Could increase your sales by 40+ percent
- Differentiation – stand out from the competition
- Retention – increase satisfaction which encourages repeat business
- Word of Mouth – give your customers something to ‘talk, tweet, yelp, blog and Facebook’ about
Now a recent study in the International Journal of Marketing Studies has revealed that giving a gift before purchase could increase consumer spending by over 40%. Here is a synopsis of the article by Hershey H. Friedman and Ahmed Rahman:
An experiment was conducted in a restaurant to determine the effects of a small gift upon entry and greeting customers with a thank you for their patronage. Two types of gifts were used: a cup of yogurt and an inexpensive key chain. The authors found that providing a gift upon entry into a store had an impact on how much was spent, on the performance rating, and on how strongly the establishment would be recommended. This study did not find any differences between gifts: a gift of a cup of yogurt had the same impact as a key chain. The difference in amount spent between the group that was not greeted or given a gift and the group that was greeted and given a cup of yogurt was 46.4%, a considerable amount.
The article discusses the underlying principle of reciprocity, the power of surprise and the importance of giving without an implicit expectation of return. The conclusions are very interesting:
This study demonstrates that there is value in greeting customers who enter a store. Customers who are not greeted will spend considerably less, will rate the store lower on performance, and will also be less likely to recommend the establishment. Providing a small gift upon entry into a store will have an impact on how much is spent, on the performance rating, and on how strongly the establishment will be recommended…
The value of a satisfied customer to a business is immense. One study showed that customers who are totally satisfied contribute 17 times more sales to a firm than customers who are somewhat dissatisfied and 2.6 times as much sales as customers who are somewhat satisfied (Whalley and Headon, 2001). If all it takes to improve attitudes of customers is an appreciatory comment and an occasional gift, then organizations should use this approach as part of their marketing communications strategies.