Does "FREE" Work?

I received an email from my good buddy, Richard Schenkar, with a link to Tyler Nichols recent blog post, I am done with the Freemium Business Model. Richard asked my take on Tyler's conclusion. Is freemium marketing dead? Was it ever a viable marketing tool?

Tyler is a self-described "computer repair guy." He's, obviously, a bright guy. One of his blog posts is titled, Dynamic Cross-Domain Canonical URL’s with PHP, which in plain English means, "I have no fricking clue what he's talking about."

Tyler writes:

I am done with “free”. I have come to the realization that most people who want something for free will never, ever think of paying you, no matter how valuable they find your service. I found this cold hard fact out over this Christmas holiday with my free Letter From Santa site. The site uses a freemium model allowing people to create personalized printable santa letters for their children for free. In addition to the free version, I also offered a paid version that includes a higher resolution letter, a personalized envelope and door hanger for a nominal cost.

Tyler doesn't fully explain why he did this project; he doesn't have anything I can see that's similar. I'm guessing he thought it would be a good way to earn some extra Christmas money and I can't fault him for his efforts.

Letter from Santa didn't go exactly how Tyler thought it would go, as the Law of Unintended Consequences reared it's ugly head. Despite making the process as simple as possibe, as well as including a clear set of FAQs, Tyler was inundated by hundreds of questions from free customers. Even worse, after the holiday he sent a thank-you message to everybody and was reported as a spammer by a number of the freebie "customers." 

Tyler is understandably upset and concludes that "...most people who want something for free will never, ever think of paying you, no matter how valuable they find your service." No more free stuff from Tyler.

I sympathize with Tyler. Kay and I learned a long time ago that it's almost always a mistake to give a speech for free. Our greatest headaches have been when we did a favor for someone and I either spoke for free or gave a deep discount. Those "customers" are usually the most demanding, hardest to communicate with, and treat the value I'm bringing as basically zero. We don't do those anymore.

I also understand his frustration with people who double opt-in to his list and then report him as a spammer. That's happened to me so many times, I've often considered paid subscriptions only, as well. I've also had too many people to count who get free advice and tips and then complain that I shouldn't be writing blog posts about my daughter's golfing career. I always delete those people from my lists.

So between Tyler's and my own experience with "freemiums," does this mean they don't work?

Of course not. They work great when used correctly and with the proper perspective. In fact, every marketing tool works great for someone who knows how to use them right. If you think direct mail doesn't work, you are flat out wrong. If you think trade shows don't work, you are flat out wrong. If a marketing isn't working for you, then either you haven't learned how to use it, or your specific target market doesn't respond to it. But that doesn't mean you can make a blanket statement that something doesn't work.

Freemium marketing (I prefer the label content marketing) is actually a very powerful and under-used tool. I've recommended such a strategy to many clients in all different industries. And if you're not using it, you should consider it, too. 

We are all trying to separate ourselves and our companies from the competition. We all want to be the de facto go-to choice. But, in order to do that, we must establish ourselves in our prospects' and customers' eyes as the best choice. I've labeled this as developing Uncopyable Superiority.

The hard reality is that technology today commoditizes everything. If it can be copied, it will be copied, so simply being superior to the competition isn't good enough. Superiority is short-lived.

We must BE DIFFERENT from the competition. And we must be different in a way that is meaningful, relevant, and hard to copy. This is where I've found content marketing to be a great strategy.

What are your customers' biggest headaches? What keeps them awake at night? Do you know this? If so, look for ways to communicate solutions to them. You can create a blog, start podcasting, produce videos, webinars, and teleseminars -- all with free content designed to address their biggest issues.

The idea of this is to establish yourself in their mind as a trusted authority and friend. Once you've done that, there's nothing wrong with telling them about your products and services. You've earned that. You are the person and/or company who enthusiastically and honestly wants to help them succeed, because you both know that if you help them succeed, they will help you succeed. The objective of maintaining a long-term relationship is to grow with your customers. 

Should Tyler give up on his free Santa letter in 2012? My advice would be not to. He learned some very valuable lessons with his 2011 site he could apply this year. I would suggest he spend more time studying content marketing, learning how to better manage the free subscriptions, better set their expectations, and make them jump through a few more hoops to get their letter. 50,000 people downloaded the letter this past holiday. If only half of those jumped through all his new hoops, that's still a great list!

And speaking of content marketing. I'm planning to provide more content in 2012 via my blog, YouTube, ebooks, and a new podcast. So watch for those emails. In addition, I plan to offer more products and services this year, including webinars, online academies, Boot Camps, and even a small coaching club. If you DO NOT want to hear about these products and services, please unsubscribe from my list now. I want to help you succeed and grow. I hope you agree it's only fair that I am allowed to succeed and grow as well.

Comments

[Nikki Groom]

Great article, particularly this quote:

"We must BE DIFFERENT from the competition. And we must be different in a way that is meaningful, relevant, and hard to copy. This is where I've found content marketing to be a great strategy."

I look forward to all the new content you'll be adding this year, Steve.

[Steve Miller]

Thanks, Nikki! I always appreciate your comments.

[Steve Miller]

One of my very best BFF's, Jackie E-S, commented about this post in a Ravelry.com discussion group. A woman named CherylN posted this link in that discussion: http://shouldiworkforfree.com/clean.html. This is hilarious! Check it out.

And a HUGE thank you to Jackie E-S!

[Elke Clausen Clausen Messeconsulting]

Hi Steve,

Thanks for this great article! I do appreciate your input, and totally agree with Nikki!

I too look forward to your content ahead!

It's always inspiring, and it reminds me to never stop developing new ideas!

Content marketing is one of the most popular marketing topics in Germany. We mainly work with whitepapers, book abstracts, e-books, free webinars, and sometimes videos.

Since market has been flooded lately with all this stuff, I guess the dosis can be a critical point, at least in b2b-market. Don't you think so? What would you suggest as a recommendable frequency for b2b business?

Thanks!

Elke

[Dan Hooks]

Steve,

I completely agree with your assessment of the "free" philosophy. I think any marketing program can work if you have the right target and the right approach, but "free" does allow certain groups in our society to take advantage of others if not monitored closely.

Specifically, I am in the event business and we are inundated with calls for fundraisers and charities looking for anything they can get for free. We show them the value in our equipment and explain to them that we provide a service for them to raise funds from their constituents by providing them value in the event. We have formed some great relationships with many of the organizations who understand the concept, but it is like you said in the article...the more you bend over backwards and give your services away the more they want and never seem to appreciate your costs in the matter.

As someone coined in our industry - "I am all out of free and I am not making any more".

I always enjoy your blog...Keep up the good work.

Thanks,

Dan