After many years of mulling it over, I’ve come to the conclusion that giving away things for free is a bad idea.

I’m sure that statement will sound odd or even idiotic to many people, but give me a chance to make my case.

 I’m going to do it in a series of essays. This is the first one… 

 

Free Is a Bad Idea, Part 1: Free Offers in Business 

“All marketing is basically about customers and marketing and making money and capitalism and winning and promoting it and having something someone really wants.” – Roger Ailes

If you have been in business for any length of time, you know that giving away free samples – a longstanding strategy to introduce new products – is, at best, a sometimesgood idea.

It works best when the free samples are given to existing customers. The more loyal the customer, the better it works.

This stands to reason. Customers that are happy with a brand are more likely to value free offers from the same brand. They not only tend to trust the intention of the offer, they are predisposed to like the freebies.

But free offers – truly free, not “free with purchase” – to non-customers (i.e., customers) are generally less successful. They are, thus, rare in direct marketing (particularly on the internet).

There are two reasons:

  1. The cost of giveaway programs is usually much greater than the cost of direct sales. Therefore, they require a proportionately higher amount of spending from each customer to justify the extra expense.
  2. Even when the cost is not great (e.g., giveaway programs for digital products), free-offer promotions (again, truly free) don’t work because the “quality” (average lifetime value in terms of dollars spent) of the customers that they attract is generally much lower than you’d get from conventional offers.

In my early days as a direct marketer, I was a big fan of free offers because they could yield three to five times the response rates I could get from conventional offers. While the historic campaigns (that required payment) might have enjoyed an average response rate of, say, 2%, I was getting 6%, 8%, and sometimes 10%!

I considered myself a marketing genius. And when it became clear that all those additional customers I was bringing in were weak spenders, I refused to give up on my precious free offers. I tried again and again, using every possible tweak I could think of in our backend marketing. But none of it stimulated those freebie-respondents to spend more money with us.

The only thing that did work was de-emphasizing the “free” in the free offer and writing in copy that reminded people that unless they were serious about buying the free sample later, they shouldn’t respond.

That worked reasonably well, but it was basically a soft form of direct selling.

I could no longer deny the truth that kept slapping me in the face: In prospecting for new customers, the lower the price of entry, the greater the number of tire kickers and moochers you attract. If you lower the price to zero, you fill your marketing files with deadbeats that will, in time, destroy your business.

 

Then the Internet Happened

I learned the lesson above in the mid to late 1980s. After that, I eschewed freebie campaigns and even highly discounted offers.

But in or around 2000, the world of direct marketing changed drastically. Most of my direct-response clients and all of my publishing clients moved from mostly print promotions and products to mostly digital in the space of about five years.

In that first decade of this millennium, free offers became the dominant strategy for acquiring prospective customers. By offering digital books, courses, and periodical publications, my clients were able to sign up millions of people that had an interest in business, entrepreneurship, investing, natural health, and international travel.

The strategy was to bring in prospects with free offers and then send them “free” material that provided both information and sales messages to “convert” them to paid customers.

What we found was that, like the old days, most of these prospects never bought anything. And of those that did become paid customers, their lifetime values were generally lower.

Meanwhile, the old, direct-sales campaigns continued to work, much as they had always worked. But these programs got little to no attention because they were bringing in far fewer names.

What happened is that the cost of acquiring “free names” (prospective customers) via the internet began to climb because of market competition. Yet the value of those free names did not rise accordingly.

Meanwhile, our direct sales were still moving along quite well. Eventually, we realized – at least I did – that it would have been better for us to focus on paid offers. They always were, and always would be, the best strategy for building a sustainable business with the greatest value with the least risk.

I’ve learned several lessons from these deep dives into free-offer marketing, but the most important ones are these:

* Free-offer marketing campaigns attract many moochers. Moochers love free offers. Not just because they like the idea of getting things for free, but also because they pride themselves on getting things for free that others have to pay for.

* Free offers attract not just moochers but perfectly good customers that appreciate a bargain. But when these people respond to free offers, they instantly become less valuable as customers because people, always and everywhere, do not value what they get for free.

You cannot turn a moocher into a quality customer. As I said, I’ve tried it a hundred times in a dozen ways. It just doesn’t work. Plus, they tend to be expensive – at least more expensive than you think. They continue to be your major responders to free offers, clogging up your processing and fulfillment departments. And they tend to complain more (even though what they are getting is free), clogging up your customer service department.

You can attract good buyers with free offers, and those people will “convert” into paid customers. But because of the free offer you sent them, these otherwise good customers will be less good to you. They will underestimate the credibility of your business. They will expect less from you and trust you less, too. And they will definitely give little to no value to whatever it is you gave away for free.

This is not advanced marketing analysis. It’s human nature.

Free is, as so many marketing gurus have said, the most powerful word in selling. That’s still true if all you want to do is attract a large following of people that like getting things for free.

But if you want to build a business, you need to purge yourself of the ego satisfaction of having a huge file of “maybe” customers and focus on building the biggest list you can of real customers, customers that value your products and services and are willing to pay you fairly for them.

In Part 2 of this essay, I will talk about why I don’t like free offers in the realm of charity.

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eschew (verb) 

To eschew (es-CHEW) is to deliberately avoid using; to abstain from. As I used it today: “I learned the lesson above in the mid to late 1980s. After that, I eschewed freebie campaigns and even highly discounted offers.”

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Fighting the Civil War cost us a fortune. We ended up going into serious debt – equal to 100% of the country’s GDP at the time. Since there were relatively few taxes back then, Abraham Lincoln imposed the first federal income tax. Although the official version didn’t arrive until 1913, this less formal version allowed the government to pay off those war debts by taking money directly from the pockets of its citizens. Those revenues were not great in the beginning, but when the industrial revolution hit, they got big. And have stayed big ever since.

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“When Mask-Wearing Rules Faced Resistance”

This is an interesting account, on History.com, of the use of face masks during the 1918 “Spanish” Flu pandemic. To read it, click here.

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“‘Hope’ is the thing with feathers / That perches in the soul / And sings the tune without the words / And never stops – at all” – Emily Dickinson

 

Fear and Hope for Young People Today 

“I feel sorry for young people today,” a friend said to me recently. “They are growing up in a terrible time.”

I gave him a sympathetic nod. I didn’t want to get into it. I don’t have the same feeling. And I’m not even sure why.

I can understand his point of view. We are going through unprecedented times, as everyone is saying. Never before in modern history (or perhaps in all of recorded history) has so much of the world’s commerce been intentionally shut down for fear of a potential catastrophe. What does this mean for the future? Are we moving into another Great Depression? Will another virus overwhelm us? Will climate change and/or a nuclear war decimate the human race?

The answer comes easily: Maybe… or maybe not.

We don’t know. And so we can’t be sure how we should feel. Or what we should do.

Much of this is a matter of emotion: fear and hope. And emotions are greatly influenced by the information we take in. My friend is a heavy consumer of the mainstream media, and mainstream media long ago learned that fear sells better than hope.

But as to this particular question: Are kids today living in such terrible times?

I was thinking about that when I received the following email from a colleague:

Imagine you were born in 1900. On your 14th birthday, World War I starts, and it ends on your 18th birthday. 22 million people perish in that war.

Later in the year, a Spanish Flu epidemic hits the planet and runs until your 20th birthday. 50 million people die from it in those two years. Yes, 50 million.

On your 29th birthday, the Great Depression begins. Unemployment hits 25%, world GDP drops 27%. That runs until you are 33. The country nearly collapses along with the world economy.

When you turn 39, World War II starts. You aren’t even over the hill yet. And don’t try to catch your breath.

On your 41st birthday, the United States is fully pulled into WWII.

Between your 39th and 45th birthday, 75 million people perish in the war.

At 50, the Korean War starts. 5 million perish. At 55, the Vietnam War begins and doesn’t end for 20 years. 4 million people perish in that conflict.

On your 62nd birthday, you have the Cuban Missile Crisis, a tipping point in the Cold War. Life on our planet, as we know it, should have ended. Great leaders prevented that from happening.

When you turn 75, the Vietnam War finally ends.

Think of everyone on the planet born in 1900. How did they survive all of that?

This essay and others are available for syndication.
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breviloquent (adjective) 

Breviloquent (breh-VIL-uh-kwuhnt) describes speaking, writing, or thinking that is concise and eloquent. Example: “Good writing is breviloquent.”

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Whether it’s caused by COVID-19 or another illness, you can help relieve mucus buildup in the lungs by following this doctor’s “rule of threes” – three deep breaths, three coughs, all repeated three times. Click here to see how it’s done.

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An email from GT:

I’m very happy to say I’ve landed an exciting job straight out of university…. Thanks to [your guidance] I’ve seen the power of sales, and been given a wonderful foundation in my ability to sell…. My formal education of copywriting will continue as there is always more to learn….  I am excited to see what the future holds.

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