Have you ever seen an ad like this?

Cloud-9-Salon-And-Spa

If you’re doing display advertising online (Google display network, Facebook, wherever), the odds are that these ads aren’t making you a positive ROI.

Here’s the irony: those ad networks actually don’t like you losing money because if you lose money, you won’t keep buying. So believe it or not, most traffic sources / agencies / marketing provider actually have the same goal as you do: positive ROAS (return on ad spend).

But here’s the problem: just because you get more traffic does NOT mean more customers. (Or enough that you make money).

Let me give you an example.

You’re at a cafe hanging out with a friend. An insurance agent comes in and tries to sell you whole life insuarance policy.

Will you buy it? I am willing to bet $100 that you won’t.

Why? The marketing funnel & how the customer brain works.

Just because you saw it once does NOT mean that you’re gonna buy it if there is no immediate demand (ex. commodities like shoes/camera/electronics, medical needs like dental, etc.) where search PPC advertising can really show massive ROI.

Otherwise, there would be no need for marketers (gasp), advertising, salespeople, manuals, white papers, or any of that stuff.

There is no “hook” for them to start engaging in a conversion with you.

Ever see one of these?

free-lunch-drawing-box
Enter your business card for a chance to win free lunch with friends.

Believe it or not, there is such thing as a free lunch.. the only catch? You gotta listen to their sales schpiel. (Usually by some financial planning company.)

Does this work?

Well, let me answer that in form of a question: do you think those card collection boxes would stay there if they DIDN’T work?

Here’s another example.

meineke-oil-change-coupon

Ever been to a car oil change place where they’ll do it for $15-$20?

Did you know all that new oil that goes into your car costs about $15 if you were to buy it at Wal-Mart?

So I wondered.. how on earth do they make money?

My curiosity was too intense, so I went to a local oil change place and just asked the manager.

It turns out they don’t. Some locations actually lose a couple of dollars per oil change.

But, statistically speaking, 1 in 6 cars (lower in nice neighborhoods with nice new cars, and much higher in not so great neighborhoods with not so nice new cars) will have some kind of “legitimate” under-the-hood problems.

He told me that the conversion ratio from him telling the owner of the problem to an actual fix-up sale is over 90%, with average order exceeding $300 (for his location).

So the purpose of the freebie?

Get the customer to come into the door!

i-love-free

“Free” = Greatest Sales Magnet on Earth

I admit. I love freebies. Every time I go to super markets, I hit up EVERY one of those.

But ever wonder why do they do that? Because

  • getting consumers to try their (new) product is 90% of the battle – in fact, food brands spend over $90 billion a year to get them try their stuff (src)
  • conversion ratio from trying to actually buying is anywhere between 20 to 90%, depending on brand (src)

In fact, some brands actually PAY super markets to host their freebies in their stores.

So if you’re a small business owner, how can you leverage this?

Advertise Free Stuff

Yes, counter-intuitive, right? Pay money to give away things?

Strange? Yes. But do it anyway.

You have to pick something that has HIGH perceived value yet it costs relatively low for you.

Let me give you an example from one my case studies, a nail salon in Times Square.

Previously they ran ads like this

  • “come check us out” ads
  • target: NYC female 25-45 who likes beauty
  • driving traffic to front page

After about 1000 clicks at $0.40 average CPC, nothing happened.

Not one person ever showed up.

Instead, we offered a free lip waxing.. the only thing they had to do was give us their name & email, and they would be taken to a download page.

free-lip-waxing-coupon

With same targeting, we drove probably about $200 in advertising. I optimized the ad for higher CTR (3-4%), and ended up getting the free lip waxing downloaded for on the average $4 per download.

ON top of that, I found some freebie channels I used to get the word out.

All in all, about 80 coupons were redeemed in 1 month.

Result? Half of them showed up with the coupon.

Of course, with the upsell (which is much easier if you’re physically next to your customer)… the “freebie” customer became an average $50 total ticket sale.

So that $200 in advertising became ($50 x 40 = ) $2000.

Yea.. that’s 900% ROAS.

Is it still running?

Oh hell yeah!

Key Takeaway

  1. Don’t promote your business the “common sense” way
  2. Develop trust – advertise free giveaway
  3. When customers show up, upsell when you have their trust

Remember, this isn’t one size fits all… some business will have to rely on good ol’ lead generation/nurturing and retargeting to achieve the same type of sales objective.