Kabbage Blog

Looking for more resources? The Kabbage Greenhouse brings together all the best advice, trends and information for small businesses.

Looking for more business resources? Check out the Kabbage Greenhouse.

Check it out
Visit Us

Customer Marketing, Marketing

Free Trials to Get New Customers – Are They Worth It?

Who doesn’t enjoy nibbling on a free sample at the local grocery store or club warehouse? Of course, the marketer of the product you’re sampling ultimately wants you to buy what they’re giving away. And there are actually many valuable marketing benefits that they are leveraging by giving away freebies.

Now could this strategy work for your small business? Let’s take a look at the benefits of giving away free samples or trials and review some things to consider before you decide to add this strategy to your marketing arsenal.

 

The Primary Reasons Why Businesses Use Sampling or Free Trials

 

Jumpstart Buzz
It’s just a reality that people like free stuff. And they are likely to share with others what they’ve received for free if they like it. In the age of social media, you can gain a lot of exposure by giving away something of value to your customer base. Even for B2B companies, platforms like LinkedIn, Quora, and industry forums can be a great way to inform audiences about what you’re giving away.

Create a Positive Brand
Receiving something for free naturally makes you feel happy or excited. Aren’t these the feelings you want to create when people think about your business? Few things create a positive brand quicker than giving something away for free.

Eliminate the Risk of Trying Something New
Many studies have proven that customers are reluctant to switch brands unless there’s a very compelling reason to do so. Can you prove that what you’re offering is actually better than what your competitors provide? Simply communicating your unique selling proposition isn’t typically enough for most to make a switch. However, offering a risk-free trial can be a great way for prospects to try what you have to offer without having to make a commitment. If you can deliver an impactful, positive experience, you may just be able to convert a competitor’s customer into your new brand advocate.

Encourage Them to Spend More
Software as a Service providers are notorious for giving away trial offers or starter memberships. Even the biggest brands like Microsoft use this tactic of SaaS because they know that offering a freebie will encourage customers to buy more. They can justify the cost of what they’re giving away by the additional sales they make from selling complementary or upgraded products or services.

Test Market
Are you in beta on a hot new product? Before you roll it out in the market, it may be wise to offer it for free for a limited time to obtain feedback from users. Their opinions can be incredibly valuable when it comes to fine-tuning before you invest heavily into marketing. Customers are typically very happy to provide input about something new and are often very forgiving if not everything has been perfected.

Start a Buying Habit
As stated above, customers are obviously more likely to try out your product or service if you’re offering something for free. If their experience is a positive one, they’re far more likely to come back again to make a purchase. It’s a fundamental marketing principle that obtaining a new customer is far more difficult than keeping an existing one. Thus, marketing to those who have taken advantage of a free trial or sample are much more likely to be responsive to your campaigns and outreach than new prospects who have yet to come in contact with your brand.

 

Should You Give It Away for Free?
Yes, this is a very provocative question – particularly for a growing business with a less than robust marketing budget. Providing free trials or samples of what you sell can be risky. You will not know if the end result will justify the expense involved. Could it diminish the value of your brand? What if your customers simply don’t like what you’re giving away? These are all worthwhile questions that every business should consider before offering freebies.

 

Strategic Sampling
Perhaps the most important question to ask when it comes to free trials or samples is who should receive them. For products sold in the grocery store, the answer is simple – in-store customers. However, sampling can be a bit more complex when it comes to businesses in other industries such as technology or healthcare. Most likely, you don’t want everyone to gain access to a free trial. This could be too costly, and you could potentially harm the value of your brand if everyone gains free access to something you actually want to sell.

One of the newest concepts in sampling is targeting free products or services to those with extensive online communities. This means bloggers, authors, trend-setters, and sometimes even celebrities. If these individuals are impressed, they can share their experience with your brand far and wide to targeted audiences that would be interested.

Even the makers of broad-based consumer goods are seeing the value of targeted sampling to strategic audiences. For example, POM Wonderful, the maker of pomegranate juices and teas, segmented its sampling efforts to audiences in several key areas including entertainment, epicurean, and health and beauty. To reach the right people, the company gave away samples at events that cater to these groups such as epicurean trade shows and marathons. They also gave plenty of samples to mommy bloggers who happen to have large followings of readers ripe for purchasing new, healthy products for themselves and their families. The result? POM increased sales from $12 million to $91 million in a single year!

 

How to Develop a Sampling Plan of Action
Sampling is not an inexpensive way to win new customers. This means that you must take into account the overall size of your potential market and the overriding goal you hope to achieve by giving away what you could otherwise sell.

It’s never a good idea to start a sampling campaign without a clear plan. The total cost of samples along with the necessary components to support the sampling campaign need to be carefully reviewed to determine the viability of the plan. A clear start and end to the campaign will need to be developed. And once you begin the campaign, close evaluation of the success of converting samplers into paying customers must be an ongoing task. Generous sampling without significant return on investment can not only waste money but it can also potentially be a business’s demise.

 

Five Components of a Successful Sampling Plan

1.       A budget

2.       A timeline

3.       A focused audience

4.       Established goals and benchmarks to determine success

5.       A method of analyzing results

Yes, sampling can be a tricky balancing act for a business on a tight budget. However, it can be an incredible way to build a brand, raise awareness, and nurture relationships with new and existing customers. By taking the time to flesh out a clear plan, you’ll have the most success with this proven form of marketing. And you may find that it becomes a tried and true strategy that you’ll use again and again to launch new products and maintain customer loyalty.

Want to learn more about the Kabbage process? Check out these helpful links: