B2B Marketing Promotions

Chris Anderson, editor-in-chief of Wired Magazine and author of The Long Tail, has turned the idea of free on its head with his new book, Free: The Future of a Radical Price.

In it, he talks about how Free is often used as promotional incentives as a way to get people to buy them. Free is often an integral part of marketing promotions, used as a way to get people to try our products, to buy something else, to showcase our products or services, and even to do some work for us.

Here are the four basic iterations of Free Anderson discusses in his book.

1. Direct cross-subsidies - This is a product that gets you to pay for something else. It could be a buy-one-get-one-free item at your favorite clothing store. Or a free “prize” given to you by a car dealership in the hopes of getting you to buy a new car. Or even a cell phone company giving you a free cell phone because you’ll pay for the minutes, the text plan, and the data package.
2. The Three-Party Market - Someone else pays for you to have access so you can use the program, in order for you to be exposed to their product. In other words, your basic television and radio mass media setup. I get to watch NBC’s “The Office” for free. The catch is I have to watch the ads that go with it. Or I can subscribe to a free trade magazine that covers my industry. The catch is I have to make my name and address available to people who want to send me direct mail. The advertisers need us to consume that product, but we need the advertisers to pay for our access.
3. Freemium - One of the models we’re most familiar with: we get a free sample to try a product: the food samples we get at our local supermarket, as a way to entice us to buy the really huge bag of pizza rolls. Or in the digital world, giving us limited access so we’re willing to pay full price for total access. Anderson uses Flickr.com as an example. We can use Flickr for free, but can only include 200 photos in our general timeline. If we want to have all of our photos available, and/or we want some premium features, we need to pay $25 per year.
4. Nonmonetary markets - The idea that people give away things with no expectation of payment. Wikipedia is one example. Hundreds of volunteers have created millions of articles in 10 languages about a variety of topics. Wikipedia doesn’t charge for this access, it’s free. Sure, they’ll take donations, and in fact, this past Spring, they had a donation drive to help cover the costs. But there’s nothing else. No banner ads (three-party market), no limited access (freemiums), and no direct cross-subsidies (“get Wikipedia free if you buy a copy of Photoshop”)

It’s this last version of free that most people are becoming used to, and this latest version of free that Anderson wrote about. Since marketing promotions in the digital world is cheap and easy, there are different ways people can use them to promote their services (i.e. a Freemium).

For example, a consultant posts free articles on their blog as a way to not only showcase their knowledge, but to get a potential client to consider them. Or a book author who offers an audio version of his book on iTunes (also free) and on the Kindle, knowing that if people get the free version, they’re more likely to pay for a real copy too. This last technique is the latest promotional incentive to hit the publishing world, and one that more and more authors are using to boost their own sales.

What kind of promotional incentives are you using to drive customer traffic? How are you getting sales leads? Have you thought of using free items as a way to do this? Leave a comment in the comment section.

Customer loyalty programs work by offering customers incentives and encouraging their continued business so sellers can see huge returns. Sounds easy, right?

Unfortunately, customer loyalty programs aren’t always that simple. They have to be done correctly and there is, like all potentially successful business ventures, some risk involved. Potential cost overruns, incentives which fail to trigger the intended response, and poor audience targeting all threaten to impede the success of any customer loyalty program. But, there’s good news: these risks can be managed. The question is, how? Here’s your answer:

Link the Promotional Incentives to the Product

In any customer loyalty program, the promotional incentive should always be related to the product. In other words, if you’re selling baby bath products, don’t reward your customers with a free oil change. Instead, help your customers make a connection in their mind between the product and the reward. The easiest way to link your incentive to your product is to make the product itself the incentive. You see this all the time at coffee shops who hand out “Buy 10, Get 1 Free” cards to their customers. And guess what? It works.

Inject Perceived Value Into the Customer Loyalty Program

One of the interesting psychological effects of a customer loyalty program is the tendency for consumers to value the promotional incentive outside the bounds of monetary value. To illustrate this phenomenon, let’s return to our coffee shop example. In the case of a free cup of coffee, it’s reasonable to assume the incentive has a monetary value of $2.

However, a lowly $2 cash rebate offered after 10 purchases would be unlikely to generate an increase in business. Customers are more inclined to consider the “value” of the free coffee based upon the experience they anticipate while enjoying it. ??This clearly works to a company’s advantage. A customer loyalty program can be designed to deliver a high perceived value to consumers while still yielding a respectable ROI for the business.

Remember, a Customer Loyalty Program is an Investment

Not all customer loyalty programs are going to provide an instant ROI. Depending on the length of the program, how it’s introduced to the market and the cost for the customer, a program can take time.  For example, a widely advertised customer loyalty program based on $2 coffee sales, something many customers buy almost every day, is going to bring a return faster than it would on, say, $75 haircuts, something customers may only purchase once every few months.

Don’t let this dissuade you from exploring a customer loyalty program. Instead, look at them as an investment, whether it be short-term or long-term. For companies that take advantage of it, a good customer loyalty program can yield dividends for years.

Promotional Currency (PC) is a digital promotions firm that merges digital technology, artist licensing and promotional risk coverage to deliver turnkey, fixed-cost solutions that meet the unique needs and budgets of the brand marketing or b2b marketing client. Among product offered are: unique customer loyalty programs, promotional incentives, online promotions and mobile promotions.