By Ed Gandia
I admit it. I’ve never been a big fan of using premiums in technology marketing campaigns.
I’m talking about the items that are not related to your products and services. The $10 Starbucks card you offer prospects who download your latest white paper. Or the complimentary 2GB flash drive you send to those who attend your upcoming webinar.
It’s not that they don’t work. It’s just that I’ve never felt comfortable with this approach. This reluctance probably comes from my days in sales when we would offer gifts to prospects who attended our live events. I noticed that attendance would jump when we gave away PDAs and golf shirts… but the overall prospect quality would also plummet.
In direct marketing campaigns, I’ve found that almost every time I’ve used a premium, response rates actually went down—not up—when compared to the control group!
I’ve long hypothesized on what causes response to drop when premiums are involved. But recently, while reading the book Freakonomics by Steven D. Levitt and Stephen J. Dubner (William Morrow), I found a more scientific explanation for this phenomenon.
A License to Be Late
In this fascinating book, the authors cite a recent study involving, of all things, day care centers. Faced with the problem of late child pickups, a group of day care centers began fining parents $3 every time they were more than 10 minutes late picking up their children.
But after instituting the fine, the number of late pickups promptly went… up!
As Levitt and Dubner explained, the day care centers’ approach failed because it substituted an economic incentive (the $3 fine) for a moral incentive (the guilt that parents were supposed to feel when they were late). For just $3 a day, parents could now “buy off” their guilt. What a bargain!
Additionally, the fine sent out a clear signal to parents that being late to pick up their children was OK-as long as you paid a nominal fee.
Blood Money
The second study involves blood banks. A group of researchers in the 1970s wanted to learn more about the motivation behind blood donations. So they began to give donors a small stipend for their blood donation rather than praising them for their altruism.
But instead of giving more blood, donors began to donate less. The researchers concluded that the stipend turned what donors considered to be a noble act of charity into a painful way to make a few bucks.
You may think that marketing enterprise software is different from running a day care center or a blood bank. But at the end of the day, we all respond to incentives, both negative and positive. It’s how we’re all wired.
And when we pile on gimmicky premiums in an effort to drive downloads, attendance or inquiries, we’re substituting an economic incentive for other more effective incentives, such as prospects’ desire to look like heroes to their employers. Or the incentive to do something that will advance their careers.
What You’re Really Saying to Your Prospects…
In essence, we’re telling our prospects that our white paper is junk. So we’re going to buy them an iced mocha and a blueberry scone for their trouble. We’re telling them that our upcoming webinar is a waste of their time. So we’re going to mail them a flash drive to make up for that.
Those are harsh statements, I know. But I contend that, as marketing professionals, we should be working harder to sell the value of the offer, the call to action, not on finding a gimmick to artificially lift response.
If we can’t find enough value in our offer to get the response we need, then it’s time to rethink the offer.
About the Author: A successful, 11-year B2B sales veteran, Ed Gandia is a freelance copywriter specializing in software and technology white papers, case studies, web copy and direct marketing.
