Giving away stuff free can return a store owner much more than the cost of the merchandise being given away. Some owners have on occasion had a special deal for a $20 purchase; the customer gets $5 in free merchandise. This is an okay method, but not as effective as what I am going too mentioned now.

Giving away a gift or a certain $ amount of free merchandise can lead to a huge sales increase. The first thing that pops into most owners heads, “Won’t someone take advantage of this”? The answer is yes, but if market right very few and the other customers will more than make up for it. 

I have run many promotional sales where we have given away something free to the first 20-50 customers that day with their letter about the gift. The cost is normally $1-$5 and we list the value of the product and not the cost. Tracking the customers who came in and received the gift shows time after time much more in sales than the cost of the gift. There are some to collect the gift, but look as a cheap way to advertise and help the stores sales for that day. The other way is more risky for store owners, but much more likely to lead a huge day in sales. 

The best way to reduce the risk in the second method is to do a test mailing or two. Send the customer a gift certificate for a certain $ amount in your store. Depending on your average ticket price, $5 or $10 should be right. As a rule of thumb, I use about 20-25% of the store’s average sale to come up with this number. 

If you are concerned about abuse, send a limited number of about 50 and track exactly how much everyone spends to see the results. The key to success with this is to send them to the right people. If they are sent to a targeted list, the results will be much better. For example, sending them to selected members of your store mailing list is a great way to use this method. 

If you know of another business with customers on his mailing list that match the kind of customers, you are looking for here is an effective method. The owner sends a letter to his list and thanks them by offering a gift certificate to your store with a few encouraging words. This can bring in many new customers at a fraction of the cost of getting them with other methods. These customers can bring you a small fortune, if you keep them as lifetime customers. 

The key is to give customers a reason to shop your store. The few who just used the free amount will be overshadowed by the huge increase of sales by the others. Every store owner should use this method or at least try it on a limited basis and evaluate the results. If it is to non current customers, consider it an advertising expense and track it with your other methods of advertising. One last word of advice, stop being afraid of what a few customers may do and focus on what most will end up doing.