“Free” is a word that is incredibly attractive. Free Samples is a common piece of content that often attract much interest. Is it actually worth the cost, though? Do free samples improve the revenue or do they hurt the margins? How do you know if your business should offer free samples? Where do you draw the line on “free”? I’m writing this article to help you better weigh your options when it comes to free samples. Keep in mind this article applies to products, not services. I’ll cover that in a future article.
Free samples have both its pros and cons. So how do you know if you should give free samples? Well, it depends on your business and your products.
Pros of Free Samples
Everyone loves to get something for free. It feels good. We like that there’s no risk associated with trying it. Expectations aren’t as high when it’s free, so it’s less damaging if the consumer doesn’t love it. Free samples expose a much larger audience to your products. Opportunities to educate your target audience is much higher, and more successful if you can offer free samples. As a person who self-identifies as “not a wine fan”, I can attest to buying 4 $15 bottles from a local winery after being offered samples during a tasting event. We’ve purchased the fixing’s to make the meals that Publix Apron counter lets you sample for dinner recipes. I didn’t buy the cucumber melon cocktail ingredients after discovering I didn’t like it at a liquor store.
Sampling targeted menu items with high margins is a great way to boost your ROI and per ticket profit
I imagine how I would have felt had I ponied the $60 and then found out. Since getting pampered at a Lush store, I can’t go visit without dropping at least $40. If you’re in certain industries, particularly food/beverage, you should absolutely be sampling your products without question. You’re most likely to recover your margins in this industry via free samples. Perry Abbenante, the vice president of marketing for Snack Factory, states that the average conversion rate of the free sampling efforts they leverage yields a conversion rate between 25 & 30 percent, meaning that at least a quarter of those who tried a free sample ended up buying the product. It’s clear that to the right industry, with the right market, free samples are a big way to boost revenue.
Cons of Free Samples
Perhaps the single greatest con with free samples is that it’s such commonplace now, that many consumers expect things of quality to be either free or cheap. Devaluation of brands can and does occur with free samples, vs samples that are paid for. The value of the brand and products retains itself when consumers have to invest a little too. Skin in the game. For folks with high dollar products, in a niche industry, or with premium price points, free samples may not be your ticket to brand growth. I can’t recall the last time I clipped a coupon for an organic juice, grass-fed meat, or a premium organic shampoo.
To the wrong business, free samples can significantly hit your margins.
Premium product companies, like Zymol, don’t keep the valuation of there waxes at $2,000 a container, by giving away free samples. They charge customers for sample sized portions. Why? Because having a premium price tag comes with the territory of not changing the perception of the value of their products. If your target market is an audience that understands the value, has spending power, and is willing to spend, then you probably don’t need to concern yourself with free samples. A USPS Opinion Survey indicated that 89% of people who received a sample would also buy the product if a coupon were enclosed. So they want one free and a discount on the next. If you’re offering a premium product to a niche market, you likely already know you don’t need to offer samples. There are, notably, fewer companies that are in this category, but those that need to make sure they realize they are.
Coupons / Discounts
Some things you just can’t sample, at least in a traditional sense. Free samples can be looked at like discounts, and some companies have such a high value of their brand that they won’t discount their products. Sonos is one of them. You cannot buy a Sonos system, or any of their add-on products, at any retailer, for less than the MSRP. Their pricing is exempt from promotional offers, regarding pricing.
Despite not offering discounts, Sonos hit $1 Billion in 2015 and currently owns almost 20% of the wireless speaker market.
Same with John Deer. Go into Lowe’s and try to get a discount on that JD Zero Turn. They’re contractually obligated not to have it included. Samsung appliances. Same story. These brands are hyperaware of their value. They also know their target market. Their customers aren’t coupon clippers and deal seekers. Customers of these brands have the money to spend and do it without question. Coupons / Discounts aren’t mutually exclusive with free samples and shouldn’t be strategized the same way, but consider the number of brands who do not allow for discounts. Are you one of them?
Should You Do It?
It depends on your business, your products, and what their price points are. For some, it really pays to have free samples. For others, it simply hurts the brand or just doesn’t pay off. Free samples may work very well for the meat vendor, essential oils, weight loss shakes, craft beer. They also may not work for an organic toothpaste, premium cosmetics, or a high priced all-natural sweetener. Your margins, target market, and current marketing efforts must be all considered and taken into account when determining if you should offer free samples. 61% of those surveyed from the USPS Opinion Poll said an actual product sample is the most effective way for a brand to get them to try a product. This is a good enough argument to at least consider offering samples if you haven’t ever thought about it before.
Keep in mind, too, that there are strategies to free samples. As a single example: Studies have shown that items with low price points are assumed to be of lesser quality than items with a higher price tag. However, when this inexpensive item is given away as a ‘freebie’ with more expensive items, consumers deem the free item as higher quality and are willing to pay more for the item on its own. Consider ways to more cleverly leverage free samples if you are currently, or going to be, giving some away.
If you need a little help evaluating your free samples strategies, or you need help deciding, Let’s Chat! There are many strategies we can discuss that will help you bring in some extra business, and help retain your recurring revenue.
Thanks for reading!