Consumers love freebies. But the companies handing out complimentary donuts, comic books, ice cream, pancakes, and Slurpees love giveaways even more. On the surface, freebies look like obvious money losers. But when handled wisely, giveaways are all but guaranteed to boost sales. Last week, Procter & Gamble hosted an enormous giveaway in New York City. Throughout Manhattan, company representatives handed out more than 40,000 products from P&G brands such as Gillette, Duracell, Scope, Febreze, Pampers, and Cover Girl. Simply getting these products into the hands of consumers is something of a success: After all, every person who tries out one of these products has the potential of becoming a lifelong customer. But the power of giveaways goes much deeper. When consumers get something for nothing, they respond in a host of surprising, mostly unconscious ways — and the net result is often that the companies handing out freebies are rewarded well for their “generosity.”
The effectiveness of the “free trick” or “freebie” lies in the psychological aspects of human behavior rather than mere money-saving considerations. If you notice a large gathering of people or a queue forming outside a shop, it is likely that someone is giving away something. You may have also observed people waiting inside an in-store kiosk to try a “new flavored” coffee for free or arguing over the last cereal bar being shared by an employee outside the tube station. Recently, the seemingly irrational impact of free items has become evident. For instance, people might engage in physical fights with strangers over a freebie they had no intention of purchasing initially. This behavior was examined in a study titled “Zero as a Special Price: The True Value of Free Products” conducted in 2007. The study found that consumers would prefer to receive a lower-quality bar of free chocolate rather than purchase a luxury chocolate brand at an 80% discounted price. Another example comes from the Walker Sands Future of Retail Survey conducted in 2019. The survey revealed that online shoppers were more likely to complete a purchase if the delivery was offered free of charge, as opposed to saving a slightly higher amount on the purchase price but having to pay for shipping expenses.
The Reciprocity Principle
One of the primary psychological drivers behind the success of freebies is the reciprocity principle. Marketers notice it over and over: Promotional events like Free Comic Book Day are huge moneymakers, even though logic would seem to dictate that retailers would lose money. The reason for this is what marketers call the reciprocity principle. If you give consumers something for free, they will automatically want to reciprocate in kind. Smart managers know this, and so they take advantage of it as much as they can. Customers love free stuff. And they also like exploring new brands that offer them precisely what they want. Reciprocity is all part of doing business. Handouts can be the perfect way to make it happen and ensure that people associate your brand with delivering genuine value.
This principle is particularly effective when applied to product categories where taste, texture, or scent is involved. As noted in discussions regarding small businesses, offering free samples lowers the barrier for first-time buyers. People love trying before they buy — especially when taste, texture, or scent is involved. No one wants to risk money on something they might hate. For example, in the food, skincare, or personal care spaces, free samples allow consumers to test products without financial risk. This builds trust and reduces the hesitation that often accompanies new purchases.
The Marketing Advantage
There is a second reason why giving out freebies is so compelling – the marketing principle. Marketing your business is a challenge in the modern world. Everyone is trying to get their message out – and not all succeed. For instance, whenever somebody uses a product, they advertise your business, both to themselves and other people if they are in public. It is, therefore, a sneaky way to improve your marketing advantage. Depending on your choice of freebie, people can use it for many months or years, providing your firm with thousands of valuable impressions.
Freebies also serve as powerful tools for customer acquisition and retention. Behavioral studies show that the word free triggers irrational excitement. Most people go for the freebie even when the paid option is better. That’s why a well-placed sample, trial, or gift can get people through the door. But it is important to explain why it is free. Whether it is a thank you for their loyalty or a little reward for picking up their order, making customers feel special is key. Freebies aren’t just gifts — they’re marketing tools. Want people to talk about your brand? Give them something worth talking about. Whether it’s a sample, a small surprise in their order, or an exclusive offer for those who refer a friend, these gestures create positive associations.
Types of Free Offers
Understanding the different types of free offers helps consumers navigate the landscape effectively. The types of free and how they can help boost sales in your business include:
- Buy One, Get One Free (BOGO): This is probably the most popular type of free, where you buy one product and receive the same product or a product priced lower, free of cost. Consumers love the idea of getting more for half the price and end up buying a lot more than they originally planned to. This gives sales a positive boost and brings in new and potential customers.
- Free Trials: Services like Netflix and Amazon Prime offer a month of free trial with the option to quit whenever you choose. Consumers like this offer because they can enjoy streaming movies and shows for free without any commitment to pay for their account. However, by the end of the free trial, most customers end up paying for their account to continue streaming shows and movies. This model is effective across various sectors, including software, media, and subscription boxes.
- Free Samples: These are small quantities of products provided to consumers at no cost. They are commonly used in beauty, baby care, pet food, health, and household goods categories. Samples allow consumers to test products before committing to a full-size purchase.
- Promotional Giveaways: These are often event-based or part of a marketing campaign. For example, Procter & Gamble’s large-scale giveaway in New York City distributed over 40,000 products to introduce brands like Gillette, Duracell, Scope, Febreze, Pampers, and Cover Girl to a wide audience.
Strategic Implementation for Businesses
For businesses, particularly small brands, the question often arises: "Should I be giving freebies to my customers?" And if yes, how often? To whom? And what kind? As a small brand, every rupee counts. So when someone suggests giving products away for free, it is fair to raise an eyebrow. But here is the thing — when done strategically, freebies can do more than just please your customers… they can seriously grow your business.
To make a freebie count, businesses should consider several factors:
- Budget: You need to stay cost-effective for obvious reasons, yet budgeting first tends to limit creativity. First determine what will delight your customers, then work to find a comparable solution that will fit your budget. If you can justify a more expensive gift (or at least gift of higher perceived value), and it meets all of the below criteria, your customers will love you for it.
- Timing: Do not wait until the last minute to plan your freebie strategy. Whether it is a Trade Show Giveaway or Blog Post, give yourself enough time to plan in advance. If you do not put much thought or effort into your giveaway, it will go unnoticed.
- Targeting: Give some forethought into who you are rewarding. Reaching qualified prospects and rewarding loyal customers will pay for itself in hearts and spades.
- Value Proposition: The freebie should provide genuine value. Simple, yet meaningful value is essential. A “Freebie” should go beyond the typical customer exchange. Nowadays, many customers (and prospects) have even grown to expect something of value up front, before they are ready to buy.
The Value of Free Education and Content
Not all freebies are physical products. Free education is a powerful tool that promotes expertise and introduces customers to new and exciting ideas. For instance, blog and social media posts serve as freebies by providing valuable information and positioning the business as an expert to the people who need their expertise most. When you deliver consistent and reliable content, your customers and fans will follow you and recommend you to others. Free education not only promotes your expertise, but introduces customers to new and exciting ideas. Creating a theme and hiring a caterer, handing out educational materials that support your theme, and partnering with sponsors who also benefit from your audience are strategies that can be used to offer educational freebies.
Consumer Psychology and the "Free" Effect
The appeal of freebies is deeply rooted in consumer psychology. The word "free" triggers a specific response that often overrides rational decision-making. As mentioned, consumers prefer a lower-quality free item over a high-quality discounted item. This phenomenon suggests that the zero price point creates a cognitive bias where the non-monetary gain is perceived as higher than the monetary savings of a discount.
This bias is also evident in online shopping behaviors. The Walker Sands Future of Retail Survey (2019) highlighted that free shipping is a major driver of purchase completion. Consumers are more likely to complete a purchase if delivery is free, even if paying for shipping would result in a lower total cost than buying an item with a higher price but free shipping. This indicates that the psychological impact of "free" extends beyond the product itself to associated services like shipping.
Furthermore, the concept of "free" works across various verticals. In the food, skincare, or personal care space, offering free samples lowers the barrier for first-time buyers. People love trying before they buy — especially when taste, texture, or scent is involved. No one wants to risk money on something they might hate. By removing the risk, businesses can acquire customers who otherwise would not have made a purchase.
The Long-Term Impact of Freebies
The long-term impact of freebies can be substantial. A person who tries a P&G product during a Manhattan giveaway has the potential of becoming a lifelong customer. The initial cost of the free product is offset by the lifetime value of a loyal customer. This is why companies are willing to invest heavily in large-scale giveaways and sampling programs.
Freebies also generate word-of-mouth marketing. When consumers receive something for free, they often talk about it. This organic promotion is valuable because it comes with a layer of trust that traditional advertising lacks. If a friend recommends a product they received for free and loved, the recommendation carries more weight than a paid advertisement.
Additionally, freebies can be used to clear inventory, introduce new products, or re-engage dormant customers. For example, a "Buy 2, get 1 free" offer not only moves inventory but also increases the average order value. Consumers end up buying more than originally planned to take advantage of the deal.
Conclusion
Freebies are a powerful tool in the consumer marketplace, driven by deep-seated psychological principles such as reciprocity and the irrational excitement associated with the word "free." For consumers, free samples, trials, and promotional offers provide a risk-free way to discover new products and services. For businesses, they are a strategic investment that can yield significant returns in customer acquisition, brand loyalty, and long-term revenue. Whether it is a physical product sample, a free trial of a streaming service, or valuable educational content, the "free" offer remains one of the most effective ways to connect with customers and build lasting relationships. The key for both consumers and businesses is to understand the underlying mechanics of why freebies work and how to leverage them effectively.