Costco is famous for its free food samples. The morsels have become an integral part of the Costco experience, incentivizing customers into the store. Costco and many other retailers appreciate that, by allowing customers to “test drive” products, they’ll better stimulate their cravings and increase purchase likelihood. For Snack Factory, maker of Pretzel Crisps crackers, free samples yield a conversion rate of approximately 24–30%, with 1 in about every 4 free samplers purchasing the flat, crunchy, pretzel-inspired crackers.
In the B2B world, a Proof of Concept (PoC) can be likened to the “free sample” modus operandi of retail. PoCs have gained popularity in the B2B realm because, in theory, they have the potential to trigger win-win outcomes. PoCs afford prospects opportunities to try a product and vet sales reps’ claims and credibility prior to purchase. For quota-seeking sales reps, PoCs offer the opportunity to demonstrate the value of a product and validate their claims.
In practice, PoCs are surprisingly difficult to execute successfully. Fear not. We’re here as your PoC sous chef to highlight 5 essential tips to follow in order to cook up a savory PoC.
- Limit scope
While Costco is generous in allowing its customers to sample a diverse assortment of food items, it limits the scope of its free sampling policy. Customers are limited to sampling the products preselected by the store. They don’t have free rein to sample any product of their choosing.
Follow Costco’s lead when conducting a PoC. Limit the time frame. The objective is to demonstrate a “quick win.” Jason Lemkin, co-founder of EchoSign, advises that, when conducting a PoC, “set a firm amount of time, not ever to exceed 60 days.” If your PoC runs on too long, the prospect will consume your bandwidth for an extended period and only have more opportunity to investigate competitive offerings. Additionally, limit your subject pool. Select one division or team within the prospect’s organization. This will not only limit the resources you’ll expend, it will also ease the evaluation process. You’ll be better able to draw conclusions from data points collected and assess the degree of success of the endeavor.
- Establish key success criteria
Costco’s free sampling policy is effective because it relies on the age-old persuasion technique of reciprocity. The influence tactic is grounded in the belief that if you are offered something for free (like a morsel of Muenster cheese at Costco), you’ll feel an obligation to repay the favor (in this case, in the form of a purchase).
Unfortunately, B2B sales reps are harder pressed to rely on reciprocity when initiating a PoC. In the B2B world, cash outlays are significantly greater than that required to purchase a brick of Muenster cheese. As purchases increase in dollar value, felt reciprocity inevitably declines. Lammers (1991) found that free chocolate samples only had a positive effect in driving sales when purchase values were $5.00 or less.
To increase the likelihood of a B2B purchase, it’s essential that reps develop a set of success metrics. One of the common pitfalls of PoCs is leaving it up to the prospect to gage success on his/her own terms. At the onset, ensure you come to a mutual understanding of what will constitute success. Is it a certain adoption rate? Usage rate? NPS score? Don’t allow the prospect to get cold feet at the end of the PoC. Both parties should be operating on the assumption that a purchase will unfold if the agreed upon success metrics are met.
3. Give an effective product demonstration
Costco has found that its food samples are more effective in driving purchases when a product demonstration is involved. According to Giovanni DeMeo, who handles some of Costco’s free samples, “When we compare it to other in-store mediums … in-store product demonstration has the highest [sales] lift.”
When engaging in a PoC, guide prospects through the “cooking” process. Constantly check in. Have they been given a proper, easy-to-follow recipe, or are they jumping the gun and using more advanced features before honing the basic ones (i.e., decorating the cake before baking it)? Are they using all features, or have they overlooked some important ones that could increase engagement (i.e., overlooking the delicious chocolatey M&Ms in the otherwise healthy trail mix)? Are they integrating your product within their existing ecosystem effectively (i.e., putting the ice cream in the fridge instead of the freezer).
When you give prospects a proper cooking demonstration by monitoring their activities over the duration of the PoC, you’ll increase the perceived ease of implementation and deployment process. One of the key differentiators between a PoC and a product demo or webinar is the prospect’s role of an active participant instead of a passive observer. While the risk of failure is higher for the former, an effective product demonstration involving constant check-ins can be a sure-fire way to increase your odds of success.
4. Do your research
Costco’s samples aren’t really “free.” Samplers generally need to have purchased a Costco membership before shopping at the store (the one exception being alcohol-only purchasers in some states). They’ve already contributed to Costco’s bottom line and, in essence, have paid an admission fee to enter the free sample playground.
Unlike Costco-membership holders, most PoC participants will not have made a past purchase from you. As a result, it’s critical you do your research. Ensure that the prospects you are talking to are decision makers with authority to make a purchase. You don’t want to sell to the candy-crazed child when the healthy conscious mother is holding the credit card. In addition, ensure there are strong indications that prospects are ready to make a purchase and have the necessary funds.
- Avoid free riders
There will always be people who try to game the system – the Costco shopper who frequents the store only to obtain a free piecemeal lunch. Jones (2001) found that nearly 70% of shoppers will try an in-store sample if approached. The B2B world is quite similar. Don’t succumb to the temptation of giving prospects everything they ask for. Doing so will distract you and only result in additional asks. Rely on your products’ existing out-of-the-box functionality. Don’t build one-off new features to accommodate PoC participants. An especially effective way of avoiding PoC “free riders” is refraining from engaging in unpaid PoCs.
Costco started from humble beginnings when founder Sol Price drew up the concept of a warehouse store model on a napkin. Today, Costco is a thriving enterprise, with 698 warehouse locations according to a November 2015 estimate. Free samples have been integral to the success of the big box giant. You, too, can leverage certain aspects of Costco’s free sampling model in the B2B world. The goal is to whet prospects’ appetites, while exercising the wherewithal to refrain from dolling out free lunches.