Is gift-with-purchase underused?

Discussion
Mar 25, 2015
Doug Fleener

Through a special arrangement, presented here for discussion is a summary of a current article from Retail Contrarian, the blog of the Dynamic Experiences Group.

A gift with purchase (GWP) is a great tool for driving customers back into a store, engaging those customers, and building higher sales. They’re also great for the customer because she gets more wonderful products for her money.

Here are some tips on how to better leverage a GWP to create more sales:

1. Always physically show the product you’re talking about. This immediately creates higher value in the gift item. Think of it this way: How often do you order dessert when your waitperson asks you if you’d like dessert? I rarely do. What if the person describes the different desserts for you? Tempting, right?

But what happens when the waitperson brings over the dessert tray and you get a look at each and every one of the delicious choices? The likelihood that you’ll order something skyrockets. (And I, for one, very much appreciate that few restaurants do that.) You’ll make more sales that include a GWP if you show the gift like it’s a tasty dessert.

2. Treat the product as the special gift it is. We all love to receive gifts, and part of that experience is in the way the gift is presented. Do you want a gift given to you with, "Oh yeah, here’s something" or "Here’s something special to show my appreciation"? It’s the same item, but the second presentation makes the gift special. And don’t call it a GWP. Use the product name.

3. Assume the customer wants to qualify for the GWP. I once had a store reporting to me that went through three times more GWP products than other stores their size. I didn’t know why until I visited. I discovered that the staff always assumed the customer wanted the GWP.

They did three things with every customer:

  • They told the customer they would receive the GWP when spending a certain amount. Most stores say "if." It’s a subtle but powerful difference.
  • As noted above, they always physically showed the product to each customer.
  • They never asked to show another product to get the customer to the qualifying amount. They never said, "If you want…" They just automatically kept showing items to ensure their customer would receive the gift with purchase.

 

What tips do you have around maximizing GWP (gift with purchase) for stores? When do GWPs act more like purchase and experience enhancers and when are they just margin killers?

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9 Comments on "Is gift-with-purchase underused?"


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Max Goldberg
Guest
4 years 3 months ago

Gift-with-purchase enhances a customer’s shopping experience when he/she does not have to jump through a lot of hoops to receive it and the gift has a high perceived value. GWP works for retailers when the gift is highly desired and has a reasonable cost. If all of these factors are not met consumers and retailers have little incentive to participate.

Al McClain
Guest
Al McClain
4 years 3 months ago

Doug makes some great points. I have seen GWP work well at a high-end retailer I am familiar with. They present the opportunity to earn a gift as a benefit and often tie in special events or activities to the promotion.

Doug Fleener
Guest
4 years 3 months ago

Completely agree with you, Max. Many retailers can make a GWP a great or poor experience.

Tom Redd
Guest
4 years 3 months ago

Some simple thoughts for a complex problem:

  1. Make sure that the GWP is a usable, feasible addition to the purchase and would assist in the shopper justifying the spend.
  2. Number one was obvious, but now let’s extend the GWP to a new area for the shopper. Extend their experience with the main buy into a new area. A unique assortment of items that may not seem to relate like past GWPs.
  3. Leave options: The shopper can get different GWPs and use the GWP as discount for another item in the same category (call it a trade in). Trade the GWP for other items that might require a bit more spend.
  4. Change the promotional techniques. Make the GWP more than just a gift. Make it a FREE or special offer.
  5. Make a process that lets the customer send the GWP to a friend or family member as a gift. Extend your shopper base with the GWP.
Ralph Jacobson
Guest
4 years 3 months ago

Ensure that the gift compels the consumer to return to the store to “complete” the value of the gift. For example, offer a gift that is part of a solution, but the consumer will want to accessorize the item for full value. A food store could offer a key ingredient of an included recipe, and then the consumer will hopefully want to cook the recipe and need to return for more ingredients.

RIchard Hernandez
Guest
4 years 3 months ago

Some grocery retailers do this so well. HEB is a great example. You can buy a Pyrex Lasagna pan, and you get everything you need to make lasagna for free (noodles, cheese, pasta sauce, salad, ground beef). It is a compelling deal and they extend it to other products as well. People appreciate the value.

Ed Dennis
Guest
Ed Dennis
4 years 3 months ago

This can work well in a retail environment that has long margins and/or superior supplier support. These can also work well in low margin situations.

I once ran a tie-in promotion with Disney and American Airlines. Consumer who qualified won a trip to Disney World. Also, the two stores with the most qualified entries won a trip for one of their employees. Most stores made little effort and if the display and POS sold the program then that was okay. A few stores, however, went after the prize and had the store employees talk up the promotion to customers. Those stores were the ones that won the prize for employees. The employees knew their customers and got them interested in the contest (which required little to qualify). Employee involvement increased display sales in these two stores triple the chain average.

Doug Garnett
Guest
Doug Garnett
4 years 3 months ago

Not bad ideas. But GWP has some subtleties that can kill it.

I find GWP needs to be used sparingly or it loses the magic. Even more, the gift itself needs to be meaningful. My wife recently received one of those GWP that can come with cosmetics. In the end, none of the cosmetics were usable—none worked for her. Big let down.

Shep Hyken
Guest
4 years 3 months ago

I like the GWP concept. It is a perk. A bonus. An expression of appreciation. The approach of treating it as something special, versus just throwing it in a bag with the rest of the merchandise creates a perceived value (if done correctly).

I just ate at a restaurant last night. The server brought over champagne glasses for each of us. The server told us that they love to start every guest experience with a complimentary glass of champagne to toast the customer. A little better than just setting it down and saying nothing. By the way, they also brought over a platter of wonderful chocolates (again complimentary) at the end of the meal. A nice touch!

Done well, the GWP works—but it is all in the execution.

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