Surprising fact about how giving away ‘Bonuses’ could harm your business

Giving away free ‘bonuses’ could backfire.

Sherwette Mansour
Aug 20, 2019 · 4 min read

A couple of weeks ago, I wrote a blog post, 4 Words that will bring your sales to the next level. One of the words was the word “bonus”, which personally drives me insane. However, now, that I know about it, it might not work that well on me… or maybe not? I am not too sure about that.

In my post, I promised, that if I learn anything scientific about the word ‘bonus’, I would share it. I am not really sure why it works better on me than the word ‘free’, but here is an interesting find if you are a business owner and give away ‘bonuses’ to increase your sales.

It could backfire.

Usually, when you are offered a free ‘bonus’, it comes with purchasing something that you are already paying for. Basically, if you bought X, you would also get bonuses Y and Z. Couple that with the scarcity of time, in which this bonus would only be available for a limited period of time, let’s say this offer is only valid for the next 8 minutes, so you intrigue the customer to make the decision while they are still thinking about it… and Bingo. Your sales rate could in fact increase.

Okay, so how could it backfire?

You see, what you offer as a bonus should also be attractive on its own. Agree?

Otherwise, why would getting that bonus intrigue you in the first place?

I get it. We could pick-up ‘free’ cat food just because it’s ‘free’, thinking we could give it to ‘someone’ we know who has a cat.

Remember: ‘Bonus’ is different than ‘free’.

The reality of the bonus, however, is that it comes with something you are already buying… so it’s not completely free. You see?

As a business owner, whatever you are bundling as a ‘bonus’ for free actually has a value…. and when you bundle it for free, you just shot yourself in the foot, decreasing the value of that bonus from X number of dollars to $0.00.

Ouch.

The customers' frame of reference now for that item you are providing as a ‘bonus’ is ZERO… and that my friend is how it could backfire.

It’s not all bad though. It’s fixable. Otherwise, how do all those successful people, such as Ryan Levesque, get away with using it… like all the time?

Simple. You tell them how much it’s worth and that you are giving it as a ‘bonus’, just for them, especially for them, in that special offer, in this specific time period. Otherwise, they will miss that chance.

For example, if you order X now, you will also get Y that is worth $299 and Z that is worth $499. This offer is available only until 21 August, and only through this link because you watched my webinar.

That way — you ensured your customer’s frame of reference for the value of item Y to be worth $299 instead of $0 and the item of Z to be worth $399 instead of $0.

I learned this trick from the book Yes! 50 Secrets from the Science of Persuasion by Noah Goldstein , Robert B. Professor Cialdini, Steve J. Martin, where they mentioned the below experiment unraveling interesting findings on how we perceive the things we get for ‘free’ or as a ‘bonus’ for that matter.

“Social scientist Priya Raghubir wanted to test the idea that when consumers are offered a bonus gift for purchasing a product (the target product), the perceived value and desirability of the bonus gift as a stand-alone product can sharply decline. She suggested that this could be the case because consumers may infer that the product’s manufacturer wouldn’t give away something valuable for nothing. In fact, it may even lead them to ask, ‘What could be wrong with this thing?’ People may assume, for example, that the free gift is obsolete or outmoded, or perhaps that the supply overwhelmingly exceeded the demand and the manufacturer is simply trying to purge its inventory.

To test the idea that the value of an item declines when it’s offered as a free gift, Raghubir had participants view a duty-free catalogue that featured liquor as the target product and a pearl bracelet as the bonus gift. One group of participants was asked to evaluate the desirability and value of the pearl bracelet in the context of the free gift, and another group was asked to evaluate the pearl bracelet by itself. The results confirmed the hypothesis: people were willing to pay around 35 per cent less for the pearl bracelet when they saw it bundled with the target product as an add-on than when they saw it as a stand-alone product.

So… Tell me, would you be giving away free ‘bonuses’?

Sherwette Mansour

Written by

Management consultant. Abstract artist. Interested in psychology and consumer behavior… Food, travel, photography, water sports... Spontaneous otherwise.

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