At first glance, giving something away for free as a strategy for making money seems counter-intuitive; surely a business is only losing themselves money by offering out freebies, yet you see it a lot in the business world. Companies of all shapes and sizes aren’t afraid to give things away for free, and you shouldn’t be either, but, why?
Establishes trust and authority
Let’s take content as an example. As a business providing a service, you would think that you’d want to keep all of the industry secrets and insider knowledge to yourself, rather than trying to educate your audience about what you do. Then why do so many businesses write blogs just like this one to educate their audience about the very service that they provide?
There are many reasons why you should give information and advice away for free on your blog or even in more comprehensive content forms such as a downloadable eBook; most importantly, it establishes you as an expert in your field. If someone reads your blogs all about the intricacies of finance, then they’ll be convinced that you know what you’re talking about and are more likely to trust you to handle their finances. This doesn’t mean that they’re going to go away and do everything themselves; for the most part, people don’t have the time to manage their bookkeeping, market their business and handle their insurance, for example, so they rely on outsourcing these tasks to people and businesses that they trust.
Encourages people to try
Most of us are creatures of habit; we stick to what we are used to and are reluctant to try something new. Offering something for free is a great way to encourage someone to try your product or service, risk-free. Once they’ve tried it once, hopefully, they’ll like it and add you to their list of trusted providers, whether it’s a new breakfast cereal, hair products, or an exercise class.
Take this last one as an example. You’ve decided you want to get fit and are looking for a fun way to do it, but you’re scared to try something new in case you’re bad at it and end up embarrassing yourself and wasting your time and money. A business can take at least one of these factors out of play by offering you your first class for free, giving you a risk-free chance to try it out without committing to it.
Positive word of mouth
You want to spread the word about your business and create a buzz around what you are offering, and giving away freebies is one of the most effective ways of doing this. If someone receives something for free then they are much more likely to tell their friends or take to social media to share it with the world. A study from the Journal of Marketing Research found that people who received a free product talked about it 20% more than people who pay. This will attract more people to visit your shop or your website and will create a more positive reputation for your brand.
How can I make it work?
Obviously, you don’t want to give away your entire stock for free, or else you’ll end up with zero profits. Plus, giving away too much will lessen the perceived value of your brand as it will give the impression that your products aren’t worth very much. The key is to give away just enough to leave people wanting more, to create a perception of exclusivity among its recipients, and that what you are giving away is something valuable.
There are many more benefits other than the ones listed here, including encouraging loyalty in customers, building a strong relationship with them and giving them a sense of obligation to buy from you. So, start thinking about what you can give away for free, whether it’s free content, samples of products or a free consultation or review.