We’re continuing our segment on the 7 ad essentials you must include in your marketing.  Last week we hit the topic of a deadlines and how vital they are to success in direct mail marketing.  To review, visit the blog.  Today we’ll move on to something I feel is completely overlooked by most marketers, a premium/free gift.

We’ll start with a quote from my mentor Dan Kennedy:

“Too many marketers deal with premiums almost as an afterthought.  This is a huge mistake.  I know for a fact that premiums can and do drive sales, and that a change of premium, with no other changes, can dramatically alter the results of a promotion.  For this reason, just as much careful thought should be given to the premium as to the main offer.”

Research has shown that a direct mail letter with a premium/free gift offer can out pull a sales letter alone by as much as 300%!  Before we get too far into why they work so well, you may be thinking, “What is a premium?”

A premium/free gift is anything of value your prospect/client/patient receives for taking some action that you want, and it doesn’t have to be just with a purchase.  Many times it may be good to offer a premium/free gift just for responding to your advertising, with no purchase needed.  Or, you may want to use the premium/free gift when an existing client refers a new buying client.

Often, the best premiums are not even tied to what you are offering!  It’s often an unrelated item for the personal use of the buyer and not even for their business (if you’re selling B2B).  The key is that is has perceived vale.  It may not cost a lot, but it should look like it costs a lot. 

It’s also wise to reveal the gift of give options rather than have a mystery gift.  When you do reveal the gift, a picture is worth a thousand words.  Always include a picture of the item, as this is much more effective than only describing the item.

Lastly, premiums can lower your cost per transaction.  It likely seems nuts to you that premiums can actually lower your cost pre transaction,, but here’s how it works. 

Let’s say you mail out 10,000 sales letters, with no premium and you get a 2% response rate.  That would be 200 responders.  Let’s further assume that you can be profitable with those 200 responders. 

Now let’s say you offer the premium, and response goes up to 3%.  This is not an out-of-the-ordinary response when you offer a premium.  You now only need to send out 6,700 pieces of mail to get the same 200 responders as you did without the premium.
 
And, for easy math, let’s say each mailing cost $1.00.  You would save $3,300 on just the single mailing.  Your premium cost you $5 each for the 200 responders for a total cost of $1,000.  You still save $2,300 over the offer without the premium!