Give gifts to boost word of mouth

Gifts to customers without strings attached (e.g. spend at least $50) and without a hidden agenda (e.g. to convince someone to buy) increase word of mouth.

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📝 Intro

As marketers, we often give something away in exchange for a specific action.

For example, “invite 3 friends and get $20” (don’t do that, you should do this instead), “share this on Twitter and get a free ebook”, or “get a free coffee when you buy 10”.

It’s much rarer to give away something for free with no strings attached (e.g. “thank you for buying from us, here’s a $5 free coupon for next time, use it whenever you want”).

But giving something away for free can drive something very valuable: word of mouth.

And what you give away for free can be much cheaper than the campaigns you would have to run to achieve the same growth.

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Previous tip: Pay-what-you-want promotions (All tips here)

Give gifts with no strings attached to increase positive word of mouth

Impacted metrics: Word of mouth
Channels: Loyalty rewards
For: B2C. Can be tested for B2B
Tip type: New research (April 2021)

📈 Recommendation

To encourage positive word of mouth, give customers free gifts with no strings attached.

Give the gifts after customers purchase something, so they don’t feel it’s a trick to make them buy more - or when it’s clear the reason isn’t attached to a hidden agenda (e.g. because it’s their birthday month).

This won’t work if your brand is generally disliked and not trusted.

🎓 Effects

  • Gifts of appreciation given to customers (with no strings attached) increase word of mouth. 

  • The more conditions are attached to a gift (e.g. you need to spend $20 minimum to redeem it), the weaker the effect.

  • In a similar way, if gifts are dependent on the customer having to do something (e.g. share this on LinkedIn to receive the ebook, fill out a survey), word of mouth is weaker. There’s a tradeoff between encouraging customers to do something specific and increasing word of mouth.

  • For example, in an experiment in a bakery, customers were given an unexpected free macaroon after filling out a survey and encouraged to take pictures to post on Instagram:

    • 62.7% took pictures when they were told the free macaroon was a gift from the bakery. 19.6%started followingthe bakery’s Instagram account

    • 44% took pictures when they were told the free macaroon was in exchange for filling out the survey. Only 8% started following the bakery on Instagram

  • In another experiment, when people were asked what they would do if given an unexpected $15 coupon from a restaurant:

    • 71%said they would post about it on social media when it has no conditions

    • 51% said they would post when the coupon had strict conditions (redeem within 3 days between 10am and 12pm)

  • The effect weakens and can even backfire when people suspect there’s an ulterior motive behind the gift (e.g. to get them to buy more). This happens in particular when:

    • The gift is given before a purchase, rather than after

    • People don’t like or distrust the brand, because they assume the worst (even if it’s not the case)

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🧠 Why it works

  • We feel valued and appreciated when a company gives us something with no strings attached and without a hidden agenda (e.g. to get us to buy something down the line).

  • When we feel that way, we like to support and benefit those who appreciate us. In this case, the company.

  • One of the main ways we do that is by spreading a good word when given the chance.

✋ Limitations

  • The researchers used seven experiments in different contexts to test the effect and it’s well grounded in previous research. So it should generalize to most situations.

  • The study focused on B2C contexts, but it’s likely to work in B2B too. You can (cautiously) test it. For example, a marketing agency once planted a tree in my name (through Treedom) at the end of a project. That may have encouraged me to recommend them to other teams at Google.

🏢 Companies using this

  • A few companies give gifts with no or little strings attached, for example:

  • The practice remains rare.

⚡ Steps to implement

  • Already giving gifts to customers in exchange for something? (e.g. their email address, buying a certain number of products). You can test giving the perk away with no strings attached and measure if the increased word of mouth is more beneficial overall.

  • If it’s the first time giving something away, you can start on a small scale and measure how much growth it generates (through word of mouth). Based on that, you can set the budget for the cost of gifts.

  • You can make gifts ‘random’ to add an additional element of surprise and reduce cost (by reducing frequency).

  • Alternatively, you can focus gifts on certain groups (e.g. newlyweds) or occasions (e.g. birthdays, anniversary of their first purchase).

  • Make sure to frame the gift as something you are giving away as a sign of appreciation, not an exchange.

🔍 Study type

Field and online experiments. United States

📖 Research

Lisjak, M., Bonezzi, A., & Rucker, D. (April 2021). How Marketing Perks Influence Word-of-Mouth. Journal of Marketing

[Link to paper]

🏫 Affiliations

Arizona State University, New York University, Northwestern University. United States

Remember: Because of the groundbreaking nature of this paper, it could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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