Connect with us

Business Marketing

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

Published

on

costco samples

costco samples

Get your free samples!

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.

bar
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.

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!

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

How ecommerce brands can increase sales, even on tiny purchases

(MARKETING) These tips and tricks are prime ways to boost the dollar amount spent at checkout and close more deals — even on the tiny purchases!

Published

on

online sales

There are many marketing techniques aimed at acquiring new customers. Makes sense, right? More customers, more money. But how do you increase sales with your existing customer base? The Average Order Value (AOV) = Total Revenue/# of Transactions. This number is important because it indicates how much each customer is buying. Here are some ways to increase your AOV:

First, it’s crucial to appeal to human nature. People like things for free. So, by setting a minimum to receive free delivery, buyers are more likely to continue browsing and eventually buying, in order to avoid the shipping fee. While we all know that spending $50 when I only meant to spend $37 isn’t ideal, but I’d rather pay $50 for two products, than $43 for one and shipping. It feels like a better value.

Over half of customers will discontinue their transaction when they found out there are additional costs. MORE THAN HALF. Don’t surprise people the wrong way — we don’t like it.

Second, have you ever been to Costco? Ever left Costco with exactly the amount of food you needed? No, of course, you haven’t. The concept of buying in bulk appeals to our sense of value. Oranges are $1.09 per pound but buy a 10 lb. bag and get it for $8.50. Next thing you know, you’re feeding your child’s soccer team as well as the opponents. Offering a discount on package deals and large quantities at least gets your customers thinking about purchasing more.

We all rationalize the need for a good deal. My roommate used to buy two 12-packs of the giant muffins because “They were on sale.” A discount on a package might entice someone who was looking for a little more variety but was hesitant at first.

Next, recommending products is a great way for customers to lay eyes on new things. Not everyone is a browser — some people go straight to a specific section. By using information from previous purchases and browsing history, showing related, best-selling, or recommended products is an awesome way to generate more clicks and potentially increase sales.

Finally, help us lazy people by including a gift-wrapping option at checkout so that people buying remotely for others out of town can send things directly. In order to wrap, they would have to send to themselves, wrap, then send again or deliver to the receiver. The former sounds like it’s worth $6.99 to me!

In conclusion, there are always ways to boost sales with your existing, loyal, customers. If buyers are only purchasing one thing at a time, reflect on why this is. Perhaps a few sweeteners or additional opportunities could lead to long-term growth. Remember human nature and happy selling!

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!

Continue Reading

Business Marketing

A more environmentally sensitive Pantone color of the year

(MARKETING) Why is Pantone’s coral color causing a ruckus? Marketing is just marketing, right? Maybe not…

Published

on

pantone unofficial color of 2020

Every year Pantone declares the Color of the Year and for 2019, the institute declared Living Coral to be the “it” shade calling it “an animating and life-affirming coral hue with a golden undertone that energizes and enlivens with a softer edge.” And it totally is. Imagine bright red orange swimming in a sea of crystal blue water.

Pantone’s Executive Director, Leatrice Eiseman even goes so far as saying it that Living Coral was what “consumers craved” and that it incites “human interaction and social connection” which might be a stretch. It is just a color after all.

However, some found this messaging to be anything but convivial and well, off-color.

Jack Railton-Woodcock and Huei Yin Wong, partners at Jack and Huei, a Melbourne-based design agency, took umbrage with this decision and for good reason.

Their native Australia has front-row seats to the dying of the Great Barrier Reef and for them, coral is anything but lively. If anything, it’s on life support.

To call attention to the tone-deaf decision, the duo preemptively christened Bleached Coral as the Color of the Year 2020.

Touche.

The duo furthered their burn, saying, “It’s the responsibility of all of us, creative or otherwise, to find creative solutions to big problems, and right now there aren’t many problems facing humanity that are bigger than climate change.”

Oof, way to pull back the curtain, guys.

As much of a buzzkill as this pair might be, they’re not wrong, and they bring up the larger question of social responsibility in marketing.

But it’s just marketing, right?

Wrong. The very root of marketing is aspirational. We see ads for luxury cars, we imagine ourselves behind the wheel and believe that maybe we can get there. We see beauty products that promise flawless ageless skin and maybe we decide to take better care of our skin. We see Living Coral and we’re blinded to the reality that the coral just might be a thing of the past.

Yes, Pantone’s Color of the Year is one of those fun end-of-year things we in marketing get excited about, but when you’re living in a world where climate change is our reality and we see it in unnatural weather patterns and the dying off of one of our greatest natural treasures, it’s time to take pause. We can do better.

These days it’s hard to please everybody. Try as we might to make everything for everyone, if we’re going to attempt to talk about a unifying the human race through color, we sure as hell shouldn’t choose a color that reminds us all that our environment is in rough shape and it’s largely humanity’s fault. Bleached Coral isn’t the color we need, but right now, it’s the color we deserve.

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!

Continue Reading

Business Marketing

Genius: How a Yoga studio is using AI to help the masses

(MARKETING) Here’s an interesting case study in how yoga, a 5,000+ year industry is using modern technology.

Published

on

yoga

Yoga is everywhere. From small town strip mall studios and big city meccas with guidance from YouTube gurus to Instagram-able practice with goats. If monitoring your breaths and balancing your body is your thing, it’s not out of reach.

However, despite its ubiquity, getting into yoga can be intimidating.

Sure, you’ve picked up a mat at Target, you’ve purchased all the Lululemon pants and Outdoor Voices bras, but actually getting on the mat and moving your body can be overwhelming if you’ve never practiced before.

Well, Would-Be-Yogis, push those fears and worries out of your mind, take three deep breaths and get on the mat, because you’re about to start posing at your pace.

Introducing the YogaBot from Austin’s own Yoga Yoga. It’s a fascinating case study in how a 5,000+ year old industry is using modern technology.

Over the past 20 years, Yoga Yoga has guided thousands of yoga students from their first class all the way through advanced teacher training and now, to help improve students choose the right path for themselves, they’ve created Design Your Yoga.

With the intention of helping new and advanced students achieve their yoga goals, Design Your Yoga is an automated experience that begins on their landing page.

Once you arrive, the bot asks you if you’d like to “Design Your Yoga.” After an initial greeting, the bot begins by getting to know your skill level.

Asking a very straightforward, “Have you done yoga before?” you are then offered nine responses ranging from “Never” to “I am a yoga therapist.”

Once you answer, you are asked further questions regarding what you’d like to achieve from your practice, what styles you’re familiar with, and when and where you’d like to practice among a few others. At the end, the bot will ask for your email address to send you a customized yoga plan. Easy peasy.

Their algorithm has thousands of possible combinations promising to make each yogi’s practice results unique to them.

“For years we’ve been working on ways to better personalize our services to the needs of each individual student. Design Your Yoga is our solution to delivering an exceptional user experience with a plan a student can follow and stick with,” said Yoga Yoga CEO Rich Goldstein.

Landing page bots are nothing new, and more often than not, they’re annoying as hell. However, this one actually seems helpful, which is refreshing.

From a marketing standpoint, Yoga Yoga CMO Marc Lefton said, “As marketers in a city as creative and entrepreneurial as Austin, we wanted to make sure we use every tool we can to bring yoga students the information they need as fast as possible.”

He’s not wrong. It worked. After trying it out for ourselves, we can’t help but be a little more ready to get on the mat. First, we’re going to need to put down the tacos.

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!