eCommerce penetration is growing globally. In 2021 China will set a new record for eCommerce as more than 50% of total retail sales will take place online. Although the rate of change is not the same in every market, China has set new expectations for eCommerce retail. With reduced customer interactions and increasing competition, brands must work even harder to cut through the noise. Free gifts with purchase (GWP) can be a valuable tool to stand out from the competition and encourage existing customers to explore other products.
In addition to this already challenging environment, the economic downturn onset by the pandemic has continued to test brand loyalty against price sensitivity. According to a recent McKinsey report, consumers are less likely to spend on non-essential products and services following the pandemic. In this article, we delve into 4 ways in which GWP can strengthen your eCommerce strategy from online only business to multi-channel retailers.
Marketing of a GWP promotion is crucial for raising awareness from potential customers and converting them rather than giving it to existing customers who were always going to buy the product anyway.
Some brands have used a combined gift and social media strategy to boost their marketing efficacy. Gifts have been sent out with follow-up social media calls-to-action. For example, a gift box that encourages customers to post a picture to their Instagram with a brand hashtag. Not only does this boost awareness of a particular offer to existing customers, but also pops up in the feeds of the customer’s friends or followers, providing them with organic social proof. This increases visibility of your offer and your brand, as well as encouraging user-generated content. UGC is often more impactful than paid-for advertising, particularly amongst millennials and Gen Z, as it is perceived to be more trustworthy.
However, a call-to-action with branded hashtags must be carefully designed. According to a recent report by Buddy Media, tweets with hashtags get double the engagement of those without. Interestingly though, if more than two hashtags are used engagement actually goes down by 17% on average. This means that your hashtags should be clear and to the point, so that they convey the meaning of the campaign in as few words as possible.
When a customer is evaluating their options to buy a product for the first time, you have a valuable opportunity to make a lasting first impression. A GWP can be the differentiating factor between choices when a customer has no pre-existing preferences or brand loyalty.
Premiums can add perceived value to your product, offering a lower cost than free shipping and other perks that brands may choose to sway purchasing decisions. Price discounts can lower the perceived worth of your brand and become an expectation rather than a special offer, meaning customers will just wait until your product is next discounted. Conversely, adding a free gift of high value to your customer but low cost to you can protect your profit margins whilst boosting customer acquisitions.
However, the product should be well-matched to the customer’s original purchase to increase the likelihood that the customer will gain utility from the addition. To achieve this, you need a proper understanding of your audience, their preferences, and what drives their purchase decisions. Simple combinations such as a free sunglasses case when you buy a certain brand of sunglasses is a useful but commonplace pairing that will not necessarily stand out in the market.
Generating a powerful emotion from the usefulness, limited availability, or great value for money of a GWP provides can outweigh previous alliances to certain brands. By finding the right gift, you will engage your customer’s emotions and put your product at the forefront of the competition, superseding pre-existing preferences. A comprehensive CRM software that creates a unified profile of your customer will enable you to create the most relevant GWP and product offering.
Any premiums that you send to your customers should align with your brand purpose to convey your core values in an authentic way. Although you may see a GWP as a nice-to-have that will influence a micro-moment of the purchase decision, it will still form part of your brand identity in the eyes of the consumer. All forms of contact with the customer can be regarded in this way, hence why GWPs should be carefully curated to your brand values as well as the customer’s needs.
This is especially true for companies with prominent values such as sustainability, outstanding quality or value for money. If you are positioning such an attribute to be the driving force behind your products and activity, then this must extend to free gifts as well. Certain GWPs are often associated with different sectors, for example, Starbucks offers a free travel mug after a certain number of purchases, reflecting their support for sustainability. Meanwhile, Pacific Coffee offers a free drip coffee set allowing customers to enjoy high-quality barista-style coffee at home. Other key attributes that a GWP can add to a brand’s image include utility, charity and personalization.
A GWP can also be used to encourage product discovery or upselling. Cornell University studied free samples at wine tastings and discovered that customers were more likely to spend more money overall, and much more likely to buy from the business again in the future after trying free samples.
When a GWP is a sample of another product or a complementary product, your customers are more likely to try and love a new product that they might not have tried otherwise. It is natural that we are risk-averse in our spending. By taking away the risk element, you are more likely to increase basket-size. This could be an especially useful tool around a product launch to motivate customers to try the new product when there are limited customer reviews or other content to validate the product.