The Pluses and Minuses of Using FREE as a Marketing Strategy


NOTE: The following is a guest post by Lior Levin. If you want to submit your own guest post, click here for more information.

Every business and individual with personal ambition today can now create an E-book or other digital product and give it away for free with the hope that customers will avail themselves of another service that will convert into a profit.

It’s an old business model that Chris Anderson explains in his book Free: The future of a radical price and is notably embodied by razor companies who give away the body of the razor and sell razor blades for profit.

Should businesses and individuals use “free” as a marketing strategy for their digital or physical products? Hard and fast rules may be hard to come by, but here are a few disadvantages and advantages to consider if you’re considering a “free” campaign.

The Minuses of Free as a Marketing Strategy

Decreasing the Perceived Value of a Product
Effective free promotions have to communicate the value of a product and convince customers that they are getting a great bargain that they’d be a fool to pass up. In fact, they the offers have to be significant enough that the buyers will tell their friends about it. Ironically, you still need to “sell” a free campaign to customers so they realize the value of your offer.

Limited Sales Potential without an Effective Campaign
A free giveaway in and of itself will not be effective. It has to lead to sales conversions at a certain point. If a giveaway fails to attract new customers and sales, then it is a significant loss in time if not materials for a business. Malcolm Gladwell’s critique of Chris Anderson’s book Free, points out the uncomfortable truth that free as a promotional strategy can have mixed, if not tragic results.

Can a Free Product Stick?
One of the great advantages of asking customers to pay for a product is they have to engage with it and decide what they really think of it. The idea of investing money into anything makes us more critical and ultimately more appreciative if it meets our needs and expectations.

The article Better Than Free states that the Internet is fundamentally a copy machine, but there are many things such as trust, loyalty, personalization or accessibility that can’t be easily copied, and this is where customer value can be created.

Take for example the strategy of Apple. Their loyal customers pay top dollar for their computers because they believe they are purchasing the best product on the market. Free may be a solid marketing hook, but marketers will need to think about how well their products will stick with new customers.

The Pluses of Free as a Marketing Strategy

A Wide Reach
Anyone who has seen the way a free product promotion spreads through Facebook or how a brilliantly counter-intuitive blog post is retweeted across Twitter knows that a free item or piece of information can spread widely with incredible speed.

Serve Your Tribe
Effectively using free as a marketing tool has everything to do with serving your tribe of colleagues and customers. By tapping into a network that already values your work and content, to say nothing of trusting you, you can effectively reach a wider segment of customers.

Author and speaker Michael Hyatt suggests that free could be used as a way to serve your network without shouting at them like old marketing techniques. In fact, Hyatt asserts that marketing as we knew it is dead. He writes:

Tribe-building is the new marketing.

  • Marketing is no longer about shouting in a crowded marketplace. It is about participating in a dialogue with fellow travelers.
  • Marketing is no longer about generating transactions. It is about building relationships
  • Marketing is no longer about exploiting a market for your own benefit. It is about serving those who share your passion—for your mutual benefit.

Reach New Audiences
Giveaways and free promotions maximize your visibility before a large segment of the market. In fact, that’s what they do best. This is especially helpful if you’re launching a new business or product that could wallow in obscurity without boost of publicity.

Expand Your Influence and Levels of Engagement
By giving away products or services for free, you can expand the reach of your business to your customers. Author Michael Hyatt has expanded his reach as a speaker by using free promotions on his blog, especially promotions that have connected him with leading experts in his field.

Free promotions can be as simple as an E-book download and as complicated as a product giveaway. Companies have given away cars to bloggers, publishers rely on book giveaways for reviews, and companies are constantly experimenting with free shipping and other perks for their customers. Free as a strategy has been around for quite some time and will continue to evolve.

If anything has been proven for certain, it’s that marketing is costly. In the past, marketing required a hefty cheque to an advertising agency. Today, network marketing on social media consumes time and resources. While a free campaign doesn’t cost anything for a customer, a business must weigh the costs and benefits before launching it.

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This guest post is written by Lior Levin, a marketing advisor for a neon sign store that offers commercial neon and LED signs such as a neon pie sign; and who also works for a company that offers a psd to xhtml service.

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22 Responses to The Pluses and Minuses of Using FREE as a Marketing Strategy

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