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! ?
Interesting post, Gunter. It seems counter intuitive, but I’ve absolutely found myself buying an additional item online to get the free shipping (even when the shipping costs less than the item I added on). And I’ve certainly bought two things to get that third thing free. I guess the risk of getting something I don’t really need doesn’t wipe out the perceived value equation. To me, the question for branders considering this tactic is whether our FREE! offers could devalue our core services or products–and whether what we’re doing for free adds value. I’m taking that chance with my FREE! online story typing tool, which allows visitors to find out which one of 12 story-based characters is most like them at their best and most motivated. It’s a way of introducing my branding approach (which hopefully creates some tangible results for me), and also a way of sharing my philosophy about life and business (an intangible payoff that also matters to me). It feels like a win-win. We’ll see!
It is great to hear back from you Cindy,
I think you use the power of FREE! correctly. As you may remember I found you thanks to that tool. I think it is great lead generating idea and a perfect example of giving something FREE! to get something back in return. In a way it is similar to the coffee shop example I gave.
Also, we have to remember that even though the idea of giving away expertise for free sound counterintuitive, in the info-saturated wold it is the only way to attract attention. So, I think you are doing the right thing!
I enjoyed your post.
Funny and also mind-boggling. I find that in the service field, customers often try to get things FREE (quote with conceptual work done before signing a deal, extra hours if the project was a package deal,…). So i am kind of allergic to FREE when it comes to giving to potential customers. My experience is also that when we did give away concepts the contract did not happen…
From a new perspective I will think about what could be a strategic FREE rather then an exploited FREE.
Thanks for your comment Muriel,
I definitely agree with you that the type of FREE! service you mention is often abused. So I think in professional service sector, my third example of FREE! (giving the service FREE! and making revenue by selling extra items) do not work. But, what would work is the first and second examples. You can still keep the budget the same but an give an extra concept (second example) or keep the scope the same but give them a discount (first example). The key here is to make sure that the client thinks he/she gets something for FREE!
What do you think?
A related article regarding the persuasive power of the word “free”: http://hex.io/NBLJc