Why do banks and building societys offer freebies and free stuff?

In a modern consumerism driven society people often expect free stuff, bargains and special deals to be made available to them.

Lots of people seem to be very cynical about things these days and wonder why.

The answer is fairly simple. Giving away things is part of the marketing experience. From offering you £25 for signing up for an account might seem madness to you as people could in theory just sign up for the account and never use it. The truth is most people don't. They'd use the account and try it out. If they like it then they will stay with the new company and close old accounts. This means the new company has gained a customer.

Even if the customer doesn't stay then they will tell their friends about the experience. How many times has someone at work told you about a bargain or offer?

Companies which give away freebies such as mugs and pens are playing the branding game a little more. You might not want a high interest savings account at the moment, but if you have a pen on your desk you use loads which advertises one then this keeps that company in your mind. Which means in the long term you're likely to associate their product with the account type.

This long term branding is very useful to companies. It takes many viewings of a product before it gets assimilated into your mind.

An example of imparting information about a brand:
Think about simple things like custard. What brand of custard do you think of most clearly? What colours does this make you think of?

Research has shown that you need to see a product about 8 times before you start to make good solid associations with it. This is why giving away pens, coffee mats, mini radios, and other neat items is so popular with companies.

So why do banks in particular want to gain you as a customer? If you can't see the catch on a savings account or current account then it could be there isn't one! Sometimes banks want you as a customer and will offer a genuinely good deal. A high interest rate on your current account, or a huge interest rate on your savings. This will cost them money. But they hope you'll be in it for the long term and take out other accounts and offers from them from which there is a net benefit for them.