"There’s no such thing as a free lunch” may be a time-honored economic truism, but it doesn’t help explain why there are such things as a free hat, and a free coffee mug, and other no-strings-attached giveaways.
Distributors and wholesalers are the second largest users of promotional products, with nearly 96 percent offering freebies of one type or another. Yet, most aren’t really sure why they do it, according to David L. Weiner, author of the Complete Sales Promotion Handbook for P-H-C-P Wholesalers and president of Marketing Support Inc.
He offers three basic reasons a wholesaler should give away promotional products: The first is to generate good will among patrons, the second is to establish name recognition and the third is to tie the item into a promotion.
Rick Ebel, vice president of communications marketing for the Specialty Advertising Association, agrees promotional products should be designed with a purpose in mind.
“A lot of companies simply give away promotional products and maybe they do so with sonic results, but they’ll probably find they are going to get more discernible results if they use it in a planned, structured promotion,” explains Ebel.
In addition to the reasons given by Weiner, Ebel lists a number of other functions the gratis items can serve as well. Promotional products, he explains, can work as impact or attention grabbing devices; reinforce an impression given by other forms of advertising; or can be used to decorate events - such as passing out logo-imprinted napkins at a company open house.
WHO SHOULD USE
PROMOTIONAL PRODUCTS?
‘Wholesalers of any size can effectively use promotional products, and small companies should definitely look for something unique, explains John Rich, a partner of Green-Rich Assoc., a marketing firm which works exclusively with wholesalers.
“The small wholesaler really needs to put his name and phone number in front of people and encourage them to give an order,” explains Rich. “Here in Cleveland, there are probably 10-12 plumbing wholesalers, but three of them are well known throughout the city. Every contractor in the business knows who they are so their name is already out there. It’s the little guys that need to make themselves known.”
It’s a personal decision as to what to include on the product, but all promotional items should have the company’s name prominently displayed. An elegant, expensive item should be kept simple with maybe only the company logo engraved on it. Miniature items may become cluttered with too much additional information provided, but smaller, independent wholesalers will probably want to list their address and phone number on items such as calendars and clip boards.
Branches may wish to hide the fact that they are part of a chain, and for this reason they should avoid listing all of their branch locations, advises Weiner.
‘‘If you’re a huge branch fighting some little independent out there, and the little independent asks the customer 'why do you want to do business with a big company like this,’ and he picks tip your pen and it’s got 29 addresses on it, you’re reinforcing their point. The idea with branches is to solely identify with the market itself,’’ Weiner says.
CHOOSING YOUR SPECIALTY
Promotional products in this country dates back to the early 1800s when Farmers’ Almanacs were passed out in rural communities. Today, perhaps the most famous of all promotional items in this industry is Ridge Tool Co.’s pin-up calendar. Weiner says that when a company becomes known for the specialty it hands out, you know you have a winner, but coming up with the ideal promotional product is not as simple as it sounds.
The promotional item picked, the amount of investment made and the method of distribution for the item depend a lot on the wholesaler’s motive for the giveaway. For example, if a wholesaler is giving away the item for good will (public relations), with no ulterior motive, he would look for an inexpensive item that the customers will enjoy and the countermen can feel free to hand out more than one of if, on the other hand, the wholesaler is giving the item as a ‘gift” with purchase, he would want to spend a litte more.
‘Understand what the promotional product is supposed to do,” Weiner explains. “Is it supposed to tie in with a promotion? Is it supposed to be something I want to give out for good will? Is it something I want to use just to keep my name out there? If you want to build your name, get something that’s going to last a little while and that a guy’s going to use.”
‘You want something that the person is going to keep,’ Ebel adds. “If they throw it away it has no value.”
An exception to this would be if the objective of the promotional item is simply to create impact, he explains. If the wholesaler just wants to grab the customer’s attention, then the promotional item does not necessarily need to be saved. One direct mail marketing plan Ebel remembers as particularly effective was done by Time magazine when they sent miniature pencils along with their solicitation for subscriptions.
The pencils were probably not much thicker than a needle,” he recalls. “It’s not something that you’re going to hang onto, but it does catch the eye. The idea of the little pencil is that you can use it to fill out your subscription form, It travels light in the mail and doesn’t cost any additional postage.”
According to research conducted by the Specialty Advertising Association, the promotional items that most appeal to businessmen are those which can be used on the job, and desk items are among the hottest specialties right now, like mouse pads.
Neutral gender promotional items, such as wall clocks or calendars to decorate an office, are also popular and make sense, because the contractor or customer is forced to see the name and number on a daily basis. Subliminal advertising like this practically forces the contractor to memorize the phone number whether he wants to or not. Another good way to gain daily exposure for your company is through the use of clip boards, according to Rich.
“I think clip hoards are unique because you can put your name and your phone number on a clip board and it’s actually something that a lot of guys can use on tile job,” he explains.
Since the summertime uniform for a contractor is generally a T-shirt, these also make excellent giveaways. Another item a contractor’s sure to use on the job is 10-ft., 12-ft. or 20-ft. retractable ruler.
Rich recommends giving the contractor something a little different from what your competitors are offering their customers. With countless manufacturer/wholesaler hats vying for your contractors’ attention, it’s unrealistic to believe he’ll be loyally wearing your hat on a daily basis.
Carpenters, plumbers, electricians and contractors like to collect hats. Usually one hat becomes a favorite and the rest are likely to hang in the closet. Some contractors have been known to “jive” countermen by wearing a competitors hat into the wholesaler’s place of business, Rich explains, so it's important to make your hat stand out.
“You can get those hats with wings on them or stuff like that, but the guys aren’t going to wear them,” admits Rich. “Still, try to make them different. Instead of giving away summer hats, if you’re in the North, give away a stocking cap with your name knitted into it or If you give them a coffee cup, give them the type that they use on sailboats—one the contractor can stick in his truck and it won’t spill.”
It’s important to understand the tastes and needs of your targeted audience. Dean Ballard of Anaheim, California-based Urban Pipe & Supply Inc., tries to find objects that are both useful and unique for giveaways, which so far includes a tiny calculator disguised as a matchbook, an extendable water heater lighter, a miniature flashlight and a pocket calendar. Some of these items were Co-oped 50/50 through advertising money from manufacturers, with the amount of money Urban Pipe received determining how much they were willing to spend on an item themselves.
"We’ll utilize the $2,000 to $3,000 we get from the vendors toward whatever we give,” explains Ballard. “We don’t like to spend too much of our own money, but we will in certain eases. We cotildn’t afford to give some of the more expensive stuff away ourselves,”
A manufacturer will co-op anything that has his name adequately shown, is in his best interests to help finance and which might result in plus business for him. It was the co-op funding which first steered Urban Pipe towards promotional products a few years ago. As a salesman, Ballard could not stand seeing money wasted which could be used to help him get his foot in the door.
“We had all this money sitting around and if we didn’t utilize it, we’d lose it. So rather than lose it, I just kind of grabbed it and started giving things away.”
WHAT SHOULD YOU SPEND?
How much to spend on a promotional item depends a lot on how it wifi be distributed. When the item is intended to he passed out indiscriminately it’s important to keep the cost down. Weiner suggests spending less than $2 a piece on no-strings-attached giveaway items.
“Over $2 spent on a promotional product and you’re getting into a premium so you’d better have him buy something," he explains. Pens, carton cutters, money clips, pen knives, paperweights, rulers, mugs and note pads are among the items Weiner lists in his promotional handbook which cost the distributor less than $2 when bought in bulk.
A notable exception to the $2-ceiling rule would be for commemorative or anniversary promotions where the item should be of higher quality. For a 100-year anniversary or a commemorative time where a select few would be present, Weiner might even up that ante to over $10 each. A more elegant item may have a longer life on a customer’s desk than a cheaper version. He remembers one company that silverplated about 400 valves for a commemorative event.
‘What I see lying on my desk are commemorative specialties,” Weiner notes.
How much money a wholesaler is willing to spend on a promotional item appears to be a personal decision, and there are no strict rules on the subject. Rich places the upper limit at $10 for giveaway items, but suggests trying to keep the price under $5. Some items might seem inexpensive at first glance but really aren’t. For example, one wholesaler wanted to give away the scratch-off prize cards (like those given away by McDonalds) in direct mailings, but had to scrap the idea.
“What you find out is that McDonalds purchases hundreds of thousands or even millions of those things, so per unit it’s inexpensive,” he explains. “But if you’re going to print 500 or 1,000 of those scratch off deals, that’s 2 to 3 bucks apiece, so they just don’t do it. There’s economy in size, but most wholesalers don’t deal with 20,000 people.”
Dave Corcoran of RB. Corcoran Co. advises spending less than 1 percent of your promoted product’s price when using promotional products in a promotion.
“You want to target your customer - who is it for and what are you trying to accomplish,” he explains. Then you can use some standard formulas on cost vs. return to determine the value to he placed on the product.”
WHO GETS WHAT?
Even more important than picking the promotional product itself, according to Ebel, is developing a promotional strategy for the item, which includes developing a distribution plan.
Although there are different schools of thought on how best to distribute promotional items, it makes sense that more expensive items should be given away selectively.
"Decide how you will present these items to your target audience. Are you going to give them away on sales calls? Are you going to send them direct mail? Are you going to let them pick them up at the counter? Or are you going to have a third party distribute them? I think developing a promotion is a little more complicated than simply giving away the product.”
Weiner suggests keeping the cost down so that more than one item each can be given out at the counter. Setting down a one-per-customer rule for promotional products doesn’t make sense, he says.
“Business by the rules is ridiculous,” Weiner explains. “You’ve got to have rules, but you have to be flexible. Know who your good customers are.’’
Another wholesaler mentioned the good specialties can do at the counter to smooth over mistakes or delays, but face-to-face is not always the most effective way to give out your promotional products. Rich says he advises his wholesaler clients to distribute some items and promotions via direct mail.
‘‘We really believe in that,’’ Rich says. “The average wholesaler probably has 20 to 30 percent active accounts, and anywhere from 70 to 80 percent of his accounts are very small or inactive. How are you going to contact those people if they’re not placing an order, dropping in at your counter or being called on by a salesman? So that’s why we use direct mail.
Rich believes the giveaway items should be distributed across the board and not with preferential treatment given to the high volume customer. Preferred customers are already given kid glove treatment when they get special pricing, tickets to major sporting events or are taken to lunch or dinner.
“Look at it this way,” he suggests. “If I’m a wholesaler and I’ve got 1,000 people on my mailing list and 300-400 active accounts, of which probably 50-75 are big customers that I really give a lot of attention to, that means there are a couple of hundred other active accounts that get very little attention and thousands on the list that get nothing, because they buy from the competition.
‘‘What are we going to do to try to get them to buy from us? So I say, don’t forget them, especially on inexpensive things like promotional products.”
Ballard suggests using promotional products to pave a path when making sales calls. He says he's found that an indifferent secretary who has an Urban Pipe paperclip holder on her desk is more likely to shuffle him in to see the boss.
And Corcoran will tell you that promotional products not only help out with the wholesaler’s customers, but can benefit their employees as well.
“As an on-going thing it’s an inexpensive way to keep the enthusiasm both internally and externally,” he says.
Weiner agrees promotional products should be passed out to both the inside and outside sales staff, because the items are usually pretty inexpensive and can give a real boost to morale.
“If it’s 2 bucks and you’ve got 80 people working for you—that’s 160 bucks. So be generous,” Weiner says.
SEEING RESULTS
At R.B. Corcoran, the promotional items are usually tied into a theme month or theme week to obtain the maximum benefit from the promotional product.
“What this does is focus the entire company and the customer base on this particular vendor or item during that week. It gets your customers thinking about their buying decisions,” Corcoran continues.
In other words, if someone came to you right now and put a calendar on your desk that said XYZ Supplier of Paper Goods, you’d start thinking about why you do business with them, why you don’t do business with them - some fundamental questions about your relationship with the company."
The positive results of promotional products are not always apparent in the short run. A promotional item differs from a premium in that there is no obligation to purchase anything in return. So, unlike a promotion where the effectiveness of the campaign can often be judged by the return on investment (i.e., the increase in business), it’s difficult to measure good will.
However, there are ways to measure the success of some items. The effectiveness of a direct mail specialty can he found by measuring the response rate after sending out the solicitation in a spilt run, half containing the promotional item and half without. Sending out questionnaires to survey public opinion of a company before and after a good will giveaway can also determine effectiveness.
If a promotional product is popular enough you may not have to seek out public opinion; it may come to you. When Emerson Electric bought Ridge Tool Co., a decision was made to quit producing Miss Ridgid pinup calendars, but soon the contractors were clamoring for an encore.
“When you become known by your promotional product,” Weiner says, "you know you’ve got a successful item.”