Are free offerings worth anything?
It was pretty clear from his session at ASAE's Invitational Forum on Leadership & Management, that Rafi Mohammed is not a fan of the price of "free." I'd say hostile even. His point: why do something that you think has such little value that you wouldn't charge anything for it?
I disagree with him on this one. I think there is value in things other than money. When someone is willing to pay attention to your organization when faced with so many other things that are screaming for their attention it means something. When someone interacts with your organization, that has real value, whether they've paid you for that privilege or not. In many cases, adding an extra barrier--such as requiring a monetary exchange--between you and who you want to attract, will limit the success you're able to achieve.
Here was the issue debated at the forum, and I'd love any readers' takes. One association executive talked about sending a couple of his staff to a conference for professional development. The staff came back raving about the experience, and the executive said he was excited by the feedback. And then the conference organizer followed up with a couple of free webinars that extended the learning and sharing from the conference. It probably wasn't necessary, but that was the deal cincher -- the association would be patronizing that conference in the future.
Mohammed thinks the conference organizer was leaving money on the table. They could have either offered a premium for the conference plus webinars or charged for the webinars themselves. He says the webinars did not actually add value to the conference because in all likelihood, they had already made the sale for the next conference -- that is, they're not getting anything additional by providing the webinars. Participants who commented, in general disagreed, saying the free webinars solidified the future sale, and could have been the deciding, impactful idea that spurred other, less raving, attendees to come back.
Would love others thoughts on the value of offering free products/services in general, and especially where you come down on the postconference webinar example.
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Comments
Fascinating topic that nicely complements this month's Professional Development Section newsletter and its articles on pricing. It would be interesting to learn from associations that are gathering good data on their pricing decisions and results. In my own personal experience (and that's all I can vouch for) the no show rate for free webinars seems to be very significant and in some circles free webinars by business partners equates to a free infomercial in their minds.
Posted by: Jeffrey Cufaude | June 14, 2011 5:59 AM
In general I'm becoming a fan of 'free to some, at cost to others' services. Although I'm paid to be unbiased, I've heard an increasing number of associations' members in interviews describing membership as a 'hunting license'--with dues being an initial payment followed by frequent solicitations to buy something else. Staff often believe that offerings things with a steep member discount reinforces the value of membership when the opposite may be happening. Members do notice the promotions, but they miss and/or undervalue the free benefits that come with membership.
Any tangible product needs a price tag to signal its value, even if it's an 'MSRP' or list price, so 'free to all' services won't create a strong perception of value, but offering that same thing for free occasionally to someone who's made a substantial previous purchase--all members, all attendees, or the most loyal members or attendees--is a good idea. It may indeed be giving away margin (as Mohammed suggests). However, if the product is near-costless to produce and deliver, and is unlikely to be purchased at list price by a large proportion of attendees, the giveaway isn't large and the gain in goodwill & long-term loyalty is a fair trade for the opportunity cost of a little addn revenue now.
Posted by: Kevin Whorton | June 14, 2011 9:00 AM
We all like the idea of getting a good deal, or even something for nothing. Getting the "add-on's" to something I've purchased is a happy bonus. If the provider hasn't already factored the add-on's into the initial pricing, that's not the fault of the participant.
Posted by: Donna Dunn | June 14, 2011 11:29 AM
What better way to get your product or idea entrenched in the marketplace than to offer a free component or teaser? I read sample chapters online and then I buy the book. I have even bought a book that is available as a free download. The Angry Birds app is free but many people go on to purchase add ons. There are many examples of how this strategy works. If your product or service is quality, teasing something for free helps extend your reach.
Specifically about the issue that was debated, if the association keeps coming back because of the value (the great session plus the free webinar) then the conference organizer has gained. No one wants to be sold more when they have just bought from you, but he 'sold' them at just that time. He sold them on the value of his product. The free teasers (webinars) are the only way to sell to your audience when they are most receptive – when they are still high on the value you have provided to them.
A business that keeps buying from me when I do very little to sell to them is better than a business that I must sell to for every penny I make.
Another thing to consider is the nature of content these days. A group that puts on conferences and webinars likely also has videos, articles, interviews, white papers, etc. The content of the free webinars might be content that was originally packaged as articles and interviews, that has been value-add-repurposed as the webinar. It is simply smart to create content that can be evolve and combine to work effectively on different platforms.
I think the free webinar is a smart strategy. That said, there are other ways to do the same but maybe they'll require more time on the organizer's part.
Posted by: Monica Bussolati | June 15, 2011 9:10 AM