Recently, I had to empty my apartment in Toronto. So, I decided to sell all my furniture. I managed to sell big items like mattress and sofa, but I had difficulty in finding buyers for stuff like cutlery and pans. So, I went ahead and posted`an ad on Craigslist and Kijiji with the following subject line: “Free stuff. Everything must go today!” And the rest is history…
Literally, within 15 minutes there were almost 10 people in my apartment taking everything that I was giving away! People’s reaction to “FREE!” was so insane that 15 minutes after posting the ads, I had to take them down! Let me give you two examples about how insane my experience was. First, it was a particularly cold and icy day in Toronto. Still a guy came by bike and took my full-size garden BBQ, just because it was FREE! Second, someone asked me if I was giving my brand new Macbook Pro free? Right. Then the same guy asked me if he could take the adapter of my laptop. Actually he also tried to remove the power outlet, which was fixed to the wall. So maybe there was something wrong with him. Long story short, clearly there is something psychological going on about the word FREE! and I think you can use it to increase your sales. Before we go into tactics, let’s understand why we lose control when we see something for FREE!
In his book Predictably Irrational, Dan Ariely, explains the FREE! insanity like this: Humans are by nature risk averse. When we get something FREE! we ignore the downside of a transaction, become risk loving and take stuff that we would not otherwise. To prove his point, he asks the following question: “Suppose I offered you a choice between a free $10 Amazon gift certificate and a $20 gift certificate for seven dollars. Which would you take?” Now, a follow-up question. What if $10 Amazon gift certificate for $1 and $20 certificate for $8? Weird eh?
How can you use this weapon to increase your sales? First, you can make part of the service FREE! to sell more products. Case in point: A couple of hours ago I was trying to buy additional books from Amazon to have them shipped for FREE! Even though I know the game they play, I cannot stop myself. The power of FREE! is that strong.
Second, if a competitor has a superior product, you can lure consumer by offering an additional item FREE! Most of us would prefer Starbucks coffee to Dunkin’ Donuts coffee. But what if the latter offers free cookies? Now you can convince yourself that Dunkin’ Donuts coffee is worth it. Similarly, most coffee shops offer free WIFI, whereas airports usually don’t. An airport can charge extra for WIFI but a coffee shop must use it to attract people.
Third, if you have difficulty attracting the crowd, then make it FREE! and look for ways to create revenue by selling other items. Ariely mentions the free-entrance days at museums. Usually these people visit the museum and end up buying something from the gift shop.
Here are the three ways in which you can use the power of FREE! to generate more revenue. Fire up your comments. Do you agree with me? Also, why don’t you tell me what other ways we can leverage the power of FREE! ?