The Power of FREE!

The March issue of Restaurant Business has a great article about the power of giving your customers a free offer.

The word has such a strong connotation it leads people to gamble away their hard earned money under the believe they can beat house odds in Vegas, so why wouldn't it work to get customers through your door?

In his recent book Predictably Irrational, Dan Ariely puts it best, "Free gives us such an emotional charge that we perceive what is being offers as immensely more valuable then it really is" Ariely believes the power of free is related to our intrinsic fear of loss. With free, there is no fear of loss, as, well, it's free.

We believe the power of free products or services works on two levels. The first has to do with engendering a sense of surprise, delight and excitement. With all of the anxiety regarding the current economic climate, free products make the consumer feel good in a way that lower prices or sale prices cannot. Put another way, it's the shopper's job to hunt down the best prices, it's the retailer's job to surprise them and make them feel better.

The other reason free succeeds is related to universal cultural norms regarding reciprocity. As most of us realize, the unilateral giving of a gift compels one to return the favor, however small the gift may be. And because this is a cultural thing, it is a very powerful force. By now most of us have endured the uncomfortable experience of being surprised by a gift—say at a holiday party--when we have brought nothing to 'return the favor' Extrapolating this effect to the retail level (i.e., bestowing a surprise gift upon a shopper) may seem less consequential, but there is an effect there, however subtle.