Faced with a protracted recession, an increasing number of UK small businesses are resorting to a potentially high-risk strategy of costly promotions and freebies.

Whilst a promotional strategy can attract the attention of potential customers, there are some due considerations before embarking on such a promotion as a freebie could be giving away more than you can ill afford, namely your reputation and profits.

I was recently at a business exhibition and out of some 150 or so exhibitors; I could only count a handful that didn’t offer some sort of promotion. Whilst the majority of freebies where nothing more than a bottle of bubbly in return for registering your details which is absolutely fine, some involved substantial discounts off the company’s core products, which was quite worrying.

In exhibitions particularly, over the years visitors have become more like freebie hunters than actual buyers of products or services. You can see this in the way that exhibitions have also changed in format. Several years ago exhibitions were seen as a sort of Expo where new products where unveiled, and exhibitors made deals there and then. The exhibitors were the star attractions.

Recently however, it seems (perhaps a reflection of society and media in general) that visitors are increasingly there to get freebies or I suspect, to see the guest speaker from whomever has won this years, The Apprentice.

The promoter wants to sell exhibition space and in certain aspects does the promoter actually care about the quality of visitors? Their success (not the exhibitors) is measured in how many tickets were given away and how many people came through the doors, in order to sell next years spaces?

Which brings me back to the point at hand? In a world where apparently nothing is free, what actual value can be placed upon ‘freebies’? Does the bargain hunter in us all yearn for that free pen? Will a 50p mouse mat with a company name you have never heard of make you buy their product or service worth hundreds, or even thousands of pounds? For me no, and whilst I can’t speak for everyone, I don’t think there will be many who would. If you are one of those few please email me at info@i-have-more-money-than-sense.com as I have some clients who would love to hear from you.

Whilst freebies or promotions can attract attention I think that many firms get too drawn into the “if we build it, they will come” mantra with giveaways, rather than actually focusing on how they can communicate the benefits of their products to their customers.

An example of this poor focus was at the same exhibition I mention earlier. The company in question hired a magician to lure people in, and I must say it did the trick, and kudos to them for doing it. Yet when the magician ended (showing me my chosen card I might add) I was left with 3 of the firm’s employees all scrambling round trying to sell to me harder than a Curry’s sales assistant come bonus day. They were uncoordinated in their approach and whilst they had my attention thanks to the magician, they quickly lost it and only proceeded to try and sell me a freebie of their services.

There was no pillow talk, no rapport building, and no fact find to see if I could even use their service. The whole thing just felt desperate and uncomfortable.

If this company were prepared to hire a magician for a few days, pay for a stand with all the trimmings, and then factor in management and staff time away from their jobs, only to give away freebies, how on earth can they hope to benefit from the huge outlay they invested?

Personally, freebies that come from customer’s spending money are better all round. For example, giving a customer 10% off for buying an additional service or product makes them feel they are getting a deal, and by discounting only on a second, additional purchase the company gets a sale it may not of otherwise gotten. Everyone is a winner. Granted, it’s never quite that easy.

However, it is far easier, and more likely that you will throw away your profits chasing people who will never be your customer. So, why not invest more in finding out who you customers actually are, why they need your product, and how you can communicate with them more effectively?

If you still feel the need to give a freebie away, just make sure that you do your research and weigh up all of the factors, as freebies may well be free for the recipients, but not to those who give them!