The branded merchandise industry, also referred to as promotional products, is booming. The Advertising Specialty Institute reported a full recovery to pre-pandemic revenue levels in 2022. And they expect the future to be even brighter. That is good news for any marketing professional looking for a tried-and-true sales and marketing strategy that enhances brand awareness and recall, drives sales, and optimizes budget. You'll have plenty of vendors and product choices available to meet your needs. But branded merchandise is an investment and optimizing that return on your investment is essential.
In this blog, we'll pull back the curtain and explore why promotional products are so effective, the art of selecting the right promotional products for your business, and how to measure the return on investment (ROI) for these powerful marketing tools. But first, let’s discuss just how powerful promotional products can be.
Data-Driven Proof of Success
The data on how effective promotional products are speaks for itself. Here are some examples from the Advertising Specialty Institute and Promotional Products Association International:
- 73% of consumers are more likely to do business with a brand that gave them a promotional product
- 83% of consumers would experience a strengthened loyalty to a brand they shop with that gave them a promotional product. No matter age, gender, or location, consumers prefer promotional products over any other form of advertising.
- 62% of employees feel their employer appreciates them when they are given a branded promotional product.
But why, exactly? Promotional products aren't just tangible items but powerful tools that tap into the human psyche.
Why Branded Merchandise Works
Reciprocity: Give and You Shall Receive
One of the fundamental principles of human behavior is reciprocity. This is how we feel when we receive a gift. We are naturally inclined to return the favor. This occurs in all kinds of relationships, business included. Promotional products act as an offering, initiating a sense of obligation for the recipient to reciprocate, often through brand loyalty or engagement. Read more about reciprocity on our recent blog titled “The Importance of Year-Round Gifting.”
Tangibility and Perceived Value
We naturally prefer items we can touch, feel, and engage with. Promotional products provide a physical, touchable connection to a brand, reinforcing its presence. This tangibility enhances the perceived value of a brand in the eyes of the recipient. Whether it's a coffee mug, a tote bag, or a high-end watch, data shows that these items remain in the recipient's possession for a considerable amount of time, constantly reinforcing the brand. For example, the Advertising Specialty Institute recently reported that 61% of consumers keep and wear promo outerwear for two years or longer, and 63% keep and use promo drinkware for one year or longer.
Endowment Effect
People tend to place a higher value on items they own. This is the endowment effect. When you give a promotional product to a customer or lead, the recipient psychologically attaches themselves to the item (no matter what it is), creating a positive connection to your brand. When recipients use these items, they often associate the product's utility, quality, or aesthetics with that brand. These positive associations and attachments lead to brand loyalty and advocacy.
Emotional Connection
Branded merchandise has the unique ability to evoke emotions. Whether it's through nostalgia, humor, gratitude, or surprise, a gift in the form of a promotional item can create positive emotional connections with a brand. Recipients remember the connections they felt when receiving the product, associating these positive feelings with the brand. These emotional ties often result in long-term customer engagement and loyalty.
Psychological Triggers
When given strategically and with data-driven insights, certain promotional products act as psychological triggers. For example, a branded stress ball can be a physical representation of stress relief, associating a brand with solutions. These triggers subconsciously guide the recipient's thoughts and actions towards a desired outcome.
Social Proof and Brand Visibility
Most humans have a basic instinct to follow the actions of others. The mere presence of promotional products in a person's daily life can influence the decisions of others. When customers see others using or displaying branded items, it generates social proof, highlighting a brand's popularity.
Promotional products can be highly visible. When recipients wear or use these items in public, they essentially become walking billboards for your brand. Others see the product with your logo, and this visibility leads to inquiries about your brand or a desire to engage with it. This visibility can influence potential customers to be interested in or to purchase a product.
Daily Utility
Many promotional products are designed for everyday use. Items like apparel, water bottles, or keychains become a seamless part of the recipient's daily life. As people use these products regularly, they repeatedly encounter a brand, leading to increased brand recognition and recall.
The psychology behind promotional products is a fascinating blend of human behavior, emotions, and cognitive biases. By tapping into these psychological triggers, promotional products become more than just giveaways; they become memorable brand experiences. Understanding the deep-rooted connection between promotional products and consumer psychology is the key to unlocking their effectiveness in your marketing strategy. With a thoughtful approach to choosing the right promotional products, your business can build enduring relationships with customers, leading to long-term loyalty and continued support.
How to Choose the Right Promotional Products
Your choices for branded merchandise is vast, but only some will generate a positive ROI. The art of aligning your product choice with your brand identity involves selecting promotional products that not only serve practical purposes but also resonate with your target audience and reflect the core values, personality, and image of your brand. Here's how to do it effectively:
Understand Your Brand Identity
Begin by having a deep understanding of your brand. Your brand is your mission, core values, market positioning, and marketing messages. In short, your brand is both your business reputation and your company DNA. Your choice of promotional products should reflect the core of your brand. To read more about brand identity, check out our blog post, "Your Brand is Not Just Your Logo."
Design Consistency is Key
Ensure that the promotional products you choose are consistent with your brand's visual identity, including your logo, color palette, and design elements. Consistency helps reinforce your brand's image and make it memorable and recognizable.
Consider Your Target Audience
Think about your target audience and their preferences. The products you choose should appeal to and be valuable for your customers. Make sure you understand their demographics, interests, and pain points. The more you know about them, the better you can tailor your choice of merchandise. For example, if your brand caters to tech-savvy professionals, tech-related promotional items are a good fit. Find items they will use every day to reinforce brand awareness and recall.
Quality and Durability Matters
The quality of a promotional product reflects on your brand. Opt for products that are of good quality and will leave a positive impression. A cheap, low-quality product can send the wrong message about a brand. A long-lasting item will keep your brand visible for an extended period, increasing its effectiveness.
Customization and Uniqueness
Customize a promotional item to make it unique to your brand. Think about how your promotional products can stand out. Unique or innovative items tend to leave a stronger impression. It could be a creative design, a functional twist on a common item, or a limited edition product. Add your logo, tagline, or personalized message to reinforce your brand identity and make a stronger connection with the recipient.
Utility and Relevance
Ensure that the products you choose are relevant to your industry and the needs of your customers. Items that serve a purpose in the daily lives of your customers are more likely to be appreciated and used, reinforcing the brand.
Emotion and Connection
Think about how a product can evoke emotions and create a connection with your brand. Identify the emotion you want to inspire and ensure it fits your brand identity. For example, if your brand identity is warmth and comfort, consider products that promote coziness, like blankets or hoodies.
Budget Considerations
To ensure a positive ROI, always keep your budget in mind when choosing promotional products. It can be very easy to find new and exciting items that are out of budget and still won’t get the job done. It's about finding a balance between quality and cost.
Finding the most effective promotional products for your target audience involves a mix of research, creativity, and flexibility. By aligning your choices with your brand, the needs and interests of your audience, and your campaign objectives, you can create a powerful marketing strategy that leaves a lasting impression and nets a positive return on investment.
How to Measure ROI
How you measure ROI will depend on your specific business goals and objectives. Some companies use branded merchandise to build brand awareness. Others use them for lead generation or customer acquisition. Still others find promotional products suitable for increasing conversions or sales. In each case, the metrics to determine success are different. It is possible to have more than one goal for a promotional campaign. In that case, you will need several metrics to determine success.
Here are several key metrics that can evaluate the effectiveness of a promotional product, depending on the goals and objectives of the campaign.
Cost Per Impression (CPI)
CPI calculates the cost of each impression or view generated by a promotional product. This is a good metric for assessing brand visibility. The lower the CPI, the better the ROI. The Advertising Specialty Institute offers CPI benchmarking for some of the most common promotional items, including drinkware, apparel, writing tools, and tote bags. Remember, promotional items tend to be very "sticky," meaning recipients hold on to them for a while. Each time the item is used, the impression tally grows, and your cost decreases.
Conversion Rate
For promotional products designed to drive immediate action, such as making a purchase, attending an event, or signing up for a newsletter, measure the conversion rate. This is the percentage of recipients who took the desired action. The higher the conversion rate, the better the ROI.
Customer Acquisition Cost (CAC)
CAC determines how much it costs to acquire a new customer through a promotional product campaign. To calculate CAC, divide the campaign's total cost by the number of new customers acquired.
Customer Retention
Measure the impact the promotional product has on customer retention and loyalty. A successful campaign could increase customer retention rates and repeat business.
Customer Lifetime Value (CLV)
The long-term value of customers is crucial to business success, and promotional products can be an effective strategy to build CLV. A CLV measures how much revenue a customer will generate during their entire relationship with a brand. The basic formula is CLV = Customer Value times Average Customer Lifespan. To calculate customer value, multiply their average total order by their average number of purchases per year. By tracking the purchasing behavior of new customers gained through a promotional product, you can determine the promotion's success.
Incremental Sales
You may be able to tie incremental or additional sales to promotional products through a QR code or dedicated URL on the item. This can be a direct measurement of success when compared to sales generated without promotion.
Number of Leads/Cost per Lead
If your objective is lead generation, keep a count of the actual number of leads generated through a promotional product. To further measure ROI, calculate the cost of acquiring each lead by dividing your marketing spend by the number of leads generated.
Referral and Word-of-Mouth
To track customer acquisition or brand awareness, track the number of referrals or word-of-mouth recommendations generated by satisfied customers who received promotional products.
The best approach for measuring success is to define clear objectives for your branded merchandise campaign and select the ROI measurement that aligns most closely with those objectives. Often, using a combination of metrics is beneficial to get a comprehensive view of the campaign's effectiveness. By measuring ROI across multiple dimensions, you can better understand the overall impact of your promotional products on your business.
In this post, we’ve only scratched the surface of the opportunities that promotional products can bring to your brand. The ability to enhance your brand and make a lasting impact on customers is real and remarkable. For more information on the current trends in branded merchandise, please explore our catalog and call us to discover what promotional products can do for your business.