatively small discount. Streaming services are famed for their free trials for this very reason. When someone signs up for Netflix, they’re likely to keep it.
Keep in mind that it’s generally necessary to mitigate the possibility of people abusing free incentive systems. This is something that streaming services do fantastically well. They don’t need to take action to stop people from using burner email addresses to have as many trial periods as they want. They know what their customers always accept: it’s just easier to pay the charges and not have to mess around with new accounts. Digital distribution has seriously reduced piracy by providing enormously-superior convenience.
In the end, then, you need to think about what type of business you’re running. If you want long-term customers, then sure, invest in free incentives — the money you’ll make in the long run will make it very worthwhile. If you don’t, though, then it simply won’t prove economical.
What good incentives could you offer?
There are as many options for free incentives as there are for products and services in general, and which ones you could use effectively will heavily determine the usefulness of adopting this tactic. The most common option is to offer free trials (for services) or samples (for products) as tasters, with the incentive being the opportunity to decide what they think before they commit — but since those things are very common, it’ll be hard to stand out with them.
Compelling incentives, then, go beyond the primary thing you’re offering. You could pick things that are fundamentally complementary, of course. If you’re selling a high-value car, for instance, you could throw in some cleaning products, bumper stickers, and seat warmers. Those things slightly add temptation, which is why they’re commonly offered at dealerships when prompted.
Alternatively, you could simply improve the value proposition. This is more what you’d see a pizza place do through coupons, combos and multi-buys. It’s often useful to offer two pizzas for the price of one every Tuesday evening in an effort to prompt people to get takeout food on a day that isn’t typically good for takeout places. You can also see this done regularly in the gambling world, with casino offers (the best casino bonuses including starting chip provisions, reduced fees, etc.) serving to push prospects past their natural reluctance to take risks.
The only other option is to throw in some incentives that have nothing to do with what you’re selling (adding arbitrary gifts to product offers, for instance), but that tends to look like a desperation move — and looking desperate is something you must avoid because it’ll devalue your brand and anything you sell.
Are your competitors providing any?
Lastly, you need to consider whether your primary competitors are offering free incentives — and, if they are, what incentives they’ve gone with. If everyone else is offering free trials, then you won’t stand out in that way, but if they aren’t then it might be enough for you to stand out. And if they’re offering high-value additions (free incentives, essentially), then you’ll need to think carefully about whether you can match their efforts and remain profitable.
Something you should aim to avoid is getting into an unspoken competition involving gifts, seeing which business can offer the most value upfront. This won’t end well. Instead, if it’s clear that your rivals are leaning heavily towards free incentives, you should pointedly go in a different direction. In addition to talking about how you’re investing in the development of your products and/or services, you could put more money into things like customer service.
In the end, then, whether you should offer free incentives to boost your online business depends on various things. If you don’t rely on long-term customers, can’t come up with any interesting incentives, or can’t meaningfully outmatch your competitors, then you should look for something else to make your brand stand out. Otherwise, though, it’s an excellent option.