Why gifts can drive sales

Gift with Purchase programs can create additional happiness as people anticipate getting more from their purchase or experience.

When shopping, the average consumer will weigh the costs and benefits of buying certain products or services. These costs and benefits will differ across products, time or occasion of purchase, and by the individual.

In higher involvement products or services, weighing the benefits can even have a much stronger influence on behaviour.

The science of persuasion

Dr Robert Cialdini, a leading thinker on the topic of influence, has written about six factors that guide consumer behaviour or the “science of persuasion”. Dr Cialdini’s research uncovers the reasons why certain sales promotion activities influence consumer behaviour.

Two of Cialdini’s factors, reciprocity (giving to get) and scarcity (the fear of missing out), are particularly at play with Gift with Purchase (GWP). GWP promotions increase the attractiveness of the original product. They create a sense of urgency, limited release or special one-offs around a product or service.

GWP drives retention and sales

A 2012 study from Harris Interactive found that GWP drives an increase in customer retention and incremental sales for online retailers:

  • Almost 90 percent of free gift receivers indicated that they are at least somewhat likely to buy more frequently from an online retailer after receiving a free gift.
  • 65% said they were at least somewhat likely to share their experiences with others online and around half offline. Women are found to be significantly more likely to share their positive experience than men.

Sales promotions are stronger when there is a match between the benefits of the gift with the product or service being promoted.  Providing that there is this alignment, people are happier as they anticipate getting more from their purchase or experience.

Other research also reveals that how customers feel about a company is strong predictor of loyalty.  Customers spend more than double with the brands that make them happy.  By making their customers feel valued through occasional surprise and delight gifts, companies can help to create those feelings of happiness.

What this means for brands

Over the long run, sales promotions can increase price sensitivity and destroy brand equity.  Using gifts, companies can increase the perceived value of a purchase and engage with their customers at a deeper level.

Speak to MaCher about how to use this research in your marketing strategies.

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