I recently saw an advert featuring a fairly common promotion; The "free" gift.
The "freebie" is normally of little relative value, but is a simple way for a sales manager to ignore that they're cutting into profits to attract shallow customers.
This particular promotion involved the purchase of a mobile phone (a commodity item). The promotional bonus was available with the purchase of many phones and contracts:
It was An X-Box 360.
Lets do the math;
Xbox 360 wholesale: $550
Revenue from phone contract : $30 per month over 24 months: $720
The phone company is willing to invest over 75% of the potential income from a customer, simply in order to gain that customer.
What does an advert like this tell the customer about the company?
I'll tell you.
The average person simply thinks "That company is making too much money.."
"..from me."
Yes, the average person - on being shown a fantastic, too-good-to-be-true deal, thinks they're being ripped off, and takes their business elsewhere.
Such give-aways are a giant flashing neon sign to customers that you - as a company - are making a disproportionate profit on the deal.
A customer is looking for one of two things; The best quality, or the best price. Focus on one of those two experiences, not on freebies.
