[Pricing Nugget #053] What Is the Best Gift in a Free Gift Promotion

Imagine you are creating a free gift promotion.

Customers buy one item and get a second for free.

In your promotion, both items have more or less the same price, like a pair of headphones and an electric toothbrush.

So what is the item customers need to buy? And what is the item they get for free?

We will find out some surprising insights today.

Imagine you go to your favorite electronics retailer and you look for your favorite pair of headphones.

You stroll around and you find that your favorite pair of headphones is on promotion: You buy it and you get an electric toothbrush for free.

Do you like this promotion? Are you intrigued to buy it?

Now let us imagine you are entering the same store. You find a similar free gift promotion. But now what?

You buy an electric toothbrush, and you get your favorite pair of headphones for free.

What do you think now?

If customers look for a product and find a promotion where they get their (target) product for free, they are surprised.

And this surprise leads to the feeling of luckiness.

And they attribute this feeling of luckiness, of being lucky to the retailer.

And this positive emotion explains why they are more likely to buy this promotion.

However, this works only if customers don't expect that this promotion is kind of targeted. If customer believe that artificial intelligence, machine learning, or any other algorithm in the background created this free gift promotion for them, then the feeling of luckiness does not materialize.

And if this is not a free gift but just a discount, for example of 40%, customers do not feel as lucky as well.

And what did we learn today?

First, if you launch a free gift promotion, give the more important item for free. This makes customers feel lucky, and luckiness increases their purchase likelihood.

Second, make customers aware of the luckiness. Stress the luckiness in this promotion, for example, with a tagline like "your stars aligned today for you."

And third, give it for free. Not at a discount. Otherwise, customers don't feel lucky.