Free gifts are a marketing staple, and in recent years they've got pretty impressive.
I remember writing about the first "free PC" offer in the late 1990s, when US-based Free-PC offered customers a machine for nothing -- provided they were happy to sit through continuous advertising on the borders of their screen.
The business went bust thanks to low click-through rates from users. (Who'd have thought it -- people too cheap to buy their own computer were also too cheap to respond to advertising!)
Now it's fairly common to see subscription-based services offering free hardware in exchange for signing up to a contract -- the mobile phone industry is built on that model, after all.
Tempting a customer with a cheap and cheerful products works at the point of sale, but by selecting a really cheap model, your proposition can fall down badly later on -- and with it your brand.
That's certainly the experience of a friend who recently signed up to a phone-and-broadband package that came with a free laptop. Within 24 hours, the CD tray on the machine had broken.
Disgusted and disillusioned, the customer returned to the shop for a refund, only to be told by the teenaged shop assistants that all they would do was swap out the machine -- bear in mind, this was a model that was demonstrably shoddy.
Only after consulting a consumer rights helpline and being briefed on the goods and services regulations -- including what to tell the supplier -- did he venture back and after two hours of arguing, get his money back. Result? Not only did the shop lose its contract, it lost a customer for life for any of its other services.
The moral of this story is that even free gifts should reflect the customer service proposition you project for paid goods and services. If it doesn't make economic sense to offer a decent product as a free gift, don't offer one at all. (On the flip-side, sometimes the free gift is so good, people will actually ignore the product you're trying to sell them.)
That's more true now than ever before. The internet has encouraged people to expect a lot for free. Even freemium business models rest on the assumption that the free part of the offering is half decent. But as companies such as Apple have shown, if the brand is solid and differentiated by high quality products, people won't expect not to pay for the service they really want.