Why Offering a Free Incentive Doesn’t Always Work

Why Offering a Free Incentive Doesn't Always Get You That Next ClientEvery day there are hundreds of offers online that promise a gift or reward when you make a purchase, sign up, or request more information. It is often considered good practice, but is it always? Does the customer see these gifts as cheap, or as a good free incentive?

In some cases, you might be surprised to discover that offering an item might cost you more than you get in return, harm your reputation, and leave you feeling deflated.

Free iPads

The chance to win a free iPad in a drawing is sometimes offered for signing up for a webinar. It has become a popular trend, and nearly every webinar comes with the possibility to win a free item. However, many of the things that are offered are cheap, and they don’t always attract the right leads since everyone and anyone wants them.

If the right people don’t attend your webinar, then you aren’t going to get anyone staying in your sales funnel. Therefore, there will be no one buying products or services to recoup your investment.

At the same time, it will put some people off as they will ask how valuable your service/product is (whether it is a quote, webinar, etc.) if you have to entice people with a free item.

The PPC Problem

Pay-per-click is another area where there are usually lots of incentives. Most of the eCommerce ones are about free delivery on orders over a certain amount, a free item, or something else. If your services are so good, then why do you need these incentives? What is the quality of the leads you are generating?

Add on to this that there are rising costs for PPC. According to some statistics, 2015 saw the highest cost per conversion since 2005. In 2015, the cost per conversion was $44.50, up 50% from 2014, and almost double the 2012 high.

Adding on the expense of an incentive like a free gadget is only going to increase those conversion costs. The biggest problem is that the average online spending is only about $78 (2015). With churn rates in some industries as high as 25%, you can see that expensive, meaningless free incentives aren’t going to make you significant profits.

So What Can be Done to Entice Customers?

There are still incentives that can attract potential customers to your brand. However, they have to be highly valuable to your key target audience, cost-effective to you, and easy to implement. Here are some suggestions on what the best incentives might be for your business:

  • An Information Kit – This can be a package of information, such as a video series, or a collection of white papers, or eBooks. It is valuable information because it tells you exactly what the customer is interested in so you can send them targeted information.
  • Incentive For Buying – Give the consumer a discount on their first purchase or a gift for making a purchase. It is ideal for eCommerce.
  • Incentive For Repeat Buyers – Reward the customer for staying loyal to you. Have a loyalty program where every $1 spent provides them with points that they can then use to lower the price of future orders. Alternatively, provide your customers with a gift after five or ten orders.
  • Have a Smaller, But More Frequent Incentive – Don’t just have one incentive. Give gift cards for the first one hundred, or two hundred respondents. Consumers are more willing to respond if they feel they have a better chance to win the reward.


Free incentives are great, but only if they are well thought out and implemented. Don’t seem cheap, or like you are following the crowd by using the same old items that everyone uses. Instead, create incentives that are specifically useful to your target audience.

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