In 1887, the Coca-Cola Company sent out coupons for one free drink to thousands of Americans. The result? Over 8 million free drinks were doled out, the majority of them leading to lifelong converts. Ten years later, Cokes were being sold in every state, and the idea of freebies leading to business expansion was cemented in sales history.

Today, incentive programs and free trials and products aren’t big news. Ads for savings and giveaways are everywhere we look. However, if you’re on the fence about whether or not to an incentive campaign, it’s worth looking into why these programs work.

incentivesTo start with, savings make people happy. A 2012 study found that participants who received a coupon showed physical responses measuring 11% more joy than those who didn’t get one. Said Dr. Paul J. Zak, the founding Director of the Center for Neuroeconomics Studies and Professor of Economics, Psychology and Management at Claremont Graduate University, “The study proves that not only are people who get a coupon happier, less stressed and experience less anxiety, but also that getting a coupon—as hard as it is to believe—is physically shown to be more enjoyable than getting a gift.” Knowing this, it’s clear that offering savings is a powerful tool. That happy, relaxed attitude will be associated with your dealership, strengthening brand awareness and loyalty.

Not only that, but incentives and giveaways regularly lead to more sales. Programs offering free trials or limited time slashes in price get people in the door. Once in, customers often end up buying more than the redeemable amount. This might be because customers rationalize many smaller purchases as still being under the umbrella of the “larger” savings they’re making on the advertised deal.

They may also buy more as a form of reciprocity, as explained in an Atlantic article by Joe Pinsker. He writes that people unconsciously feel the need to repay the “kindness” of a freebie, even if, to use Pinsker’s choice of words, that freebie is “a quarter of a ravioli on a piece of wax paper.”

Incentives and freebies can likewise boost your visibility, especially useful if you’re just incentivesstarting out. With the shift toward online marketing, sharing a deal via the internet can greatly heighten your dealership’s recognizability. According to one study, 28% of people will share deals they see on social media and 40% share using email. Even if the program doesn’t immediately increase foot traffic, it inevitably raises brand awareness, which means when a person next needs a service you offer, they’re more likely to come in, promotion or not.

Finally, in case you’re worried that as a small dealership you can’t afford these kinds of programs, you may want to reconsider. While, of course, you should ensure beforehand that your dealership can afford whatever you plan to offer, according to data obtianed by the advertising firm BIA Kelly, small businesses surveyed estimated that almost 18% of their coming yearly total profit would come from incentive-type programming. The key is to have multiple streams, such as loyalty cards, occasional freebies, biannual sales and other regular, but varied incentives.

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