The Value of Free Goods for Your Customers

Everyone enjoys getting something for free, right? You go to a website and order some merchandise, and when your package is delivered, you open the box and voilà! You see some free items you did not order. Nice, right? Free items are an extra bonus for your customers while adding value to your marketplace. These days, all direct marketers should be doing some level of free items for promoting their brand and giving something back to their customers.

 

It’s important to have good back office software for managing your orders and to perform this task with precise analysis. Excellent back office software determines which free goods the customer should receive. This determination needs to be entirely automatic and delivered in real time, as the system needs to make sure the merchandise type or brand is something the customer would be interested in receiving.

 

First, you need a pool of free items. Your back office software needs to check inventory levels and purchase patterns to make sure the item is not best kept for selling to the masses. The item selected for the customer should not be repeated; your system should be keeping a full history of all free items shipped to the customer or the customer’s recipients. Likewise, the system should check and make sure the customer has never received the free item. Also consider the incentive for the free item: do you want to award the customer for their first order or reward them for their loyalty for repeat purchases? Do you want the free item to be based on the total dollar value of the order? (For example, the more the customer spends on the order, the better the free item.) Would you want to add a free good to a shipment for a customer with history of returning a high percentage of their orders? (This should be a red flag.) A good back office system needs to be fully automated to handle these parameters and qualifiers.

 

Another important factor is to not flood your customers with free items in each shipment; one or two per shipment is a perfect amount. Focus on quality, not quantity. Remember, they have to be small enough so up sizing in cartons is not required, as you do not want to add additional weight to keep your freight costs in line. Having a lot of free items per shipment will have false indicators on your line item average and a negative impact on merchandise dollar/line item ratio. Furthermore, this can slow down your distribution center.

 

As always with any marketing tool, analytics and reporting is a must to monitor if your efforts are worthwhile. Weekly automated emailed reports to all stakeholders for management overview should be executed.

 

Our flagship software application, MOST, is designed specifically for catalog, retail, ecommerce, and business-to-business merchants. Our order management product allows quick deployment of customized applications, allowing our clients to get a leg-up on their competition. Our systems are architected to deliver fast and reliable functionally while at the same time providing a flexible data store that can easily handle any increasing data requirements while maintaining low to no cost of administration and overhead.

 

Contact our office for more information.