Copy Unlimited blog » selling

The true cost of free

Kevin — Fri, 02 Apr 2010 06:00:41 +0000

Easy, yes. Advisable? Maybe.

So it’s finally happening.

Last summer, I heard a radio interview with somebody from News International, who said they were considering charging for access to the online versions of The Times and The Sunday Times.

They were confident that people would pay.

Not me, I thought to myself. Not in a million years.

Why? Because I’ve been reading The Times online for free for over 10 years. And it’s good – but not that good.

And if I’m honest, I’m a bit of an online tart, so I also spend quality time with the Daily Telegraph and The Guardian (or if I’m in a more exotic mood, Le Figaro or Le Monde).

And then last week, the story was confirmed. From June, it’ll cost £1 a day or £2 a week to read the papers online.

I wondered what the reaction would be. I’m often out of step with the popular mood on these things. Perhaps other people – real, sensible, grown-up people – would think it was a good idea, and made sound economic sense.

After all, The Times gets 20m unique visitors a month. If even 5% stay with them, that’s a million people they can ‘monetise’.

Or perhaps not.

When I last looked, the story on the Times site had 472 comments, most of them negative. Some very negative.

And when I clicked on the ‘most recommended’ heading, I saw that a whopping 3,500 people had recommended the top comment. Which tells you how consistent the response was – for every one person posting, eight were simply agreeing with the most recommended (self-perpetuating, I realise) comment.

If I were James Harding, the editor, I’d be worried. Very worried.

Free and easy

Giving something away for free is a great way to attract people. But once they turn up, what do you do then?

A sprat to catch a mackerel is fine: you give a free e-book, or a free hour’s consulting, or a free website critique, because you hope to pick up more, bigger and paid work.

But if you’re giving away everything, as The Times was, then you’ve got a big problem.

It’s all a case of expectations.

Do you charge for your time? I do. So when somebody says “Let’s get together. I’m in Brighton – where are you?” I realise three things.

First, they’re a ‘meeting person’. Second, they don’t value my time – or at least, they’re not prepared to pay for it. And third, they haven’t checked on my website to see where I live and work (I’m often tempted to say “The Isle of Lewis. Why? Where are you?” to see what their reaction is.)

And almost every time, when people realise there’s a price tag attached, the meeting effortlessly morphs into a teleconference or a videoconference. Which is free, of course.

The thing is, people value what you value.

Just the other evening, I had a second helping of pasta at a friend’s house (tagliatelle carbonara, since you asked). And as I twiddled my fork, I suddenly thought how odd it would be to ask for seconds in a restaurant.

“Was everything OK?” the spotty waiter with the off-white shirt would ask.

“Yes, absolutely delicious,” I’d reply. “In fact, it was so good, I’ll have a second helping.”

“Certainly, sir – that’ll be another £11.50. I’ll be right back.”

Free. £11.50. It’s all a matter of context.

The naked truth

Would you walk down the street in skimpy underwear? Of course you wouldn’t (if you would, you should consider seeking help).

But what if that underwear was actually a bathing costume and the street was actually the pathway down to a shimmering blue pool?

But that’s different, I hear you say.

Is it really? Or is it simply a case of perception? You’re still as naked, but it’s just a matter of how it feels.

Free is the same. It’s a perception. You have to create the value first, before you can give it away.

And if you do go down the free route, remember a few basics:

It’s a powerful weapon, but it should be used sparingly. Once, I worked for a company that constantly bundled ‘free’ software with much more expensive software. So often, in fact, that it came to be the norm. And when the freebies disappeared, guess what happened? That’s right – the paid-for software sales fell of a cliff. Now in reality, the free software was a gimmick, and probably sat on people’s shelves or on their hard drive – either way, it was unused. But it had the magic word ‘free’ attached, and that creates value. Taking it away has consequences.
It works one way only. You can make something free that you’ve charged for, but it rarely works the other way around (as James Harding may well discover in June). Lotus, the software company, makers of the iconic Lotus 1-2-3, gave away their word processor, Ami Pro, to boost sales way back in the 90s. Then, they decided to start charging for it. Charging? For free software? You must be joking, thought customers. And nobody bought it.
It should really be free. Not FREE* or Free (++) or even FREE^^^. If you’re going to hem in your offer with endless terms and conditions (what’s the difference, by the way?) then you might as well think of another offer.

So free is easy, but not that easy. You should think long and hard before you start giving things away, and make sure you have an exit strategy.

Much as I have with The Times.

There’s still another two months to go before everything disappears inside a walled garden, but I’m already weaning myself off their columnists, correspondents and diarists.

Easy come, easy go. And I’m going.

Happy Easter.

Find out more:

Pay dirt: The Times and The Sunday Times to charge for use of websites from June at The Times online (but not for long).
Bargain basement: Free: The Future of a Radical Price: The Economics of Abundance and Why Zero Pricing Is Changing the Face of Business (phew) by Chris Anderson, who also wrote The Long Tail.
Give and you shall receive. Don’t know what to do with all those embarrassing A-Ha albums? Try Freecycle.

Prospecting? Watch out for existing clients.

Kevin — Fri, 05 Feb 2010 05:00:25 +0000

Poor targeting and a missed opportunity (bad). But perfect pitch (good).

Three things caught my eye this week. But first, a digression…

Years ago, I was in a restaurant with my boss and a group of colleagues. My boss was pretty fearsome, and took no prisoners when it came to service.

Her opening line to the waitress was chillingly direct.

“I usually tip 20%,” she said. “In fact, the tip is already 20%. But here’s the catch – from now on, I’m going to deduct points for bad service. OK? Now I’d like to order.”

The poor girl stared with rapt attention, and the service never wavered for the whole of the time we were there. It was impeccable.

My boss’s secret was simple. She knew what she wanted. She asked for it. She got it.

On another occasion, at another restaurant, she requested a sauce that wasn’t on the menu. The waitress, who this time hadn’t had the 20% routine (my boss varied her tactics) said she was sorry, but that it wouldn’t be possible.

“Why not?” barked my boss.

“Because we’d have to make the sauce up,” said the girl, faltering slightly in the glare of the blue-eyed headlights.

“Oh right,” said my boss with exaggerated emphasis. “I see. I mean, it’s not as if this is a restaurant or anything, with ingredients all over the place. You’d have to make up the sauce.”

The dripping irony had its effect. And before long, that special sauce was dripping too.

1. Close (but no cigar)

I was reminded of the second restaurant episode recently. If anywhere knows about sauces, it’s a restaurant.

And if anybody knows about technology, and how to use it, it’s a technology company. But it doesn’t always work out that way.

Just last week, I got a letter from Google with a little surprise in it (well more than one, but we’ll get to that bit).

Here’s what it contained:

The word ‘discover’ should have set alarm bells ringing. But it didn’t.

Inside was a credit-card-sized voucher with a unique code. I logged into my AdWords account and entered the code, relishing the thought of 75 smackers off my next bill.

Not so fast.

Because here’s what it said when I entered the code:

Too old? Well, yes, it’s years and years old. I’ve been using Google AdWords for longer than I can remember. I’m very, very happy with it.

Or at least I was.

Until they dangled £75 in front of me and took it away again. Is it really that difficult to de-duplicate a mailing campaign when you’re targeting prospects, so you exclude existing clients?

Sauce. Technology. Different consistency, same taste (bitter-sweet).

2. Don’t bank on it (the feature, that is)

Just as I’ve been using AdWords since the dawn of time, so too have I been a customer of the Royal Bank of Scotland since the good old days when banks were privately owned and collateralised debt obligations and credit-default swaps were a twinkle in the eye of a Wall St banker.

In fact, I was one of their online-banking beta customers, way back in the mid-90s. And recently, they sent me a leaflet extolling the virtues of their online service:

Can you spot the problem?

Yes, they got the headline the wrong way round. Make the most of digital banking isn’t the best thing about digital banking. It’s the time you save.

So that should be in a big, bold, brash font that shouts Benefit! followed by the more sober feature. And somebody close that gap, please.

It’s Marketing 101. Feature (banking) and benefit (time).

Which would you pick? (Thought so.)

3. U and non-U

And lastly, a company that gets it exactly right.

HTC, who make those super-sexy smartphones, realise that a phone is just a phone. What makes it special is you, as this advert shows.

Their closing line sums it up exactly: You don’t need to get a phone. You need a phone that gets you. It’s simple, direct and hits the mark.

And I want one.

[If you're reading this in an email, click here to see the advert on Youtube]

The risk of reward

Kevin — Fri, 02 Oct 2009 05:00:22 +0000

More doesn’t mean better. In fact, it can mean worse.

A few months ago, I was chatting with a headhunter – no, not the South American type, but one who hunts in the concrete jungle.

He places top people into top jobs in the City of London, the beating financial heart of the capital. Think huge salaries, big bonuses and corner offices with walls of glass.

“So,” I said, “what makes them move? Is it the chance of even bigger salaries and bonuses?”

He didn’t even pause to think.

“It’s never about money. Never. Ever.”

Surprised? I was too. Surely you can never have enough zeroes on the end of your bank balance or big fat carrots on sticks at the end of the month?

Apparently you can.

For after a certain point, money fails to motivate. And that point is not as far down the line as you might think. For even high-flyers in the City are motivated by lesser things.

Like real challenges, new horizons and things that keep them fresh, alert and engaged.

What makes people tick is at the heart of Dan Pink’s talk, which I’ve just finished watching. The surprising science of motivation was delivered to TED Global in Oxford during the summer.

Here’s what I took away from it:

Larger rewards almost always lead to worse results.
Incentives dull thinking and block creativity.
The key to the 21st century can be summed up in three words: autonomy, mastery and purpose.
Google ‘gets’ it (that’s why we have Gmail, Orkut and Google News).

But I don’t want to spoil the talk by giving too much away.

Grab a skinny latte, put your feet up and treat yourself to 18 minutes and 36 seconds of entertainment, insights and sticking candles to walls (no, really – trust me).

If you’re reading this in an email and can’t see the video, click here instead: The surprising science of motivation.

Enjoy.

Are people buying what you’re selling?

Kevin — Fri, 26 Jun 2009 06:00:33 +0000

If not, change what you sell – or how you sell it.

My day started so well.

The summer sun poured through my office windows, and a steaming cup of coffee stood on my desk, its rich aroma teasing my tastebuds with anticipation.

Then the call came. A withheld number, which is never a good sign.

“Hello, Kevin,” said an unfamiliar voice. “Isn’t it a wonderful day?”

“Uh, yes,” I mumbled. “But more to the point, who the bloody hell are you?”

Actually, I didn’t.

Instead, I let him cast his line, safe in the knowledge that I wasn’t going to be hooked. As soon as he said the word ‘cricket’, I knew I was right.

You see, you’re either a cricket fan or you’re not. And I’m not.

Doug was from a corporate sports marketing company. And guess what? A box at Lord’s (The Home of Cricket – isn’t that a great tagline?) had just come free. Just think of the corporate entertaining I could do!

Except I couldn’t. And wouldn’t. And I told him so.

“Ah,” he said irrepressibly, “so not a cricket fan. What about football?”

No.

“Tennis?”

No.

“Rugby?”

No.

“Horse racing?”

No.

“Dogs?”

No. No. No.

Game over. Insert new coin.

Sometimes, you just have to face it: they’re not buying what you’re selling. And you can do one of two things.

You can either keep on trying, which means you’ll waste your time (and lose lots of other sales to more likely customers).

Or you can change what you’re selling. A bit like Virgin Mobile didn’t do when I spoke to them about their mobile-phone contracts.

“You don’t send texts?” said the incredulous customer sales person.

Yes, that’s right. Calls, yes. Texts, no. So could they give me more calling minutes in lieu of the hundreds of texts I’d never send? Couldn’t they make an exception?

“Um, I don’t think so,” she said, fishing around for a killer argument.

And then she found one.

“You see, if we made an exception for you, we’d have to make an exception for everybody, and give them what they wanted.”

Mentally, I moved my chess piece. Checkmate.

But I savoured my little moment, and let the silence drag on, until she could bear it no longer.

“You see my point, don’t you?” she pleaded.

I didn’t.

And the very next day, I changed my mobile operator – to one that let me take any mix I wanted of minutes and texts.

Lights, camera, action

Most companies think they know what their customers want. And they keep on hitting those little square pegs harder and harder, in the hope that they’ll one day go in.

Clever companies think like customers. And when people aren’t buying, they change what they’re selling, or how they sell it, until customers do buy.

Just like lovefilm.com did.

When I first checked, this DVD-rental website was just too expensive. I like films, but not enough to pay £15 a month (that’s $22.50 or €17.50).

So I didn’t bite.

But wait, it told me – I could have four discs at a time, and an unlimited number of films per month.

I still didn’t bite.

Then my local DVD store closed down, so I checked again.

Same deal. Same reaction.

And then last week, fearing becoming a social outcast (I hadn’t seen Slumdog Millionaire) I checked again.

And there, I saw a new package, aimed at ‘lite’ users, priced at just £4 ($6, €4.60) a month.

I bit.

So you see? If people aren’t buying, it’s because you’re not selling what they want. It’s not that they don’t like you. It’s not that your product doesn’t work or your service doesn’t deliver.

It’s simply that something, somewhere in the mix is wrong.

Get it right, and they’ll bite.

Find out more:

What do you mean you haven’t seen Slumdog Millionaire? Quick, hurry over to lovefilm.com.
Leg before wicket? It’s simply not cricket. Check out Lord’s Cricket Ground (tell Doug I sent you).

Why selling on price is a Bad Idea

Kevin — Tue, 03 Mar 2009 09:00:02 +0000

Is cheaper better? Sometimes. And sometimes not.

You walk into a shop. There are three pairs of shoes (for shoes, substitute your fetish).

They all look similar. But one pair is £50, one £100, and one an eye-watering, wallet-withering £325.

Which pair is best? Well, you say to yourself, there’s only one way to find out: try them on.

So you do.

The £100 pair is OK, but something doesn’t feel right. They’re not pinching, exactly, but something’s amiss. Like writing with the wrong hand.

So you take a deep breath and try on the £325 pair. Good heavens, you think. Now that’s just bizarre: they’re your size, they’re reassuringly expensive, and yet they constrict your feet, crush your big toe and either one of your legs has suddenly grown three inches, or the heels are uneven.

Well well, you say to yourself. More expensive isn’t better.

Finally, you pick up the £50 pair. The shop assistant cracks a professional smile – the one she’s paid to do 9-5. But you know what she’s thinking: cheapskate.

They fit beautifully. The leather is soft and pliant. Your toes breathe a sigh of relief. And your arches sing with happiness.

And all for £50.

Well well, you say to yourself. Cheaper isn’t worse.

“I’ll take these,” you say to the Ice Maiden with a triumphant smile. She puts them in the box, scans the barcode, and her smile dissolves into perplexed confusion.

“I’m sorry,” she says, “there appears to be a mistake.”

She calls a supervisor. They scan all three barcodes. And then the penny drops.

Oh, of course, they say. It was Sophie – the new girl. She put the price tags on the wrong boxes.

Your heart is in your (as yet unpurchased) shoes. Knowing your luck, the right price will be £325.

But it’s not. It’s £100.

With unaccustomed presence of mind, you remember what your friend Margo told you. Under EU Directive something-or-other, subsection 32/573B, the displayed price is the price you pay. And if they say no, they can talk to your lawyer – in Brussels.

And so, 10 minutes later, you stride out of the shop swinging a glossy tote bag with a pair of shoes inside. A £100 pair of shoes you’ve snagged for just £50.

What just happened? Well, you’ve learned something about price:

Cheaper isn’t better.
More expensive isn’t better.
You’d rather that expensive was better – that way, you’d have got the £325 pair for £50.
First impressions can be misleading.
So can second impressions.

And (most importantly) price is often not related to quality, comfort or satisfaction.

A fistful of dollars

I’ve written about it before. There is no ‘right’ price. The right price is the one you set. Double it, and you’ll appeal to a whole different segment of the market. Halve it, and you’ll do the same (and in the process, you may discover the wonderful world of tyre-kickers).

Never sell on price. At least, not on price alone. Yes, I know it’s the credit crunch, and cheaper is better, but there’s one problem. And it’s a Very Big Problem.

However cheap you are, somebody can always undercut you. UK cut-price retailer Pound World discovered this recently to their cost.

Pound World was a skinflint’s delight. The principle was simple: everything, but everything, cost just £1. (I visited a similar outfit locally and saw grinning, swivel-eyed customers scooping products off shelves as if WW III was just around the corner.)

Then the inevitable happened: across the road, a 99p shop opened. One penny. And that was all it took to spell doom for Pound World.

One penny.

What’s your secret weapon?

Of course price is important – and never more so now that we’re the icy grip of the global downturn. People want value. But they also want service.

So make sure your price is fair, but add value by doing the simple things give people that little bit extra:

Answer email sales enquiries as if the person was standing by your desk waiting for an answer.
Smile before you pick up the phone. Keep smiling throughout that conversation.
Deliver before the deadline you committed to.
Give away something free: an e-book, 15 minutes of your time, a valuable marketing idea.
Give away something that’s not free, but brings in more customers – like UK fast-food chain Pret, which now has free WiFi across most of its branches. No strings attached (well that’s wireless for you, isn’t it?).

If somebody asks you ‘What makes you different?’ and your first response is price, think again. You don’t want to be the cheapest. Neither do you want to be the most expensive.

You want to be the best. Because that’s priceless.

Find out more:

In for a penny, in for a pound at Pound World.
Now that we’re credit-crunched, everyone’s your friend. But is it charm or smarm? Manners maketh the businessman at Economist.com.