Follow Up Messages and Confirmation Calls in Marketing Part IV

Are Bonuses, As Sales Tools, A Waste Of Time and Money?

** This is the last part of a four part series. You can read part I, part II, and part III by clicking the links.

Offering a bonus, special gift, or extra incentive to close a sale adds overhead and it increases your sales costs. So, are they worth it?

In case you don’t understand what I mean when I say bonus or incentive it is this: “Buy the XYZ Widget 3000 today and get a  mini-widget and additional deluxe-widget absolutely FREE!” The mini-widget and deluxe-widget are the bonuses, special gift, or extra incentive.

You’ve probably seen this technique in infomercials on TV, in magazine ads, online, even in your local Wal-Mart (Buy the mega-sized shampoo and it comes with a sample size conditioner – FREE).

As the seller, these extra gifts cost you extra. Even if you give away some form of inexpensive-to-distribute “info product” like an emailed special report or down loadable audio file you still incur some cost to produce and package the “information-give-away”.

Clients don’t like adding expenses to their sales cost. They don’t like to increase overhead or burn through their cash. Besides, adding a bonus gift does not guarantee increased sales, or increased profits.

In Direct Response Marketing You Must Test

True. You don’t know if a specific gift can close a sale. You don’t even know which gift or combination of gifts has the ability to increase sales overall. So you have to test different ideas until you find something that appeals to your market.

A rule a thumb for bonuses to work and increase your sales: the gift must be desirable to your market while at the same time inexpensive (relative to you) as a give away.

Let’s try these out…

Would you pay $40,000 for an electric map? No?

Would you pay $20,000 for a cup holder? No?

Are you sure?

Would you pay $3,500 for a non-guaranteed cruise? No?

Would you pay $42 to rent one DVD for one night? No?

You think these deals stink and no one will go for them?

I disagree.

A few years ago I was in a seminar on trading FOREX markets. The man sitting next to me was a security manager for a Las Vegas Casino, and he was more interesting than the seminar.

He told me stories of all the different scams people pull to steal the casino’s money and your money. My favorite one was about the Jeweler. This is how the scam worked.

After a jewelery trade show, con artists followed a trade show vendor (jeweler) through the casino.

They dropped a few twenty dollar bills onto the floor behind the jeweler. One of the con artists told the jeweler, “I think your money fell out of your pocket.”

The jeweler put down his briefcase and turned around to pick up the twenties. The con artists picked up the briefcase and walked out of the casino with $5 Million in gems.

The Bonus Psychology

Bonus gifts work because humans are still Neanderthals. Ok, maybe you’re not a Neanderthal but your clients and customers are. Your spouse might be. Your children probably are.

• The jeweler, a professional with 20 years in the business and the third generation in the gem business let $5 Million of precious stones walk away in exchange for three twenty dollar bills.
• $40,000 for an electric map? In the early 2000s automobile navigation systems were new. Car buyers tripped over themselves to buy a $40,000 car (or more expensive) because it came with an electronic map (around the same time you could get an aftermarket navigation for under $1,000 out the door including installation).
• $20,000 for a cup holder? In the 1980s mini vans were the rage. American Baby Boomers were having children of their own (the Echo Generation or Generation Y). If you were in the market for a mini van, you bought the one that came with the cup holder.
• $3,500 for a non-guaranteed cruise? There’s a local contractor who’s offering to put your name in a drawing for a two night, three day cruise, if you hire his firm to remodel your kitchen (average sale is about $3,500). There’s only one winner but the idea of a cruise might be enough to push procrastinators off the fence and purchase a new remodeled kitchen.
• $42 to rent one DVD for one night (instead of buying one for less than $30)? I’m talking US dollars. I don’t know how much it costs to rent one DVD for one night in “other” dollars. But my local DVD rental store has a reward program (which still counts as a Bonus gift in my book). If you rent 15 DVDs at $2.80 each, you can rent the 16th one, for one night – FREE.

Alright, alright… Maybe Neanderthal was too strong a word. But the point is…

People Will Buy Your Product To Get The Special Gift

When you get it right, it works very very well.

In the financial newsletter subscription business it is common to “sell” the special free report to encourage prospects to subscribe to an annual subscription.

For instance, a special free report I read about (was pitched and “sold” to me) recently described why you should own Nuclear energy and/or plutonium mining company stock.

It explained: there’s too much greenhouse gas in the World and not enough energy. Nuclear power is the only solution to increase the world’s energy without increasing greenhouse gas. And the existing nuclear power plants are too old and must be replaced plus due to the negative stigma associated with nuclear power – there’s a world shortage in plutonium.

Hence, you’ll get rich if you own these specific nuclear company and plutonium mining stocks. Which ones? Learn all about them in the FREE report, all you need to do is subscribe to a trial membership for their monthly newsletter.

Some of these newsletter companies are $100 Million in size!

Many years ago I was lucky to work in Spain for a sweepstakes marketing company. I was only there for a few months but I saw how they promoted gas stations with loyalty programs. The most popular was a collect-stickers-and-buy-a-name-brand-product-at-a-huge-discount deal.

It worked like this: Buy X Pestas (today it would be Euro) in gasoline and earn one sticker. Collect 12 stickers and you earned the right to purchase a Corning kitchen set for a ridiculously cheap price (something like 90% off retail).

McDonald’s in America has it’s annual Monopoly sweepstakes. Purchase food or drink and collect a game piece. This game piece will tell you if you won a free soda, nothing, or $100,000 in cash.

Your customers need an extra push (especially in a slow economy).

They also want a good deal. They (even you) will almost always buy if the value (or perceived value) is higher than what you’re paying. This is why bonuses are powerful and should be tested and implemented in your marketing.

*To read part I, part II, and part III in this series click the links.

Dear reader what do you think? Are bonuses wasteful or are they profitable? Leave a comment.