- Offer something your clients want
What Is An ‘Offer’?
An offer is a proposition you make to your customers to prompt a response from them, to entice them to buy.
An offer gives a potential customer a stronger reason to try you out. Essentially it is the carrot designed to push the customer over the edge and have them buy from you.
Today we’re going to look at the way special offers can increase the range and volume of your sales, how they can introduce you to new markets and differentiate you from your competitors.
By including an offer in your ad or marketing piece that appeals specifically to the people you want as new customers, you can dramatically influence the decision-making process and generate a far greater response for your marketing pounds.
We’ll also look a number of techniques for making offers that will win customers and increase the likelihood of repeat business.
First, let’s look at some general principles that you should consider when you create offers. These principles will help you make offers that:
- Are within budget
- Aimed at the people most likely to be interested
- Will motivate people to act, and to act now rather than later
Offers That Win Customers
One of the most important factors to consider when trying to appeal to the consumer is the ‘WII-FM’ element. Those 5 letters stand for ‘What’s In It – For Me?’ and it is the single driving force behind any buying decision. To break that down, look at it this way: No one ever actually buys a quarter-inch drill for the drill itself; they buy it for the hole it can make!
Given that, it’s important to recognise that a similar thought process occurs when consumers read or hear an advertisement asking for their hard-earned money. By simply including an offer that increases the ‘What’s In It—For Me? factor, you can dramatically influence the customer’s decision-making process.
Know Your Market / Cost Your Offer
Identifying your target market will help you decide what type of offer may be most effective and to direct offers to the group of people most likely to buy your product or service.
Market research is a big topic – basically, its importance is to target your audience or audiences so you can focus your advertising on the messages most likely to get a response from a customer.
Market testing will help estimate how much income an offer is likely to generate and that will help you balance the cost of the offer against the increased sales it generates.
When you’re considering whether to make offers that involve a price reduction (such as a discount), a loss leader (where you make a loss in the hope of attracting future custom e.g. a free meal at a restaurant), you need to ask yourself a number of questions:
- Will the price you decide on still allow for a sufficient margin?
- Is the industry you’re working in price-sensitive?
- If you advertise a price reduction, will consumers think they’re getting a bargain or suspect that you simply jacked up the original price?
Provide Offers That Add Value
Offers don’t necessarily mean price reductions. In fact, you’ll find you generally get a better result with offers that add value rather than cut prices. And adding value does not necessarily increase your costs.
For example, it need not cost a lot for you to put out a booklet that gives customers valuable knowledge and tips that you have picked up in your business. ‘How-to’ booklets are ideal. For example – ‘12 things you need to know before you commit to a [your product or service type]’.
Another option is to provide seminars or demonstrations such as the ‘How to tile your bathroom’ type offered by builders hardware stores.
It’s important to note that these reports and demonstrations can’t just be marketing ‘blurb’. They really do have to provide useful or practical information. This will generate kudos for showing that you are an expert in your field, while customers indirectly find out more about your business.
In the back of the booklet or during the demonstration, you can add a description of the benefits of dealing with your business. You can also include testimonials from your customers and guarantees you offer.
Quantify The Value Of The Offer
Try to set a pound value on the customer benefit the offer represents. This can have a big impact on how attractive the offer is, as people tend to place a lower value on things that are simply ‘free’ – in fact they may be seen as ‘value-less’.
However, if the value of the offer is very low in comparison to the ticket price of your product, you should probably not mention a value. In this case, it would probably be better not to make an offer at all, but rather to provide the customer with an unexpected ‘gift’.
Make The Offer Time Or Quantity Sensitive
You can also increase an offer’s perceived value by introducing limitations that increase the urgency for a response. After all, offers are designed to make people act ‘now’. They should be calls to action. You can make a ‘while stocks last’ offer, for example. And people are more likely to buy if the offer has a deadline — a limit or an end to the offer incorporated into the promotion.
People will not only be attracted by the good features of the offer, they will be motivated to avoid the ‘misfortune’ of missing out on a good opportunity.
Other examples of this sort are:
- ‘Our offer of a free gift expires on [date]’
- ‘When you purchase a minimum of 20 bottles you’ll receive a [related product or service] valued at £x – absolutely free’
- ‘The first 20 callers will receive tickets to [name event]’
‘Early bird’ offers’ are a special type of time sensitive limitation well suited for registrations – and car parks.
Consider The Form Of Offer
Give careful consideration to the way you word an offer. Offers come in many forms as you can see from the slide.
When you look closely at these offers, you’ll find that some of them are really different ways of saying the same thing. For example, these offers are identical:
- Half price!
- Buy one, get one free!
- 50 percent off!
You might be surprised to learn that the different ways of stating the offer get very different results. In one market test, for example, the ‘Buy one, get one free!’ format generated a 40 per cent better response than the ‘half price!’ or ‘50 percent off’ formats.
So when you make offers, consider the way you express them and try to fit in some market testing to see which form has the most pulling power.
Consider The Timing Of The Offer
Offer timing can vary depending on what you are selling and what sort of offer your product allows for. Some common tactics are:
- Bounce back timing: The idea here is that customers are already feeling good about their first purchase, so with a strong offer they will ‘bounce back’ and buy again. For example, a computer store would be more likely to sell a customer a computer carrying bag while the customer was excited about the original purchase of the new computer. So, that store could make an offer at that time, making it even more attractive to buy right there and then. Or a hairdressing salon might always offer a free conditioning treatment if the clients book their next appointment right there and then BEFORE they leave the salon.
- Until further notice timing: Here you create an ongoing habit, one where the customers get used to it ‘just happening.’ Bottled water delivery is a perfect example. The cost of the water is simply billed to a credit card every month, and the water just keeps on being delivered like clockwork. These arrangements keep going until the customers give notice that they no longer want the service or goods. So while the buying decision happens only once the purchases keep on going and increasing your profit.
- Purpose timing: This is where offers are used to increase sales during flat spots or to move stock quickly. Examples are bargains at ‘fire sales’, a movie theatre offering mid-week cheap seats and an air-conditioning business offering specials in winter.
Marketing In A New Area
Now let’s look at how a pizza delivery chain has used an offer to develop business in a new area. When starting business in a new area, the chain selected a ‘Street Of The Week’, offering a discount pizza delivery to residents of that street. On average, 25 percent of the residents would take up the offer.
A limited-time offer of this sort can be a good way to make customers familiar with your product and it may be the beginning of a long-term relationship. You could also use such an offer in a business-to-business purchase situation; it could help build your network in your local area or industrial estate.
Specific Types of Offers: (Further details on each type of offer below)
- Loss Leader Offers
- Free Item with Purchase Offers
- Credit / Easy Repayment Option Offers
- Optional Extras Offers
- Bundling Products & Services
- Unit of Sale Offers
- Volume Discounts
- The Future Obligation Offer
- The Service Offer
- The Host-Beneficiary Relationship Offer
- The Sample Offer
Loss Leader Offers
One way to offer an incentive is to offer something extraordinary for free if potential customers respond before a certain date, for example a free main meal at a restaurant.
Most restaurateurs would say this owner was ‘mad, absolutely crazy to give away a meal—they’ll be ruined!’ But consider that most people don’t like to eat alone. Often they’ll bring another party, or another couple to make a night of it. So in fact, the restaurant could then be serving 3 paying customers for the cost of 1 free meal.
Further, it’s rare for 2 people to order only a main meal. If you take into consideration the appetisers, entrées, drinks, wine, and possibly even dessert and coffee, the hard cost of the 1 free meal is quickly absorbed by the additional sales.
This is precisely the idea behind a ‘loss leader’ offer. You may make a loss on the offer, but the offer itself leads the customers into spending more and more with you. So, in looking at loss leader offers, it’s important to focus on the additional revenue the offer will generate and not simply the costs you incur as a result.
In fact the actual hard costs of this example offer are very low. You see, the labour cost is absorbed because the team is there in any case (better to have them busy), so the hard costs here are literally ONLY the cost of the food materials for the free meals.
Incidentally, the value of testing is proven with this example. After running the ad with this headline for a while, the restaurant decided to try a different approach. The new headline—‘Two Meals for the Price of One’ with exactly the same copy—caused the response rate to drop by half. FREE is a very powerful word! And that leads us to another type of offer.
Free Item With Purchase Offers
Gifting something to a customer for making an enquiry, for testing or trying, or for buying your product, is one of the most commonly used incentives. And one of the most effective, provided the gift really does suit your target market.
It’s not unusual for the right gift to increase the response to a marketing piece by 25% or more. However, it’s important to note that if the unit of sale or amount of sale overshadows the appeal of the gift, this strategy can actually reduce response or create no positive effects at all – offering a free fridge magnet with the purchase of a fridge won’t exactly excite customers.
When you’re considering what you’ll give away, you must ensure that it’s something the customers will perceive as being of value to them. As a general rule of thumb, gifts for personal use tend to have considerably more appeal.
And by the way, your gifts need not always cost you a lot – for example, you could talk with manufacturers about purchasing inventory that might not be selling well but that would appeal to your customers. You’d usually be able to put together a good deal—the manufacturer or supplier gets rid of the hefty expense of carrying dead stock, and you keep costs down AND have a great offer.
Credit / Easy Repayment Option Offers
Credit option offers are designed to make it easier for customers to buy. Take this example from the housing industry. Offers of wall-to-wall carpets and landscaped gardens with a new home were once attention-grabbing offers of themselves, but now they’re standard in most housing deals.
With that in mind, look at the next advertisement on your handouts. It offers to pay the interest on the first six months of a mortgage—now that’s an offer that will get people’s attention. And it will differentiate the company from its competitors, helping to build brand awareness.
Offers can also take the form of easy payment options. For example – ‘When you purchase [XX] by [date], you’ll be able to take advantage of a special payment plan that really will make it even easier for you.’
Alternatively, if your ad is designed to generate a quick reaction or decision, provide an instant method for ordering and paying.
Optional Extras Offers
Basically, these offers rely on bundling products together so that customers will perceive them as offering much greater value. The optional extra can be offered for free or at a minimal increase in the price.
Picture this—you’re feeling a little hungry, so you pull into the nearest fast food restaurant. You’d really only intended to get a cheeseburger to tide you over until you got home, but there on the menu looms the offer of your coveted cheeseburger PLUS regular fries PLUS a regular drink. All for just a little more than your original burger was going to cost anyway! So you go for the ‘combo’ deal and spend £2.50 instead of 99p after all, it’s better value, isn’t it? Imagine the effect on a full day’s trade even if only half the customers did this in a day.
Other industries make similar packaging offers. For example, most new cars come with optional upgrades of air-conditioning, central locking, power steering, and other items for what seems like a small addition to the overall price. (Actually, most car dealerships make their greatest profits on optional upgrades!)
Gyms, to take another example, may offer various levels of membership benefits using discounts or ‘pay by the month’ plans to entice customers to select more extensive membership plans.
Bundling Products & Services
It’s also possible to package a product with a service. For example, a Venetian blind manufacturer might offer free installation. The offer would differentiate a manufacturer from its competitors; it might also be attractively convenient to householders, who might prefer it to a discount.
You can also include postage and handling costs as another form of package deal. For example: ‘When you purchase XX before October 10, we’ll take care of all postage and handling costs for you. In fact, you’ll save £29.99.’
Unit Of Sale Offers
Offering discounts or ‘freebies’ for purchasing high volumes is another sort of offer that gives customers an incentive to buy more.
For example, a winery offers a free magnum of chardonnay with every mixed-case purchased.
The offer is also double-edged: the winery actually offered the magnums to the retailers for free, as an added incentive to upgrade their orders. Plus they’ll throw in a free beach umbrella with a minimum purchase of 24 cases.
Volume Discounts – Sell More!
Now, if a retailer has an order for, say 22 cases to restock, this just may inspire them to bump the order up to 24. What’s another 2 cases, especially when they’ll probably sell more of the wine to customers because of the free magnum. A sense of urgency is instilled by the notation of ‘Strictly Limited Offer—Available Only While Stocks Last.’
And there’s another dimension to this offer. The winery offered to create in-store displays for any retailer purchasing 24 of the specified mixed cases. The hard cost of this is minimal (the winery’s representatives would be calling on the customers anyway), and it certainly would appeal to their customers who find it difficult to invest the time (or energy) to create their own displays.
The Future Obligation Offer
There are some other common ways to form offers. For example, you can create a future obligation for potential customers, enabling you to provide an initial offer at a greatly reduced price.
Take, for example, CD, wine, and book clubs. They offer the first 3 to 5 items at a cut price. The ad might read – ‘Buy 3 CDs for just £5 each simply by becoming a member.’ But there will be a clause about minimum duration of membership or minimum number of items to be purchased in the first year.
This is a type of loss leader offer but with the difference that acceptance actually locks the customer into a number of future purchases.
The Service Offer
Another option is to hold seminars or demonstration days to educate your potential customers about how to solve a problem or meet a need. For example, a gym could hold seminars on: ‘12 Steps To Better Health’, or ‘Learn 7 Keys To Guarantee Weight Loss’.
Or a professional firm could offer a seminar on a particular topic. For example, a small business consulting firm might hold a seminar about: ‘Keys To Business Planning’ or ‘15 Steps To A Better Business’.
Other types are:
- Free Consultation
- 24-Point Assessment
- Confidential Needs Analysis
- Free Trial Period
The Host – Beneficiary Relationship Offer
This can be seen as a special sort of Service Offer – one where another business, one that can influence your ideal type of customers, refers business to you and you to them.
For example, take a training company that approaches a bank manager who deals with small- to medium-sized businesses. This bank manager is a perfect source of referrals to the training company.
One way to do that would be to create an offer for the bank manager to give to appropriate clients. Imagine how happy that bank manager would be to give clients a free ticket to a seminar called ‘How To Make Your Business Really Fly’—valued at £195—to help that business grow.
The clients think the bank manager is fantastic for providing something very useful for free. The bank gets good word of mouth, and maybe some referrals, out of the scheme. The customers’ loyalty to the bank and bank manager also increases, making them less likely to move to another bank.
The customers get to attend the seminar for free and pick up some valuable ideas for their businesses. The training company wins new clients on a regular basis, and they can then feed into other courses or programmes.
So it’s a win-win situation for everyone involved, and it’s a very powerful offer. It doesn’t need to be one way either – you can ask other firms to put up offers for your clients.
Making The Host – Beneficiary Relationship Offer Work
Keep in mind that this system works best where:
- Your host is a non-competing business
- The offer is limited to your ideal potential customers (there’s a lot of value at stake)
- It can generate referral traffic
- It is established as a formal, structured arrangement
- And, once again, your offer is something customers will perceive as being of value
The Sample Offer
The most direct way to make an offer is to simply seed the target market with samples of your product. This can be an effective tactic when you introduce a new product. It creates awareness of your product and gives people a chance to find out whether they like it. It may also make potential customers more aware of the full range of your products and services.
You’ve no doubt come across the sampling technique. For example, have you ever received trial shampoo and conditioner in the mail? Or sampled small snacks at a supermarket? Or perhaps you’ve seen a professional firm promote a free consultation for a particular issue. People often find such ‘freebies’ irresistible.
Conclusion
We’ve looked at some ways you can use offers to make your products more appealing.
We’ve also seen that you can use offers to expand the range of your market or to introduce your business to new geographical areas.
We’ve seen how you can bundle products and services together to expand the range of customer purchases. And we’ve looked at how different formats can affect the kind of response you will generate with an offer.
As I have mentioned before, there are only 4 ways to grow a business, and good offers impact directly on 2 of them; they can increase your number of customers, and they can increase the number of times each customer buys from you.
Good offers have a direct influence on the bottom line.
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