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'Free lunch' strategy requires careful targeting Add to ...

For customers of Amy Stoddart's Say-She-Ate catering firm, there is such a thing as a free lunch.

Earlier this year, Ms. Stoddart dramatically changed the focus of the company she has owned and operated for 10 years. Instead of catering special events, the Toronto-based Say-She-Ate is now mostly a personal chef service, delivering meals to the homes of clients. And before those clients sign on, Ms. Stoddart gives them a meal from that week's menu to let them get a taste of what they're buying.

“Our complimentary samples really show our confidence in our service and help to establish a trusting relationship right off the bat,” she said. “People experience instantly what we are all about and that experience is positive.”

Giving out free food is a very common practice in the industry, experts say, and it can be an effective marketing tool. But it must also be strategic: Business owners need to pinpoint who they want to target and have measures in place to know that they're getting a return.

“It is a highly effective marketing strategy if you have a good product,” said Brock Smith, a professor of marketing and entrepreneurship at the University of Victoria's Faculty of Business. “It allows consumers to make decisions based on their own experience rather than advertising or other messages. Direct experience trumps advertising and other marketing communication.”

“I'm a big fan of free,” said Roger Pierce, co-owner of entrepreneur training company BizLaunch.com . “You've got to encourage trial. Anything you can do to remove the risk of buying from your business is a good strategy.”

But there can be pitfalls. Mr. Smith notes giving out free samples is expensive, and you don't really know if the person you're giving it to has any intention of buying your product in the first place. Even if they do, “it still might not be enough to change consumer behaviour,” he said, because consumers may not think the product is good enough or believe it is not better than the product they are already using.

Both Mr. Smith and Mr. Pierce say it's important to know your target audience. “Most companies don't understand their customers well enough before they design and implement campaigns,” Mr. Smith said. He suggested focus groups, test markets and other forms of market research for small businesses that can afford it.

Mr. Pierce said a classic mistake is to give free stuff to people who are already customers. A restaurant, for example, should target free offers to potential new customers, perhaps with a coupon.

In most cases, Mr. Smith said, to make free samples worthwhile for a business, they “need to be part of an effective marketing communication strategy and part of cohesive marketing strategy.”

Take the Cupcake Girls. While Ms. Stoddart targets customers who have shown an interest in her products, Lori Joyce and Heather White took a different path. The two women, who started in 2002 with one cupcake store, are now owners of a chain of franchises and the subject of a W Network series. When they started, “we got out there and made sure that every person who had any influence in the media world had our product and experienced it,” Ms. Joyce said.

But Ms. Joyce said she and her partner were always strategic in their approach. She did her homework and knew whom to send cupcakes to at each media outlet. She also sought out specialty publications, such as wedding magazines. And she made sure that when the media responded, there was an interesting story to tell.

Making the samples and targeting the right audience is one thing. Keeping track of the payoff is another.

Ms. Joyce and Ms. Stoddart both say they didn't start with a financial budget – which experts say is crucial for businesses – but they did keep an eye on the return on investment of their free sampling.

“Every meal I've given out has had a payoff” – a new customer or a catering job or a referral, Ms. Stoddart said. “Essentially, it's opened a door.”

For Ms. Joyce, about one in six early attempts resulted in free publicity, she estimated. That kind of response “is really high, extremely high,” said Mat Wilcox, a Vancouver-based public relations consultant. “I would suggest that if you got a 5-per-cent return, that would be amazing.”

Marketing campaigns can easily be tracked for effectiveness, Mr. Smith said, with metrics that can include the number of samples tasted, coupons redeemed, contest participants registered, website product feedback and units sold. At the very least, Mr. Pierce said, a business can compare a head count of samples given with sales of the day or of the week.

“You've got to know as an entrepreneur what works and what doesn't because we don't have time or money to waste,” he said.

“We need to measure everything we're doing because we need to get better and better.”

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