Buy one car, get one free! Can this be good for business?

Like me, you've probably seen this item in the press in recent weeks.

An article by Miles Brignall published in The Guardian on Saturday November 8th, explains... 

"A car dealer desperate to shift stock has stunned the motor industry with an extraordinary offer: buy one car - and get another one free.

The Colchester-based online car broker Broadspeed.com said yesterday it had just sold the last of its Dodge Avenger saloons after launching the offer more usually seen on washing powder or packets of bacon.

Buyers were able to buy two Dodge Avenger SXT 2.4i models, with leather seats and air conditioning, for £20,000. Demand for the cars was so high the company website crashed. Simon Empson, the managing director, said he was planning to offer more "Bogof" deals in the future."

"Empson said: "It was amazing. We had been trying to sell those cars online at half price for nearly a month and they were selling, but it was nothing special. But when we made the deal two-for-one, we got 22,000 customers. It's the power of marketing, I suppose."

The killer lines above are those in bold (emphasis mine).

When Simon Empson changed the offer from 1/2 price to 2 for 1 - the offer went from "nothing special" to getting 22,000 customers!

How can this be when two for the price of one is arguably a worse deal than half price - you now have to buy two cars to get the deal?

Hopefully you don't have to discount to get new business.

But, if you do, then tests show that "adding value" or doing "2 for the price of 1", "3 for the price of 2" or even "4 for the price of 3" outsells 50% off, 33% off or 25% off every time.

Another example comes from a Hotel client of ours.

In the midst of the November and mid December winter slump that many Hotels in the UK experience, they ran a "30% off" offer - and got a reasonable response.

But when the offer was changed to "3 nights for the price of 2" - the results were significantly better. And this offer meant guests stayed longer, and spent more on food and drink.

Plus it maintained the "value" perception of the normal room rate - a "% off" offer can erode your normal price position.

And in another imaginative example, an Electronics store client of our Australian office emulated the car dealers who at the time were offering to give away a TV with every car purchase, by offering a CAR with every TV.  (He went out and bought up a lot of old, but roadworthy cars!  The PR he got was extraordinary.)

And you only have to walk the isles of most supermarkets to discover that they know the which works best - the famous "Bogof" (buy one get one free) offer reigns supreme.

Be really careful with discounting - as we discussed in the last issue, it can quickly slash your profitability.

But if you are in a business like our Hotel clients, when the "value" of a room varies depending on time of year, day of the week and perhaps even the weather - then "2 for 1", "3 for 2" or even "4 for 3" could be a much smarter way to get the till ringing than just a percentage off promotion.

Other times when this type of promotion may be valid is if this is part of a strategy to (a) move stock and/or (b) to build your database.

To get better results in your business by improving your marketing, call us on 01933 373000, or email enquiries@resultscorporation.co.uk with your details and we will be in touch.

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