Freebies Are A Sign A Company Is About To Go Under

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Thinking about giving out some freebies for your business? According to new research, that could be a bad sign.

There is no free lunch in company giveaways of sandwiches, airline flights, hotel stays and other goodies. That's because there is a significant risk that the so-called "future rewards" will diminish in value when claimed – or the business might not last long enough to hand out the goodies, a new University of Florida study finds…

…Many of these so-called reward or loyalty programs are really "shams," said Shugan, who presented his research, which focused on the travel industry, at numerous conferences and universities, including the INFORMS Marketing Science Conference in June 2006. Instead of building customer loyalty the traditional way by beefing up staff and increasing service, companies provide a lower-quality product in the form of reduced service, hoping to avoid sales losses by promising customers future rewards, he said.

Zero percent financing is the first thing that popped into my head. Great marketing ideas aren't great marketing ideas if they ultimately hurt the company in the long term.