Creating Customer Loyalty with Back-End Premium Fulfillment Strategies
What is back-end premium fulfillment you ask? Premiums are anything delivered to the buyer that gives them more for their money. Examples include buy one get one free offers (BOGO), free gift with purchase, free samples, focused white paper special reports, or donor/member thank you gifts, just to name a few.
It may seem like an unnecessary expense to incur; after all they already bought your product right? That kind of short-term thinking is way off. The business of premiums is key to developing strong customer loyalty and has shown outstanding ROI results over the long haul. For online companies, the pay-off can be huge; web sites that send a catalogue or free gift with order report 163% more revenue than those who do not. Don’t assume the “free giveaway” is a logical process for consumers, research has found that humans respond to free gifts in many surprising and unexpected ways.
How Customers Respond to Free Premium Offers and Why They Work
Gifts of gratitude make us feel good about donating. Specifically for the nonprofits out there, sending more than a standard thank you form letter can increase donations for the future. It doesn’t need to be an expensive gift, but meaningful is good. Perhaps a simple book of stories showing their donation at work, or a free gift from one of your sponsors. The American Red Cross is brilliant at this. For regular donors they’ve given out free Sports Clips haircut certificates, free Dunkin Donuts coffee, and Red Cross t-shirts as thank you gifts. Not only does the donor feel special, but they frequent the sponsor’s business giving them the chance to build a future customer. A real win-win for everyone.
When we get a free gift, we feel obligated to buy more. This is because of a behavior concept called the reciprocity principle which basically states that we feel obligated to return the favor granted to us even if we didn’t ask for it. Sort of taking advantage of our good nature just a wee bit, but it doesn’t feel bad to us, on the contrary most of us are happy with the unexpected “gift” we got. As well, because free offers expose us to products we may not otherwise try AND we feel subconsciously obligated the odds that an additional purchase will occur are quite high.
We talk a LOT about freebies. In the world of social media and online reviews you can’t afford to miss the opportunity to start tails wagging about how great you are. It’s not just chatter; we love to share good fortune with our friends and family by passing along our latest great deal. Discounts are nice, but free stuff just feels bountiful and worth blabbing about. Think about Ben & Jerry’s annual free cone day, not only are there tons of pictures on social media, but serious long lines of happy people, and everyone is talking about how generous the company is. That kind of word-of-mouth is a free PR machine that can pay off handsomely for any organization.
We perceive getting more as far superior to a discount. The age-old concept of getting more for your money is in play here. In a Journal of Marketing study where participants were offered a choice of getting 33% more coffee or 33% off the regular price of coffee. More people picked the more coffee, even though the discount is a better deal. You see this everywhere from unlimited cell/data packages to hefty-size restaurant meals to the old baker’s dozen (13). Not to get too scientific here, but the theory of abundance vs. scarcity is an underlying conflict for all human beings. We think that we never have enough so our instincts kick in to remedy the scarcity in our world.
Discounts can have the effect of cheapening a brand; consumers read that if the manufacturer doesn’t think their product is worth the full price then it must not be. Of course this can be a vicious circle that slowly erodes profit margins and market share. Offering premiums are an excellent way to stand out in your market without reducing the price and creating doubt in your customer’s mind.
Premium fulfillment comes in all shapes, sizes, and prices. Begin by consulting with an experienced premium fulfillment firm to control campaign cost. They can make recommendations like size, weight, thickness, materials, and coating to keep cost low and guarantee your package won’t be rejected by USPS automation. Three Dog manages countless premium fulfillment campaigns every month and has developed consulting expertise that’s included with every project.
Ready to develop loyal customers with a premium fulfillment program? At Three Dog Logistics our consultants will help develop a plan that delivers your parcel at the lowest cost and fastest delivery speed possible. Remember, we take the bite out of postage and freight. Visit www.threedoglogistics.com or call 410-284-5494 extension 220 to schedule a complimentary consultation today.