Two for one drinks. Free bottle with a reservation. Free shot with a purchase. These are common promotions we see in the nightclub and bar industry, and they all have one thing in common: free drinks. While giving away free drinks may work to attract customers in the short-term, it’s an extremely detrimental strategy in the long-run.
Customers equate the word free with cheap, and never expect to pay full price once they receive a free or discounted item. In fact, a guests’ likelihood to spend drops more than 50% with every free drink or bottle. So while you caused a spike with attracting customers, you’re also causing a drop in future earnings with that same guest. To get a good example of this, watch this episode of Bar Rescue.
Instead of giving away free inventory, create packages that entice your target market to increase the perceived value. If you’re accustomed to giving away a free bottle with a reservation, try selling a table that includes a bottle of vodka and a bottle of champagne for a price that’s profitable to you. The guest won’t perceive this as a cheap gesture and will instead see it as a valuable package. This perception is the value of your promotion, and is what differentiates your efforts from simply slashing prices - read Promoting Without Discounting for more details on this.
No matter what type of promotions you run, always make sure they align with your target market and your core values as a brand. People connect with venues that have a focused style, and that style is your brand image. It’s what aligns customer expectation with customer experience; and it’s what drives the right demographic into your venue in the first place. Understanding both your brand and your target customers is what drives consistency, and that consistency will always help to determine the best promotions to generate results. If a promotion is too obscure or makes little sense in comparison of what your brand is known for, it simply won’t work.
So the next time you’re about to give away a free drink in part of your promotions, just remember that you’re setting yourself up for marginal returns and a low-paying demographic in the long run. And unless that’s what you’re going for as a business, you just might want to reconsider.