You see, people value what they pay for, and if they are your ideal customer, with a problem you can affordably solve, they are more than willing to pay. It’s the principle of causality where a customer's investment with your business results in an immediate benefit or relief from their point of pain. It is this symbiotic relationship between investment and reward that builds relationships and ultimately a dependence on your business for what you provide.
The problem with free is that the customer has no investment in the outcome and there is a tendency to attract those with interest but no real need for what you offer. The resulting lack of perceived value in your product or service means you are having to work harder for longer to convert these freeloader’s into customers, who ultimately reject you when they can no longer justify the expense.
Now, I am not saying that free does not work. Simply that to get the best value from free offers you need to ensure that they are pitched at your avatar. That is someone with a need for your products and services that is willing to pay for it. And, be sure that an alternative offer would not be more appropriate.
Let me give you an example. As a society we are addicted to our morning coffee and there are thousands of people that have an insatiable need for their barista crafted shot on their way to work.
A cafe could offer FREE COFFEE to get people in the door but all you do is giveaway profits because you have unconsciously told these potential customers not to spend money for what they need.
Alternatively, if the cafe were to offer $2 coffee when the average price is $4, and carefully position some banana bread by the counter,the likely outcome is that the customer would spend $6 because they were positioned to spend, and they consider the treat they desired as a bargain at $2 because they would have paid $4 for the coffee they needed elsewhere.
Both options attract the people, but the second is more aligned with the objectives of business and has the added benefit of creating loyalty due to the law of reciprocity, where your customer has the psychological urge to repay the value you have given them with their repeat business.
Shannon Daniels is a business growth strategist at Emanation who specialises in bridging the gap between where you are and where you want to be. www.emanation.com.au