Can Freebies and Giveaways Boost Business?

Times are tough, sales are down and who doesn't love a giveaway? In a slowdown, businesses might be tempted to offer freebies and giveaways to get customers in the door, but this Wall Street Journal article warns that their good intentions could backfire.

If you asked me, I'd say go for the giveaway gimmick. I love a good freebie, and you'll have my business for life. Just ask my auto repair shop, which offers freebies via its monthly newsletter.

But if you ask some experts, they'd say to think before you advertise the words "FREE FREE FREE." They say you run the risk of coming off as cheap, which is a problem because once the promotion is over, your customers may be wondering where all those great deals went.

One of the keys is to make the promotion enticing enough.

I interviewed Lou Aaron, a restaurateur in Boise, Idaho, last week for a story I'm writing on customer feedback. During the interview, it came up that he's been running promotions specifically to help combat the economy. His latest one? Come in for lunch or dinner on Tuesdays and Wednesday and your meal might be free (he chooses the lucky diners at random). It's a cheap and easy way to get customers through the door, he told me.