Some retail businesses give free trials, free samples to get customers to try their products or services. Others give huge discounts to get customers to buy their products or services.

So which is better?

Well, that depends on the type of business you’re running and the type of customers you want to attract.

In general, these strategies are a type of “Loss Leader” strategy. This is where businesses to attract customers, so they can up sell or cross sell other products and services.

So what’s the difference between Free & $1 Promotions?

The main difference lies with the objectives of the promotion.

Free Promotion Strategy

A Free Promotion Strategy offers customers the chance to try your products and services for free. You will see these at events where customers free samples to taste, or some Yoga Studios giving free trial classes. It allows customers to try your products and services first before they decide to buy.

With this strategy, you will be targeting at anyone who is willing to take up your offer. So chances are, you might get customers with totally no intention to buy your products and services too.

Generally, this comes with an up sell strategy for you to sell customers more of the products or services they are trying.

So when should you use a Free Promotion Strategy?

This Strategy is ideal when the cost your product or service is low and it doesn’t take too much extra time or effort for you. Usually when customers need to experience first before they decide to buy.

It is ideal for short term events like Food fares and road shows that last only for a couple of days. The whole idea is to get as many people to try your products or services, so you can sell to them. By attracting anyone interested, you get to sell as much as possible in the shortest amount of time.

$1 Promotion Strategy

A $1 Promotion Strategy offers customers the chance to buy your products and services at a very low price. Typically you see this at department stores or in front of shops to attract customers to walk in.

With this strategy, you will be attracting bargain hunters and customers who don’t mind spending a little to try your products and services. This strategy also weeds out customers that are there only for freebies, so you will be targeting more genuine buyers.

Generally, this comes with a cross sell strategy for you to sell customers other products and services that are more profitable.

So when should you use a $1 Promotion Strategy?

This Strategy is ideal when you have other more profitable products to cross sell. Also $1 is not a magic number for you to follow. You can price higher too like $5, $10, etc as long it is still relatively cheap for what you are providing. Usually for very straight forward products and services, so customers know that they are getting an awesome deal.

This strategy is ideal to drive foot traffic for your store so your promoters get more customers to sell to. By attracting more genuine buyers, it also increases your chances to sell more products and services to customers.

Both strategies are designed for different purposes. One is designed to up sell a particular range of products & services, the other is to drive traffic to cross sell other products and services.

It is best you evaluate what you want to achieve before deciding which strategy is better for you. The worst is if you blindly copy a competitor’s promotion without understanding what they are trying to achieve. It might end up being a blind leading the blind.

SoVou is an affordable Cloud Loyalty System that uses SMS to engage your customers and encourages them to share your promotions on WhatsApp, Facebook, Twitter & Email.

Our Loyalty System’s is specially designed for Small Brick & Mortar (Offline) Retail Businesses that requires customers to come down to buy or use their services. We have stripped off the complex features to ensure that you and your customers have pleasant experience with your Loyalty Program.

Feel free to contact me at jay.li@sovou.com find out more about our Loyalty System!

Everything expressed in this article is my personal opinion and might not be applicable for all businesses. Please share with us your ideas and thoughts too so we can grow & learn together!

Do subscribe to our newsletter too at the left column to receive the latest updates & marketing ideas for your Retail Business!