by: Roger Dooley
Free Kisses Beat Bargain Truffles
In his book Predictably Irrational, Ariely describes a series of simple experiments that offered subjects something desirable – chocolate – at a variety of prices. Two types of chocolate were used – a Hershey’s kiss and a Lindt chocolate truffle. While the kiss is an inexpensive and common treat, a Lindt truffle is a far more tasty confection that costs an order of magnitude more than the kiss.
The first experiment offered subjects a truffle for 15 cents (about half its actual cost) or a kiss for 1 cent. Nearly three out of four subjects chose the truffle, which seems logical enough based on the relative value of the offers.
The next experiment reduced the price of each product by one cent – the truffle was offered at 14 cents, and the kiss was free. Although the price differential remained the same, the behavior of the subjects changed dramatically: more than two thirds of the subjects chose the free chocolate kiss over the bargain-priced truffle.
To see if the appeal of the free kiss was based on convenience (not having any change, having to hunt around in a purse for coins, etc.), the experiment was repeated in a cafeteria food line where the cost of the chocolate could be easily added to the total purchase. Even with the elimination of paying inconvenience, the free kiss was still the overwhelming choice.
Ariely attributes the preference for “free” even when the rational choice would be the bargain item to an aversion to loss. In essence, a free item carries no risk. He may well be right, though I think another explanation is that, to our hunter-gatherer brain, a free item represents the proverbial low-hanging fruit. That is, a resource that can be obtained with near-zero effort. If, millennia before money and commerce came into being, I had just gorged on fruit and had an adequate supply of food stored in my cave, I would be unlikely to go looking for more food. But, if I was walking back to my cave and found a perfect apple hanging over the path in easy reach, I’d no doubt be tempted to pluck it and figure out what to do with it later. That apple would be, in essence, “free” – other food sources might involve climbing, stalking, traveling, or other kinds of effort.
Amazon’s Experience with FREE!
The most interesting example of the power of “free” in Predictably Irrational comes from Amazon.com. When they launched a “free shipping” promotion with the purchase of a second book every country except France showed a big jump in sales from the offer. The Amazon marketers investigated, thinking perhaps the French were rational enough not to be swayed into buying a second book. In fact, they found that in France the program had been slightly altered. Instead of zero shipping, the offer in France charged a mere one franc – about twenty cents. From a pure economic standpoint, the two offers are almost indistinguishable. In actual performance, though, the one franc offer caused no sales increase. (When the French offer was changed to FREE!, sales did indeed jump.)
Here’s the neuromarketing takeaway: FREE! is more powerful than any rational economic analysis would suggest. If you want to sell more of something, use that power. I often see department store offers like, “Buy one pair of slacks at regular price, get a second one for only one penny!” That may sound clever – “wow, pants for just a penny!” – but I think FREE! will outperform the penny offer. Want to spark sales of a product? Try offering something for FREE! with it. Want to get the widest possible sampling of a new product? Use a FREE! sample.
When NOT To Use FREE!
There are some cases when using FREE! isn’t the best idea. If you are trying to encourage sampling of a product that appeals to a specific audience, for example, a very modest charge will throttle demand but will eliminate most samplers who have no use for the product. For example, I don’t own a cat. I don’t even care much for cats. But if the supermarket had a big display of “Free Cat Food Samples” there’s a good chance that I’d pick one up, thinking that I’d give it to a friend. Or maybe hang onto it for when one of the inevitable stray cats shows up. Hey, it’s FREE! – I’ll grab it now, and figure out what to do with it later.
If Ariely’s research is to be believed, pricing the cat food sample at a mere ten cents would almost certainly slash inappropriate sampling by people like me. A few legitimate cat owners might avoid the sample, too, but the overall cost/benefit of the program would likely improve.
Free Advice
Chris Anderson, author of The Long Tail and editor of WIRED magazine, will release a new book about FREE next year. But, you don’t have to wait – start harnessing the power of FREE now!
Original post: http://www.neurosciencemarketing.com/blog/articles/the-power-of-free.htm
