How excited were you to get a prize in your cereal box when you were a kid?
You may have even chosen what type of cereal you wanted to buy based on the prize they promised on the outside of the box.
Companies have been giving away products with purchase for years. Some gifts were relevant, like Marlboro giving away ashtrays, while others seemed a little less applicable, like banks giving away toasters for opening a checking account.
Today, companies are still offering the gift-with-purchase as a means of adding more value and boosting their competitive advantage.
What is the gift-with-purchase?
The gift-with-purchase is a sales tactic that’s used to entice and convert buyers. Other promotions typically take away from the value of the product, like offering a discount or providing free shipping. The gift-with-purchase, though, is used to add value to the receipt. This encourages customers to buy by providing more for the same price.
Generally, gifts are also exclusive and limited. They are offered as a promotion, meaning that the gift is only offered for a set period of time or “while supplies last.” This is meant to increase the exclusivity and urgency of the promotion that other discounts might not have the ability to do.
You can learn about the history of the gift-with-purchase here:
Some companies live on the gift-with-purchase model. For example, Victoria’s Secret often uses gift-with-purchase as a promotion. They’ll give away tote bags, beach blankets, or “Pink” dogs when you purchase a given dollar amount.
“Free gift” is also a tradition in the cosmetic industry. A number of makeup and beauty companies will give deluxe travel-size products with each purchase or at certain loyalty point levels. Cosmetic customers love this because they can try out other products without committing to an entire bottle of it.
What are the benefits of gift-with-purchase?
1. Adds brand value
The purpose of a gift-with-purchase is to provide more value to your customer. Other promotions, like discounts, lower the worth of your brand, while a gift adds perceived worth.
You’re not losing a significant amount of cash in your profit margins, as you might with a deep discount or shipping options.
You’re also not minimizing your brand value by adding a gift. This is especially important if you have a luxury brand, like most cosmetic companies.
2. Boosts conversion
Customers feel there is more value in the purchase, so they’re more likely to convert. When they know they’re getting an additional item at the same cost, they feel like they’re getting more “bang for their buck.” In a time where we’re all trying to make good economic decisions, this can create strong purchasing power.
This extra value can actually spur an impulsive decision in a micro-moment. Gifts-with-purchase are generally exclusive and limited, which adds urgency to the purchase.
In most cases, a gift-with-purchase is only offered if the customer buys a given number of goods or dollars. For example, “With a $75 purchase, you’ll receive a free surprise gift.” Another example could be, “You’ll receive a free mascara when you purchase a foundation palette.”
The customer has to reach a certain amount in order to receive the gift. If a customer wants the gift with purchase, they have to buy enough to get to that threshold. This tends to increase the number of units on their receipt to hit that minimum for the gift-with-purchase.
For example, you’re offering a gift with a $75 purchase. If a consumer is purchasing $60 worth of products, they might buy another item for $15 so they can receive the free gift.
This is an easy way to add more units to the receipt, especially low-ticket and slow-moving items.
4. Encourages repeat purchases
Most gift-with-purchases are a small or altered version of another product. They are samples or complementary products. For example, a gift could be a travel-sized bottle of face wash for a cosmetic company. Another example could be a gift of free socks with a pair of shoes.
This gets your customers to try—and love—another of your products. They’re more likely to come back to you to purchase a full-size or additional product after testing out the gift. This encourages repeat purchases and ultimately boosted client loyalty.
P.S. This works especially well for product launches. You can give out smaller or older versions of your new product to get customer opinions and data. Think of it as a trial period.
5. Attracts customer loyalty
Along with these repeat purchases, customers love free items. A valuable gift-with-purchase shows that you care about their business. You give them the gift because you want them to have the best possible experience with your product.
When you give something to your customers, they’re more likely to respond with loyalty.
How do you offer a gift-with-purchase?
While offering a free gift is a great idea, you do have to consider the logistics of it all.
1. Think about utility.
The gift should complement the purchased product in some way. For example, you could give a small dog toy with the purchase of a leash. Or you can give a travel case when they buy a pair of luxury sunglasses.
This creates supplemental, relevant value that helps build a lifestyle around the purchase.
2. Avoid the giveaway.
There’s a difference between a giveaway and a gift-with-purchase. The goal is to provide value, not to just give more units to the customer. Consumers can tell when you’re offering a “gift” as a promotion without adding any true value to the purchase.
For example, you sell luxury sunglasses. A cleaning cloth costs pennies, so this would be a “giveaway.” This doesn’t excite the customer or add much to the product value. In fact, it could detract from the actual value of the product.
On the other hand, a gift-with-purchase could be a sturdy travel case. This adds true value that builds a purchasing incentive.
Think about the order total. The gift-with-purchase should match in quality with what the consumer “deserves” for spending that amount of money.
3. Choose the gift wisely.
What gift-with-purchase will actually entice your audience? The goal is not to simply give away free items. You want to use the gift-with-purchase as a marketing and conversion tactic. This means you need to think about the kinds of complementary products that your audience will actually want and use.
For example, you sell shoes. Offering a comfortable insole could be a strong gift-with-purchase—if you have an adult audience who wants more comfortable shoes. A teenage audience likely wouldn’t care so much about this gift.
Know your audience and how the gift would complement the product that they’re purchasing.
4. Make them aware of the gift.
Marketing is key for any promotion. Too often, companies run a gift-with-purchase offer without marketing the deal. They end up giving away the gifts to customers who were already purchasing that day anyway. A customer goes on to make a purchase, they see that there’s a gift-with-purchase, and they think, “What a nice added bonus!”
In this case, you might be able to increase urgency and conversion or create more loyal customers, but you’re not using the gift-with-purchase as a marketing enticer.
Promote your gift-with-purchase as you would any other discount. This increases velocity of sales and heightens long-term customer loyalty.
5. Make the directions clear.
When marketing the gift, make sure that the promotion details are clear. You want your customer to know exactly how much or what they need to purchase in order to qualify for the gift.
Create a detailed list of any exclusions or exceptions. You should also include the method in which they’ll receive the gift. Will it be handed to them at checkout? Will it be sent separately?
Don’t forget to include the phrase, “while supplies last.” This creates a sense of urgency while also ensuring customers don’t get mad if you run out of gifts before they purchase.
6. Stock your gift inventory.
Make sure you have enough inventory of the gift-with-purchase. You don’t want to run out of the freebie too quickly or your customers might get frustrated with the promotion. If you are giving the gift-with-purchase with a specific product, you also want to make sure you have a hefty inventory of the main unit.
For example, customers will receive a travel case with the purchase of a luxury brand of sunglasses (over $300). You want to stock both travel cases and luxury sunglasses. You should have enough in stock to maintain a strong promotion for the appropriate period of time.
You don’t need too much stock. It’s okay to run out. Having a limited quantity helps encourage urgency. But too limited a quantity can upset customers who were looking forward to the promotion but didn’t get a gift-with-purchase when they purchased an hour after the deal started.
7. Use the promotion at the right time.
You want to run the gift-with-purchase promotion at the right time. For some smaller retailers, they’ll use the gift-with-purchase during their busiest seasons, like Q4, as a way to increase sales and compete with major retailers.
But retailers who already do well during busy seasons will instead use a gift-with-purchase during slower seasons to create an incentive to buy.
Use a gift-with-purchase when it would be most fruitful for you to gain a competitive advantage.
8. Be aware of frequency.
Frequency sets expectations. If you offer too many gift-with-purchase promotions, it won’t have that same sort of urgency and exclusivity.
In fact, it can have the opposite effect. Customers will get used to getting something free with their purchase, and they won’t buy your items if they see no incentives are being offered. They’ll just wait until the next gift-with-purchase. This is conditional loyalty, which doesn’t help develop your brand and profits.
Instead, make it a special occurrence. If you make an event of it, the gift will encourage an influx of sales and visibility that can have long-term benefits for your business.
9. Utilize social media.
Today’s consumer loves free gifts almost as much as they love social media. Use this to your advantage! Market your gift-with-purchase promotion on social media, or you can even consider running a similar giveaway on your social accounts.
We also recommend creating a social aspect to the gift-with-purchase. When you offer the gift, also give your social media handles to the purchaser. Provide a call to action that helps show off this guest.
For example, you could request they take a picture and tag your brand on social media. This will show their friends and social circles that your brand is fun and valuable. You can even offer another incentive or gift if they share their freebie and purchase on their social platforms.
You can also give a free gift-with-purchase to influencers as a means of marketing. This helps market your gift promotion while gaining social status.
A gift-with-purchase is a great way for online companies to boost visibility, compete in the crowded e-commerce market, and gain an influx of sales. Everyone loves free items—especially if it provides genuine and relevant value.