Marketing

The true cost of giveaway marketing

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Editorial CollectiveJuly 30, 2024

From National Donut Day to your birthday, Krispy Kreme loves giving away free doughnuts. They aren’t just celebrating two very important days in the calendar year, there’s a powerful sales strategy behind it.

In this article, we'll explore Krispy Kreme's approach to free doughnut giveaways and how entrepreneurs can apply similar principles to their own promotional strategies. By examining the true cost of giveaway marketing, businesses can decide if aggressive promotions are the right approach to success in business.


This piece was inspired byFast Company
Two people engaging in a lively conversation in a busy office environment. A person in a yellow jacket is smiling at a colleague in a red plaid shirt who is gesturing expressively while holding a smartphone. Behind them, several other colleagues are focused on their devices, standing near a whiteboard filled with business strategies.

Giveaways aren’t always best for business

Marketing and promotion tactics are constantly evolving. Market conditions change. Platforms change. Consumer expectations change. With all of this change, it would benefit entrepreneurs to consider how they might also approach things differently. Especially when it comes to giveaway marketing.

Krispy Kreme’s giveaways aren’t just about making people happy with a free treat; they're a cornerstone of the company’s strategy to turn occasional visitors into regular customers.

This is the level of repeat success entrepreneurs hope for when running their own giveaways, but it’s crucial to question whether this marketing tactic is right for the business or simply just an outdated viewpoint that it takes free stuff to attract customers.

The psychological and financial impact giveaways have on small businesses

While giveaways can drive traffic and potentially increase sales volume, they also come with costs such as loss of revenue from the given away products and the operational costs involved in managing such promotions. Frequent giveaways can also negatively affect consumer behavior, creating an expectation of perpetual discounts or reducing the perceived value of the product.

Just like most things in entrepreneurship, there’s risk involved before the reward.

The key to running giveaways that aid in long-term success is finding a balance between generosity and profitability. Knowing the cost of a giveaway or multiple giveaway marketing campaigns, in relation to projected revenue for the year is where this balance can be found.

Performance measurement is also key to making sure giveaway campaigns result in positive business outcomes. Tools like Leadpages provide templated designs and in-platform analytics to measure the success of giveaways. However, if you’re running a contest on social media, looking at how much your sales or subscribers increase during or after the period you run your giveaway is also a viable method of tracking performance.

We can’t all adopt Krispy Kreme's strategy of free doughnut giveaways, and why would we?

Running your own business offers the flexibility to experiment with or abandon promotional techniques, based on what works for you and your customers.

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Editorial Collective

Digital Entrepreneur's editorial team includes Sharon Milone and Barrak Alzaid, with help from our friends at Redbrick, Danni Deguire and Rachel Aiken.