Is There Value In Giving Your Product or Service Away?

6 Jun

Is there value in giving away your product or service? The topic came up at a recent event when a small business owner questioned whether or not she should continue to give away her company’s products at industry events. When the business first launched she provided free products to grow her customer base but, now isn’t certain the free offer is needed.

Red 3-D Dollar SignFor those starting a new business, one of the biggest challenges is getting those first customers. Attracting customers by offering them a risk-free opportunity to try your product or service can be a successful strategy to build business.  The offer may be free trial, special pricing or a 100% guarantee that can remove concern a customer may have about trying an unknown.

Free trials are a frequently used strategy.  Cloud-based software companies use free trials to grow business and then convert trial users to paying customers. One of the most successful companies to employ this strategy is Salesforce.com.  Another cloud-based software company that offers free products is WordPress.com.  WordPress’ strategy is to provide basic blog features free with the intent to entice customers to pay for additional or enhanced features.

Free may not be a good strategy for some businesses.  Costs, brand image, value perception and conversion to sales need to be considered. Answering these questions can help determine if there is value in providing a product or service free.

Will your business benefit by giving something away?

Is the goal is to entice your targets to use your product and convert to paying customers? Or are customer referrals and success stories what you’re after? Both are a tangible benefit. Decide up front what benefits/results you want to achieve.

Do your potential customers find value in what you are giving free?  

The bottom line is if the product doesn’t solve a business problem for the customer, it won’t matter how great the offer is.  A good example of providing something of value to customers are free assessments.  Let’s look at a company that sells a product that improves CRM database performance.  This company provides free professional assessments that evaluate productivity and performance of customers’ current CRM products.  In addition, the assessment includes data showing how by also using their company’s product customers can improve productivity by X% and save $Y annually.  The free assessment underscores how using the company’s product solves key business issues.

Will providing your product free help or hurt your brand?

Providing free products or services must support the brand. In other words, potential customers should not think less of your product or service because it is offered free.  In the example above the free assessment supports the brand, the company is positioned as knowledge experts in improving CRM database performance and employee productivity.

Can your business afford it?

Giving away free product is another marketing activity so evaluate it as such. Set your goals and make sure to include the costs of giving away free product in your budget. Since the desired result is to attract repeat and long-term customers, offer the free incentive to the targets that will continue to do business with you.

Resources:

5 Rules for Giving Your Products Away, Beyond the New Frontier blog, by David Sorkin, New Frontier Marketing Associates

Should You Give Away Your Product, by Tom Taulli, Forbes.com

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