Article

Getting the most out of a giveaway

Marketing experts and QSR brands share tips on crafting a successful promotion.

May 17, 2009

Value menus may have been the traffic driver of 2008, but this year it's the product giveaway. Today more than ever, freebies and deep-discount offers resonate with consumers.

Such promotions certainly are not new tactics, but they have become more common in recent months as competition has grown. As a result, brands risk looking like copycats — or worse, losing face when a chain's ability to fulfill the offer is challenged by a greater than expected response.

Giveaways can, however, provide a brand plenty of return on investment if executed properly.

Linda Duke, CEO of Duke Marketing, said that the key to a successful freebie offer is considering what the promotion does for the brand in the long term and not simply putting up an offer to follow the pack.

"It shouldn't be used as a band-aid for a tough economy because that's when it hurts the brand," she said. "What restaurant operators need to think about is what they can be doing now that's going to affect their business six months, a year or two years down the road. So if they're giving stuff away now, will they still be giving stuff away two years from now?"

Duke recommends using product giveaways with the same purpose that retailers have in mind: new product sampling.

"The giveaway works to introduce a new menu item because they may get trial," she said. "Ultimately, that's what sampling's supposed to do. So they could see residual effects from it, such as new guest counts."

Giveaways can build a perception of value, especially for brands without a dollar menu. Jeff Cannon, president of integrated marketing and public relations firm The Cannon Group, said offering one-day freebies or deep discounts give brands more flexibility than adding a permanent value menu. That way, the QSR can respond to product availability and market demand as needed.

"More important, on a brand level, it wraps the concept of discounting into a fun idea for the consumer — never knowing what special will come up, but knowing there is one. In effect, saying this is about fun, not about discounting" he said.

But a mishandled promotion can turn the good PR the brand is counting on into a consumer backlash. Popeye's Louisiana Kitchen's recent Pay Day promotion offering eight pieces of mixed chicken for $4.99 overwhelmed stores, despite operators boosting their inventory. Consumers complained about stores that closed early as well as having to wait in long lines. Still, their reaction paled to in comparison to the outcry aimed at KFC in its recent Oprah Winfrey-endorsed free two-piece grilled chicken meal coupon — an extreme example of what can go wrong with a giveaway.

"That illustrates the other side of buzz: the old saying that 'all publicity is good publicity' ain't necessarily so," said Lori Walderich, CEO chain restaurant marketing firm IdeaStudio. "If you hope to generate scads of free buzz with deep discounts and freebies, just keep in mind that you sometimes get less than you pay for."

Marketers and brands with experience with giveaways and deep discounts share the following best practices:

Have a goal beyond the giveaway

Brands need to approach the offer with an understanding of exactly what they expect from the effort, whether brand awareness, reinforcement or redefinition, Walderich said.

Rita's Italian Ice, for example, found a way to introduce its product to people in its market who are unfamiliar with the brand. The chain holds its annual First Day of Spring event to kick off its season, giving one free cup of regular-sized Italian ice to customers.

This year, the brand's nearly 570 stores gave away 1.3 million cups of ice, said Jim Rudolph, chairman and CEO, Rita's Franchise Co. "Our biggest challenge is getting people to know what the product is," and the spring kickoff helps with that.

Know the ROI

The return on investment for giveaway and discount offers can be measured in monetary as well as intangible returns. Walderich recommends brands be realistic about the monetary ROI, keeping in mind the promotional spike as well as the possibility of diminishing returns.

It also is better to give away a low-cost item rather than a high-cost one. "An item that's perceived as a good value by customers doesn't have to be a money loser for you," she said.

Duke said that using a giveaway for product sampling will have more ROI if the event has a name that relates to a menu item or the brand. Brands, then, need to be sure to tie the event into an overall marketing campaign that extends beyond the single-day freebie.

Dunkin' Donuts uses its annual "Iced Coffee Day" to draw attention to its cold beverages every spring. In its first two years, it gave away a free cup of iced coffee. This year, the brand tied it to one of its charitable organizations. Dunkin' charged 50 cents per cup and gave away 5 cents to one of its sponsored charities, Homes for Our Troops.

With the charitable tie-in, Dunkin' saw intangible returns. The company sent out a press release well before the giveaway recruiting volunteers for the home-building effort for veterans. As a result, the charity experienced nearly a 25 percent increase in new volunteers.

"There was a lot of carryover goodwill from the event," Cynthia Ashworth, vice president of consumer engagement for Dunkin' Brands. "It made it less of a one-day event and more of a rallying point for our crew and franchisees."

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Be prepared

While not every promotion will have lines around the block, it's important for brands to prepare as if each one will. For system-wide promotions, preparing franchisees is essential. Dan Cohen, principal for Full Court Press Communications, said that brands sometimes concentrate on getting the message out to consumers over its own operators.

"So many times our priorities are on communicating with our customer," Cohen said. "Getting your internal house in order is sometimes job No. 1 — whether it's being ready to answer the tough questions or to fulfill on a marketing promise, regardless of how large or small."

The operators in the Cold Stone Creamery Boston Co-op have learned a number of lessons in the three years it has held an annual giveaway tied to the region's Patriot's Day holiday. Co-op president and Cold Stone franchisee Madhuri Coletti said the franchisees have learned to craft a plan that is simple to execute and promote.

The co-op members spend months brainstorming and help each other remember the little things, like having enough sugar packets for its recent iced coffee promotion, as well as bringing in enough staff.

"You can't have too many people on hand during a time like that because you do want to keep it an upbeat, positive experience," Coletti said. "If you are spending more on labor, it's money well spent because of the overall perception of the promotion."

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Getting the most out of a giveaway

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