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The psychology of free samples: how Costco improved sales by 2,000%

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In general, people love anything free: from free WiFi to free books and everything in between,  nothing beats free. However, there seems to be something especially magical about free food; from retail chains to Realtors with open house weekends, nothing drives interest better than the lure of free food.

No other retail chain is more closely associated with free sample offerings than Costco, but why? In some cases, the lure of free samples have boosted sales as much as 2,000%, but it is not just about the monetary factor.

Free samples can influence a shopper’s decision to buy. Many times people will buy something they never intended to, simply because they were offered a free sample. This is not just because we all have a weakness for frozen pizza; as Joe Pinsker at The Atlantic details, there are psychological factors at play whenever we indulge in the free sampling arena.

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On a subconscious level when you’re given something free, from pizza to chocolate,you may feel obliged to buy something. As Dan Ariely, a behavioral economist at Duke University states, “reciprocity is a very, very, strong instinct; if someone does something for you (like hooking you up with the freebies) you really feel a rather surprisingly strong obligation to do something back for them.”

The dirtiest of secrets: activating hidden cravings

A free sample can also activate a craving you didn’t even realize you had. If you’re given a piece of chocolate you may suddenly want to buy M&Ms: Ariely believes, “what samples do is they give you a particular desire for something, if I gave you a tiny bit of chocolate all of a sudden it would remind you about the exact taste of chocolate and would increase your craving.” What retailers like Costco are doing by offering free samples is stimulation your mental and physical needs to buy a particular, or similar product.

Pinsker cites a study done in the UK, in 2011, which found that you are more likely to buy when surrounded by other people, like other samplers. Being surrounded by other samplers, or customers, creates a situation where “samplers with a heightened awareness of the presence of others at the sampling station may be a level of social ‘pressure’ to make a post-sample purchase.” 

By offering multiple sample throughout the store, Costco, and similar retailers, are creating an environment where freebie hunters feel psychologically obliged to buy something, in order to repay the kindness of being offered a freebie.

Why Costco is on the leading edge

It’s not just about the sampling though, it is also about creating the Costco brand. Other stores give out samples, but few are linked to the notion as closely as Costco. Sampling has become something fun that keeps bringing shoppers back to Costco. Much like shoppers enjoy inexpensive hotdogs and pizza during their shopping trips; they’ve also come to associate free samples with shopping at Costco.

And perhaps this is why: free samples are a type of reward for shopping there, which then stimulated the need to buy in order to repay said freebie, and it becomes a cycle of wanting to experience the freebie, but feeling obligated to purchase: all-in-all a pretty good way to continually push different products.

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

Business Marketing

The checklist every company needs when redesigning a website

(MARKETING) Web design is deceptively complicated, and failing to meet the proper criteria can leave you with the cyber equivalent of a ghost town. Here are some crucial steps to take before you publish (or republish) your website.

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Web design can be a huge pain in the rear even for seasoned veterans, and the arduous list of things that can go wrong all but guarantees that you’ll miss something crucial before going live. If you need to update (or create) your company’s website, make sure you’ve met the necessary criteria before you click that “Publish” button, even if it’s a revamping done through a firm.

Your initial steps should involve determining the purpose of your website and cleaning up the website’s copy to match that purpose. For example, if your website’s primary goal is to serve as a call to action for customers looking to purchase your products, any additional information or services listed on the site should be appropriately categorized and removed from the landing page.

You’ll also want to ensure that your website’s copy is clean, easy to understand, and thoroughly proofread. Nothing pushes potential customers away more quickly than misspelled messages or overly technical explanations.

The importance of optimization cannot be overstated, and that concept applies doubly to your website’s mobile performance. If you don’t have an accessible mobile version of your website, you’re kissing a huge amount of revenue goodbye. Remember that, while your mobile site should stand out, it should also endeavor to mirror your desktop site as closely as possible to facilitate a sense of continuity.

Accessibility is actually a pretty complex issue in and of itself, so you’ll want to make sure that your website meets all of your country’s standards for basic web design in addition to meeting — and, if possible, exceeding — the standards for disability-related challenges such as those faced by blind or epileptic visitors. This can include anything from making sure your links are functional to creating a spoken version of your site for the blind.

While important, the above is not an exhaustive list of your website’s crucial criteria. Your website should also include some form of the following:

  • Reviews or links to social discussions about your goods or services
  • Relevant, high-quality photos and videos
  • Standard web conventions including having your website’s logo in the top-left corner and the search bar in the top-right corner

Once you’ve checked off these requirements for your site, it’s not a bad idea to have other people go through the website with the same criteria in mind. Peer review — especially from both a professional developer and someone on the consumers’ side of the process — will be a substantial aid in allowing you to find and plug the holes in your website’s design.

Mindfulness is only the first step in creating a flawless website. As long as you adhere to the above requirements and recommendations, your website should stay relatively active and frustration-free.

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Business Marketing

Study finds cancer care centers using illegal deceptive marketing tactics

(MARKETING) A new study alleges deceptive marketing practices rampant with cancer care centers, leading to FTC complaints.

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When my uncle passed away from colon cancer last year, I was ready for it – that is, as ready as you can be to lose a loved one to a terminal illness. Although his death was deeply sad, I was spared the shock because his doctors had always been honest with our family about his prognosis. Once he received the diagnosis, we knew we’d be lucky to have two more years with him.

When it comes to fighting a serious illness, it’s important to have hope – but it’s also important to have realistic expectations. Unfortunately, some cancer treatment centers are luring patients and their dollars by selling them an unwarranted belief that they can beat the odds. Truth in Advertising (TINA.org), calls it “the deceptive marketing of hope.”

TINA.org has published the results of a year-long investigation into the marketing of cancer treatment centers. One study focused on Cancer Treatment Centers of America (CTCA), the cancer center that spends more than any other on marketing – an estimated $110 million over the last three years. The other study analyzed 48 big-spending cancer care centers, including Sloan-Kettering, Dana-Farber, and NYU.

The results were disturbing.

TINA.org found that many of the biggest names in cancer care use deceptive practices in their marketing. Specifically, 43 out of 48 (yes, that’s 90 percent) used anecdotal patient testimonials that show atypical care results without disclosing what the “generally expected results for a patient in a similar situation would be.”

Testimonials featured patients with types of cancer that, more than half the time, result in death within five years. By showing unusual and rare recoveries, these cancer care centers give patients the false impression that, by choosing their care center, they will have “a therapeutic advantage, allowing them to beat the odds and live beyond five years.”

Testimonials also featured atypical results from new treatments and clinical trials, without disclosing that these treatments are experimental and that success is far from guaranteed.

TINA.org also conducted a specific investigation of CTCA, who in 1996 entered a consent agreement with the FTC that barred them from using deceptive testimonials. This agreement is near expiration, so TINA.org decided it was a good time to review CTCA’s marketing practices. They found 130 examples of deceptive testimonials in CTCA’s marketing.

This week, TINA.org sent a formal complaint to the FTC asking them to re-open their investigation of CTCA. They also sent notices to 42 cancer centers warning them that using atypical testimonials is illegal.

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Business Marketing

What the YETI “cult” can teach you about marketing success

YETI has built a cult following for their 300 dollar cooler. Confused? Don’t be. This story isn’t rocket science; just good old fashioned product innovation and saavy marketing at their finest.

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The rise of YETI

Here at The American Genius, we feel the term “cult” gets a bad name. In fact, we find it beautiful. It’s the product of keeping promises and delivering remarkable experiences to consumers time and time again until they have no choice but to love a product or service unconditionally. That’s not just gold for your business, but it’s a grand human experience to build a relationship founded on trust and loyalty (and a leeeeeetle bit of fanaticism).

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We’ve written about cult followings before, like the Crossfit craze. However, we can understand if you’re a bit skeptical when we tell you that a company making coolers is cultivating a similar craze amongst consumers. However, the facts don’t lie. In six years, YETI sales grew from $9 million to $450 million. Sales are so strong, they can barely keep certain products in stock.

All this over a 300 dollar cooler. Yep, 300 dollars for something you usually pick up for no more than 50 bucks at any no-name Walmart.

Confused? Don’t be. This story isn’t rocket science; just good old fashioned product innovation and saavy marketing at their finest:

YETI didn’t just make a better cooler; they made a luxury product

Those janky, $50 Walmart coolers don’t cost much for a reason; their functionality is a bit limited. So, there’s plenty to improve on. But a Yeti Cooler isn’t just an improvement; it’s damn near perfect.

It’s practically indestructible. So indestructible that it’s grizzly proof. It also keeps ice frozen for a long-time. Long enough that you will still have ice after a long weekend trip in many cases. Combine those things together, and it’s not hard to believe that when a fire engulfed a vehicle, the YETI Cooler and the ice inside it survived the inferno.

Excessive? For most, maybe. However, there’s a beauty in its utilitarian luxury. And they have expanded this utilitarian luxury beyond coolers to products ranging from tumblers to soft-side coolers to bottle openers.

It’s not uncommon to find brands that succeed on a platform of relentless perfection of their product; Apple, Harley Davidson and Ferrari come to mind. Consumer trust in the quality of the product, be it durability or user-friendliness, forms a strong foundation for a relationship with your customers. Here, Austin-based YETI is no different, and more than ever, it’s necessary to be remarkable to achieve the business success you want.

Marketing to aspirations

YETI Cooler’s marketing focuses intently on the ideal outdoorsy lifestyle, and it has kept that focus throughout the product’s lifetime.

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“The aspirational use and the actual use don’t always have to be the same thing,” said YETI’s VP of Marketing Corey Maynard. “We want our communication to stay as absolutely authentic to the hardcore user from the hardcore user as we possibly can.”

Influencers aren’t just Instagram yoga girls

From the beginning, YETI has marketed the cooler to people like the founders; passionate and respected outdoorsmen whose passions drove them to own the latest and greatest gear.  To do this, they hired influential guides and fisherman as brand ambassadors. They also sponsored programming on hunting and fishing TV stations. All of these early efforts earned the trust and recommendation of “influencers” and “prosumers.”

“Those commercials didn’t reach millions of people, but the people that they did reach were the most serious hunters and fisherman,” Maynard said. “So it would reach 100,000 or so hardcore hunters and fishermen who would be the person within their circle of friends who their buddies would ask about the latest gear.”

When they did land the sale, YETI made sure they could advertise that too. In the beginning, the company handed out stickers and hats with each cooler sale as a way to kick start conversations about the brand.

All of these factors created a “grassroots marketing goldmine,” where word-of-mouth made a lot of difference. That, combined with the aspirational messaging, creates a tribe where consumers feel included as a part of something bigger than themselves. So, as you go about marketing your business, consider these key concepts in your model. It could be just what you need to take your business to the next level.

This story was first published on May 6, 2016.

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