Be Careful What You Give Away for Free
If you give something away for free then that's what people will think it's worth.
This is even more in our increasingly digital age. I had a conversation with a publisher today that caused me to reflect on this rule-of-thumb to address where it's accurate, where it's not, and when it's regularly confused.
I had a conversation with a publisher today that caused me to reflect on this rule-of-thumb to address where it's accurate, where it's not, and when it's regularly confused.
tl;dr - Free (no cost) can be powerful when it's a means to an end, especially if you get something valuable in return.
First, we all give things away for free.
Here, this blog post, that you're reading now is free for you to read but we write it to share something about how we see the world - it's a form of educational marketing (or support when it comes to existing partners). Likewise, many publishers give away content for free in print, online, social media, emails etc. because, among other reasons, it's hard to sell ads if you don't have readers. In either case, there is value to what has a price of zero however it's being subsidized by income from other things.
When Free isn't Free
With that preface out of the way let me add some context. Our conversation was specifically around the business directory platform that we provide which is incorporated into each and every website we power. We were discussing growth strategies and the fact that creating listings for local businesses and inviting them to claim their listings is a great way to get them engaged which is when he commented, "well, I guess we won't make any money there if we give it away for free."
That kind of stopped me in my tracks.
A major strategy on the internet is that known as the 'freemium' - the combination of free and premium - whereby you give away some part of your service for free with the expectation that as people derive value (yes, the freebie has to have some value) they'll want to get more of whatever it is you do and pay to upgrade (premium). Like most services, this is valuable with Locable because many businesses would flat out say "no" to paying until they see the benefit and, once they are registered, we're able to send them emails to communicate the virtues of said upgrade and other services that we deliver to local business via the directory platform.
But here's the thing, what a business owner pays for with an upgraded listing or other service is not the same as what is included at the 'free' price level. It's both quantitatively and qualitatively different. Zig Ziglar wrote in "Secrets of Closing the Sale" that it's hard to get people to change their mind because that's tantamount to admitting you're wrong. However, people will gladly make a new decision once new information is presented.
"I asked that Redhead of mine (she is a "decided" redhead, meaning that one day she just decided to be a redhead!) to marry me and she said no. I asked her the second time; she said no. Third time, no. Fourth time, no. Fifth time, no. Sixth time, yes. No, she did not change her mind. What she did was very simple. She made a new decision based on the new information which produced a new feeling.
Before you can get a prospect to change his mind, you've first got to get him to admit he was wrong, that he made a mistake when he said no. Well, friend, let me ask you a question. How many times in the last 12 months have you admitted that you were wrong, that you made a mistake?...
No, the prospect won't change his mind, but he will be delighted to make a new decision based on new information." Zig Ziglar, see quote here.
So, by giving someone a free opportunity to use the service there's very little risk of being wrong but the choice to upgrade is, in fact, a new decision based on new information that would be unavailable were it not for the well-structured free option.
Moreover, with the directory Powered by Locable the free component is a means to an end. In the feverish SEO world we live in this content has incredible relevance for Google, increasing relevance for Facebook, can be leveraged to run contests and other engagement like Reader's Choice Awards, and when you introduce tools like the Customer Reviews Toolset publishers get even more benefits from 'giving something away'.
Though, let's be clear, there is no better way to drive revenue than to engage with prospects and when you can automate that engagement and deliver value in the process you're golden - don't forget, these are the same businesses you'd like to buy ads in print and online or buy sponsorships.
When Free is Bad
Don't give away advertising for free, ever. Even if your current website has no traffic and you feel no value don't do it - don't waste either of your time if that is truly the case and don't set a bad precedence that is hard to overcome. There may be times you need to sweeten the pot to close an advertiser, just make sure you understand the implications and seek opportunities to get value not merely give it i.e. a web-based advertorial is a form of reader content that is also valuable to the advertiser while not consuming a fixed asset like the appearance of a banner ad (display).
Bottom Line
Don't get caught up in the rhetoric and think strategically about your pricing, negotiations and every aspect of your business. Most of the time you'll be able to find a win-win situation which is important because the alternative is likely lose-lose.
Looking for a little help executing your digital strategy? Talk with us about Membership and Consulting Services.
