Section # 2 Yours Free: 4 Steps to Selecting a Winning Premium

Section 2 Yours Free: 4 Steps to Selecting a Winning Premium


If you’ve been in direct marketing for more than a few weeks, you know that
offering a premium can significantly increase response rates. Well, in my
opinion, the four most important factors to consider when choosing a premium
are: value, novelty, relevance, and desirability.

1.Perceived value. A good premium either (a) has a high perceived value or (b)
has a value that the reader cannot determine.

The worst premium is an item that the prospect sees as having a low value.

Example: a well‐known financial newsletter publisher did a series of blanket re
newals with each offering a different premium for early renewal. One of the
bestperforming premiums was a video of the editor giving financial advice. The
promotion positioned it as a free financial consultation with the editor in the
privacy of your own home.


One of the worst‐performing premiums was a pack of playing cards with the
editor’s picture on each card. Why didn’t playing cards work well as
a premium?

One reason is low perceived value. You can buy a deck of playing cards in any
drug store or stationery store for a dollar or so. Therefore, the perceived value
of the playing card deck premium was about a dollar.

The video, by comparison, has a much higher perceived value: videos can sell
for anywhere from $19 to $79 or even higher.


And since the editor was a highly paid investment advisor, positioning the
video as a free one‐hour “consultation” with him boosted the perceived value
even higher.

Readers knew such a consultation would cost several thousand dollars, if the
editor would even agree to it.

2. Novelty. As a rule of thumb, unique premiums generally—but not always
pull better than “me‐too” or commodity premiums. Newsletter and magazine
publishers know that an exclusive special report, written by the editor on a topic
of interest, is an effective premium because it is a unique item: the reader can’t
get it anywhere else.

On the other hand, offering best‐selling books as subscription premiums has
generally not worked well, because the item is so readily available: if the
premium is a best‐seller, there is an excellent chance the reader already has it
and if not, he can just pop into a bookstore and pick one up, without subscribing
to your publication.

One subscription premium that did extremely well was a coffee mug for Adver
tising Age. Of course, coffee mugs are about as ordinary an item as you can get.

But here was the gimmick: the artwork on the mug looked like a faux front page
of Advertising Age. Each mug was laser‐imprinted with the subscriber’s name
incorporated into a headline, e.g., “Jane Smith wins Advertising Age’s ‘Adverti
sing Genius’ award.”

3. Relevance. Many consumer marketers have found that premiums having
little or no relationship to the product have worked extremely well. Examples
include free telephones, tote bags, and solar calculators.


On the other hand, many other consumer marketers, and a large number of
business‐to‐business marketers, have found that they get a better lead or custom
mer when they offer a premium that’s relevant to the product.
Years ago, Weka Publishing mailed a package offering a loose‐leaf service on
managing Novell networks. When they tested the control against a version offe
ring a disk with 5 free utility and shareware programs for Novell, orders
doubled.

4. Desirability. The more desirable the free gift, the greater the number of pros
pects who will respond to your promotion to get it. One of the best premiums
I’ve ever seen was for the Sovereign Society, a financial newsletter focusing on
offshore asset protection.

The premium? If you subscribed to the newsletter, the publisher would open a
Swiss bank account for you! Offering the Swiss bank account as a premium
meets all four criteria with flying colors:


•Perceived value. How much should it cost to open a Swiss bank account?
Ihave no idea, and probably, neither did the subscriber. But prospects knew that
Swiss bank accounts were something rich people generally had“NOT just for
millionaires anymore” the headline exclaimedand so the perceived value by
logical extension was probably high.

•Novelty. Most financial newsletters offer special reports as premiums.
The idea of offering a free Swiss bank account was clever and unique.

•Relevant. Offering a free Swiss bank account as the premium is directly rele
vant to the newsletter’s core proposition of helping readersprotect their assets
offshore.

•Desirability. High. Even if you don’t have a lot of assets you need to hide off
shore, it’s a status thing: casually mentioning your “Swiss bank


account” to neighbors impresses the heck out of them giving the customer
immense pleasure and satisfying the need for exclusivity.