Creating Sustained Profit with Free Products/Services
By Trish Tonaj
I remember the days when the concept of “free” was used to capture our attention as part of a promotion. There were very few exclusive offers where business owners were willing to provide goods or services at no cost to connect with prospects and customers.
I was around in the 80’s when the concept of a lost leader was developed in business, specifically in retail. There were also gifts with purchase, purchase with purchase, and percentage discounts. Pricing items at cost or with marginal profit to introduce a product or service for a limited time or while quantities last. At the time, I was a National Buyer for a major department store with over 220 stores coast to coast. We participated in and encouraged the concept as part of the marketing strategy. I will say with conviction that it was a fantastic way to connect with customers and we most often found increases in sales throughout the limited time offer period.
As a Business Consultant and Coach, I now find myself having conversations with clients and colleagues about marketing strategies that include the concept of free. We are now asking the question: How Free is Free?
In recent months, we’ve seen several businesses offering “free” services that are intended to increase our visibility, encourage collaboration, and create connections within our community. We use these initiatives to introduce our products/services and amplify our message – inviting people to connect with us and our business through this unique offer. We are all mindful of the challenges we’ve been facing in recent months, supporting government restrictions for the benefit of our health which has ultimately affected revenue. As a result, there are more free offers being shared throughout social media. At the very least, these incentives ensure that our brand image remains relevant and top of mind. FREE has now become part of everyone’s marketing strategy, offering something to encourage engagement and recognize valued customers.
We all know there are costs associated with the delivery of free products and services and creating a list of assets that may be used throughout the year to increase engagement is one way to connect with potential customers. I believe the concept has become the new lost leader and is here to stay as part of our regular marketing calendar.
Here is a list of assets you may consider under the umbrella of free:
- Newsletters with value-added offers
- Gift Cards as part of a recognition program
- Cross promotions with other businesses offering services to support each other’s business model
- Buy One Get One Free (BOGO)
- Contests and draws
- Promo codes for discounts or limited time exclusive offers
- Downloads such as e-books, journals, or recipes
- Complimentary Membership fees
There is no doubt that competition is fierce, with many business owners having to rely on innovative ideas while riding the wave until we see signs of recovery within the global economy. As part of our commitment to innovation, we have all made investments of both time and money to create value in our marketing plans. On the other hand, for our businesses to create sustainable profit, we need to ensure there is adequate cost recovery throughout the selling process. At the very least, to participate in free offers, customers should provide contact information or opt-in to newsletters so that we are able to create a database for marketing in the future. Taking inventory of how many free offers have been utilized and what type of offer resonated with your target market will then provide solid intel for future promotions.
I believe “free” is here to stay for the near future and creating various unique offers will ensure long lasting value and help to maintain brand identity. With every campaign that includes a free offer it is a good idea to keep in mind the value it represents to our prospects and customers without breaking our bottom line.