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How Different Types of Offers Work For Companies

 

Despite it being one of the oldest practices in the business world, the art of making a special offer has still not quite been refined down to a science. Instead, there are multiple competing theories on which offers are the most effective, and that's before things like regional or demographic factors come into play. Below is a brief breakdown on how different offer types work and what industries they are best suited to.

 

Freebies

They may come in a lot of different forms - samples, trial periods, buy-one-get-one-free - but when they are boiled down to their purpose, these offers are all the same. The concept is that by drawing in new customers with free products, or just products with greatly reduced prices, those customers would then continue to buy from the company afterwards.

 


Source: Unsplash

 

Keeping a careful balance is the most important with freebies, and it's the reason industries like online casinos have so many terms behind their offers. In general, casinos are one of the biggest users of freebie offers, but it also makes them prone to bonus-hunting tactics where players try to exploit the system. That is why there are clear terms and limits in place to stop the whole thing from backfiring.

 

Loyalty Schemes

A loyalty scheme can come in many different forms, but the most common is a points system where customers earn rewards by making purchases. It's a case of both sides getting something from the deal: the customer gets rewards, often discounts or extra products, and the business gets a customer who wants to keep coming back.

 

When putting a loyalty scheme into place, balance is absolutely critical. It may be tempting to try and beat the competition with more generous rewards in your loyalty scheme, but as many companies found out recently, maintaining big rewards often ends up losing more money than making it. A loyalty scheme should be both appealing enough to be worth it to a customer and also conservative enough that scaling up won't bankrupt you.

 

Loss Leaders

 

This is a case more specific to supermarkets than any other business type, but the case studies are some of the most fascinating. Loss leaders are products in a supermarket, often daily essentials like bread and milk, that are deliberately sold at a loss in profits. The idea is that once customers are already in the building, they'll buy the rest of their groceries there at the same time, making a profit overall.

 


Source: Unsplash

This practice has gone to extreme levels at times, most famously in the 'Baked Bean Wars' a few decades ago where supermarkets competed to push the price of the staple baked bean tins as low as possible. It got to the point where one regional store ended up selling at a negative price, essentially giving money back to customers instead of taking anything. The practice has since been more carefully controlled, but it shows how powerful the idea is.

In the end, preparation is the key term here. To make any offer work takes research, timing, and careful budgeting. Forgetting any of them is asking for trouble!


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