Give gifts to boost word of mouth
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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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
Research date: 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:
Hyatt and Chick-fil-A give surprise loyalty rewards
Sephora gives birthday gifts
Target gives gifts to new parents
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
🏫 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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