In 1966, Columbia released a movie called “Born Free” about raising a lion from a cub and ultimately reintroducing it to the wild and thus setting it free. In 1970, Richard Bach published a book called Jonathan Livingston Seagull. One of the most often coined phrases from the book is “If you love something set it free. If it comes back, it’s yours, if it doesn’t, it never was.” Fifteen years later, Sting, from the Police, had a hit called “If You Love Somebody Set Them Free” which essentially carried the same message. The idea of FREE can be equally applied to humans or wildlife. The origin of the word free has its roots in concepts such as “not in bondage” or “acting of one’s own free will” and it also is coupled with the idea of love, which echoes the premise of the movie, book and song mentioned above. But, of course, free has yet another meaning, which is “something that is provided without a charge or payment” such as “free parking” or “free sample”. Indeed FREE is one of the most powerful words in the advertising and marketing ecosphere along with its brethren, Guaranteed, Risk-free, Promise, Money-back, and Satisfaction. The latter definition of FREE is intrinsically tied with the concept of money and currency.
Animals live in a world without money, so one could argue that everything in their world is essentially free, but in fact it’s not exactly true. Animals must work to earn their assets. Animals also trade and save their assets as storage of value, just like humans. Humans have always looked at an apple at the very top of the tall tree very differently than an apple hanging down from a branch over the path that they walk every day. The treetop apple has a cost in the time and effort required to retrieve it. The “low hanging fruit” is essentially “free” or “easily acquired” and therefore very tempting to take, whether it is really needed or not. So free, in that sense, is something that is easy to acquire with little or no effort and no currency trade, but not necessarily without quality or value. Capitalistic societies are based on the premise that everything and almost everyone has a price. There are very few things in life that are free other than perhaps true love and the air we breathe. So how is it that so many things are offered for FREE, in big headlines, wherever our attention is focussed?
We have become conditioned to be at once attracted, and yet sceptical of things that are touted to be free. The saying, “there’s no such thing as a free lunch” is largely true. Free things are categorized by people. One may be that it has very low or negligible value – worthless in a sense, like dirt. Another is the suspicion that there are always “some strings attached”, small print hidden in the TOS or consent form. Free is only attractive if true value is conveyed and perceived. Some things that are currently free were once coveted, for example, “My computer was expensive when I bought it, but now I can’t even give it away.” And some things that were almost free are now expensive, for example, “I bought Bitcoin in 2011 when it was only a dollar.” We see lots of free things at garage sales. That usually means it’s not worth much and it’s one hour short of going to the recycle or garbage bin. We inherently expect cheap or free stuff to be of inferior quality. But how much of that is psychological? In many cases, items with a higher price tag will sell better than the exact same product with the exact same quality, priced at a much lower price, but in an unbranded, no frills container.
It is important that every business, big or small, considers the hypothesis of the Power of Free and how it can be used to further the business goals. In the early 1900s the Gillette razor company came up with the idea of a disposable razor blade, but it was difficult to sell, as people had been conditioned for centuries to use a straight razor, which had an unlimited shelf life. Gillette solved this problem by giving their safety razors away for free or thereabouts. The company profit was made in selling the replacement blades and from that moment forward, marketing was changed forever. Today’s modern equivalent might be a free cell phone with a three-year air time package contract. The profit is in the ongoing supply sales, not in the hardware.
The strategy of a loss leader is used over and over again by many merchants, whether brick and mortar, or online. The online world is full of free; Google appears to be free, Facebook appears to be free, video games appear to be free, but are they really? It’s not really free if one has to give up one’s email address and/or cell phone number in order to obtain it. Savvy people realize by now, that an opt in for anything free online, means you are in fact giving up a certain amount of your privacy and further to that, YOU become the product that’s for sale. The company that is giving you free service is mining and selling your data to advertisers or using it for themselves to remarket to you. That’s the business model that makes it work. It works so well, it has spawned some of the biggest companies, by market cap, in the world.
Nowadays, it’s common to see free local newspapers at your local supermarket. Why are they free? Because they are supported by advertisers and sponsors. Again, YOU are the product. Many people have experienced going to Costco and literally getting a “free lunch” by walking around enjoying all of the free samples. Of course, there are always strings attached. There’s always an agenda behind free offers. A certain percentage of people taking free things can be upsold to other items at full retail margin. Even if the motive is pure in nature, as in volunteerism or philanthropy, there is still an expectation. The ROI expected comes from a good karma, “what goes around comes around” point of view.
When I see free offers online, it always perplexes me why I need to provide a credit card. Of course,the reason is, if you forget to cancel during the trial period, they will happily ding your credit card for the paid monthly fee because you clicked ok to that in the TOS. Free products are either heavily branded, severely limited, or full of advertising, not to mention plastered with “in-app” purchases, again suggesting that the FREE part is really just a loss leader. Many nightclubs have a policy where women can gain free entrance to the club, but men have to pay. What women may or may not realize is that they have been commoditized; they are the bait that actually incentivizes the men to pay. One of Amazon’s prime reasons for exponential growth was the allure that Prime Members enjoy free delivery (but only on orders of $25 or more). Gary Vaynerchuk wrote a book called “Jab, Jab, Jab, Right Hook” which loosely translated means “give, give, give and then ask”. It’s the idea that if you just give away value freely, you will gain a following and if, at some point you ask your audience to do something like buy your book or merch, or patronize one of your sponsors, a big percentage often will.
In the last couple of decades we’ve noticed more and more examples of business models that do exactly this. They give and give and give to build an audience, to build a subscriber base, to build influence etc. and once that is attained and branded, it can be monetized by themselves or other advertisers who want access to that subscriber data.
When I was a young salesman, I was often asked by customers to throw in something for free if they buy, like including a printer with a computer purchase for example. I had a sales manager who taught me something very important that I’ve never forgotten. Even if you agree to such a deal you should never put it in writing as just free. You should show that item as a line item on the invoice, at full price, and then on the bottom line show the discount, which is a gift to the customer to build good will and some sense of duty to reciprocate with future loyalty. This creates a much different interpretation of the value of what’s being provided. Don’t be too quick to just state something as free because that conveys much less added value perceived by the customer.
Many businesses typically put a CTA (call to action) on their website that says FREE QUOTE or FREE ESTIMATE. This is not always necessarily a great idea, because what it does is diminish the value of the effort required for a provider to even look at the customer’s needs and to come up with some kind of price response. Because so many companies offer free estimates, what it does in fact is create a gang of price shoppers and tire kickers who just shop around for the lowest price. They look for “meet it or beat it” offers, playing one merchant off against another. That’s a loser’s game that will drive the price into a downward spiral. The “last man standing” is typically a national chain in those scenarios who can afford a long term zero or negative profit to obliterate the competition. They’re the ones with leveraged “economy of scale”.
Another pearl of wisdom that I learned as a young salesperson is to ask the question, “Is price your only consideration?” I was taught it’s always better to qualify the prospect’s needs to find a product that is the best fit for the customer and to get the customer to agree that the selection is the right choice before bringing up the topic of price. Without selection and excitement and anticipation of purchase it’s very difficult to keep the price at a healthy margin. Almost anything can be obtained for cheap or free nowadays, except high end luxury brands. Five star stores and restaurants don’t show their prices, they sell excellence proving that cheap and free isn’t always the best tactic. Businesses caught in the trap of driving the price down lower than their competitors are often on a fast track to insolvency. Yes, Walmart played that game and won but it’s a risky business model. Many of the businesses that seem to be succeeding today are the ones that add some other value to familiar commodities. One value that is definitely being used to sell things is based on time and the saving thereof. People have been shown to spend even more on things that require less time and effort to obtain.
The biggest asset that almost any company has on the balance sheet is their list. The customer list, the subscriber list, the user list, with all the contact information and behavioral information has value that trumps the physical, tangible assets that the company may own. Case in point would be Facebook’s willingness to purchase Snapchat for $3 billion when Snapchat had not even managed to turn a single dollar in profit due to it being a FREE service. The reason is they had a significantly large, accessible, signed up and committed user database. The devil is in the data.
FREE is like fire. It can be a friend or a foe to your business depending on how you use it. Once you fully understand its power, you will probably never use the word haphazardly again. Has your business or enterprise thought about the word FREE and how it can be used? Can you imagine how giving something for free can be turned into a profitable business model?
If you haven’t heard of this book, I highly recommend that you read it. It’s called “FREE: The Future of a Radical Price” by Chris Anderson.
Anybody who lived through the 1900s witnessed a phenomena that is basically repeating itself post Y2K. In the very early 1900s, newspapers were the primary means of getting the daily news (the written word). Two decades later, radio became prevalent and people were inclined to tune in to get information (the spoken word). People loved listening to the radio because they could multitask other tasks such as housework, exercising or driving a car. Another decade and along came television (the next best thing to being there). Television stole the thunder from both newspapers and radio as a means of delivering and receiving information and it went on to dominate our attention for at least a few decades. Post war baby boomers could aptly be called the television generation. It quickly became the best way to reach a large audience with marketing and branding messages. A lot of people preferred to watch television as opposed to reading, for the simple fact that it was easier and arguably more entertaining.
Then towards the end of the 1900s and early 2000’s we moved into the Internet age and the same type of progression has been taking place ever since. The Internet started primarily with text based information. Soon thereafter, static images were added to the words, then (voice) podcasting came along, but it wasn’t until quite recently that hi-def video with sound became prevalent on the Internet and the reason for that is because of the advances of hardware technology in the areas of resolution, storage and bandwidth. Most recently it seems that we have solved all of those problems and can now enjoy unprecedented, beautiful video productions on our phones virtually anywhere. Not only can we consume those videos but we can also produce them with the same device that we watch them on and that is a huge paradigm shift of power to the average person. In the golden age of television, a single person couldn’t possibly dream of creating their own show or network. Today, a teenager can do that in the basement with a cell phone.
The Advantages of Video
The advantages of video are as follows:
- They are easy to consume, especially on mobile devices, in virtually any location.
- They encourage longer engagement times with your content and brand.
- They help to lasso the incessant scrolling behaviour that most people have on their phones.
- You can do text overlays for people that may have their phone on mute but are still consuming video.
- Video provides another way to get discovered, especially on YouTube, which is the second largest search engine in the world.
- Video dovetails with social media platforms very, very well and is better at getting attention than any other content.