May 13th, 2013

Should You Ever Offer Your Product Or Service For Free?

Should you ever offer your product or service for free?  This is the question that I’m often asked and, to be honest, the answer isn’t clear cut.  As the Italians would say: ‘dipende’.

For instance, I offer my PR services for free when it is to assist good causes.  That isn’t affecting perceptions of my brand other than in a positive way, as it is part of my corporate social responsibility (CSR) policy.  It is clear that I am doing it for that reason.

Free sampling, to get a product off the ground is another way to use the ‘free’ route to benefit a brand that is trying to introduce itself into the market.  This is typically related to FMCG products and can be part of the product’s market research, as well as product trial.  Most consumers know the score here and realise why the product is being offered on a free basis. They understand this is a limited time offer, not a long-term policy.

Then we come to free entry to attractions.  This is where I think the ‘free’ offer gets murky.  For instance, there is a visitor attraction that offers free entry in winter.  Here, it can argue that it takes trade away from competing attractions – but that causes great friction in the tourism sector, as the other attractions resent it.  On that basis, they are unlikely to recommend that any of their visitors visits this attraction, if asked to recommend somewhere else to go.

It could be argued that the attraction that is offering the free entry takes money on food and gifts purchased during a visit, to make up for sacrificing admissions money at a quiet time of year. But do they? My experience of anyone who takes up free offers and discount dining cards, and so on, is that they are the type of person to take their own butties along, or head home for their normal meal, rather than spending in the retail outlets at the attraction.

So then we come to the question of the damage it can do to the brand and customer perceptions.  Most consumers would deep down probably be of the mentality of ‘If they’re offering it for free, it can’t be worth much’ and although happy to accept a freebie – as many of us are – are often unlikely to fork out for that product or experience later down the line when asked to pay for it. By that time, they themselves may be better off and psychologically think it better to opt for a different brand, which they perceive to be better, because it never felt it had to sell itself for free.

In this way, the ‘it builds loyalty’ argument doesn’t hold sway and, in many ways, the ‘free’ offer can actually do the opposite.  Unless a truly first class experience is offered for free, most people would consider that they got what they paid for – i.e. very little, for having paid nothing.  They are unlikely to then want to pay for it later on.

In terms of the brand, it can also do untold damage in the eyes of the outside world. We all know the train of thought that we all get …”They must be desperate if they’re having to resort to that”.  Here, the timing of the ‘free’ offer is crucial. If it looks like a cynical attempt to fill a place, it is likely that you will fool nobody and actually significantly damage the brand.

So there is no simple answer, but my own feeling is that people have to pay something to access a product or service, to attach any value to it at all. In the case of the visitor attraction, I strongly suspect they are now building up a big army of people who say ‘we’ll visit in winter when it’s free’, rather than converting those people into paying customers in summer.  Such is the way of the world and the way in which we all tend to think.  I doubt that any long term loyalty will accrue at all.