SECTION 2: IT’S IN YOUR HEART
Chapter 5: To Be Successful, First Give It Away
Give it away? What? Really? Yes, I know what you are thinking: "How can I make money in 90 days or less if I give everything away?” Well, it's proven. In the beginning, Kanye West gave away music tracks. Sean Puffy Coombs passed out flyers for record labels for free when he got his start. Think of it as a worldly, even spiritual principle. In order to attract money and success, you must give some away. Many books, such as The Secret by Rhonda Byrne and The 4-Hour Work Week by Timothy Ferriss, focus heavily on giving as part of the formula to success.
Through it all, most successful entrepreneurs began by giving their product or service away. Giving your product or service away or at a deeply discounted rate offers four distinct advantages:
1. It offers market research for free or deeply discounted.
When entrepreneurs begin by giving their services away, it minimizes the risk taken on the client's end. Clients are more inclined to take a risk on a provider that is confident enough to give their services away for a time. With this, it offers entrepreneurs the chance to test their product/services within various industries and professions. Furthermore, it provides the entrepreneur with valuable statistics related to the selling cycle and selling process. How many calls does it take to convert a prospect to a client? What are the best talk tracks to engage the gatekeeper and ultimately speak with the decision maker? Who is the decision maker? What are the product benefits? What do your clients care about? Literally hundreds of questions are answered for no more than expending some sweat equity.
Customers are surprisingly more inclined to give feedback when the product is free versus paying for it. As the entrepreneur, it also gives you more authority to ask for participation in surveys, special focus groups, etc. When customers receive products or services for free, they feel more obligated to offer something in the return, ultimately their feedback and time.
2. It gets you reviews and testimonials.
One of the strategies on Fiverr is to under-promise and over-deliver. The reason is, A, because it's ALWAYS good business practice, and B, it creates a platform of excellent feedback, reviews and testimonies that influence future buyers to utilize your services.
Utilizing this strategy, I quickly became a top-rated seller in just 10 days. What this means in terms of revenue, is that I had the potential to earn up to $2,000 in extras per customer. It is a quite common-sense approach that has helped Fiverr to grow quickly and deliver a higher-quality marketplace. Once sellers complete a gig, customers are able to rate them in three specific areas, then leave comments about their experience. Because it is done with the click of a few buttons and is part of process to mark a project complete by the buyer, the review process has really engaged buyers, creating transparency in this marketplace. Sellers can then share the testimonials on social media, new buyers looking for a similar service can read about the past work experiences of other buyers, and Fiverr utilizes positive feedback metrics to rank and place gigs at the front of the heading (sort of like Google with keywords), making the seller easier to find and making buyers more comfortable in purchasing the gig.
3. It helps grow (and retains customers) sales quickly.
Obviously, it’s less of a risk to potential customers when a business puts a little “skin in the game” by offering their service as a trial or free for a period. It shows complete confidence in the product or service. Furthermore, giving it away for free (at least for a time) builds trust in the company and the brand. With a quality product/services and exceptional customer service converting trails, samples and free sessions is a relatively easy win! This ultimately, builds customer retention and loyalty. Not only does this model make it easy for clients to access your product, it makes it easier for customers that you acquire through this model to sell your brand to friends and families…word of mouth advertising!
4. Customers talk more about freebies.
The rise of social media creates a welcome (for some) and healthy stream of “free” word-of-mouth advertising. Sites such as Yelp, Angie’s List and others have put a spotlight on consumer feedback. Customers are apt to talk about a good “free” or nearly free (think Fiverr) product or service. This behavior then sets in motion a snowball effect of buyers reaching out to you versus spending thousands of dollars on traditional advertising. Getting your customers to say nice things about you is, according to some research, as effective as traditional advertising, and it’s almost always cheaper. And companies like Procter & Gamble are figuring that one of the easiest and best ways to get people talking about their products is to simply give them away. Studies show that people who got a product for free talked about it 20 percent more. Getting a freebie related to the product prompted them to talk about it 15 percent more, while coupons and rebates didn’t make a difference.
Take, for example, Chris Zane, founder of Zane’s Cycle, who rapidly grew sales from $0 to $17 million with large margins in a relatively short period of time. While Zane clearly sells cycles, his primary focus was on the customer experience, thus placing a high priority on branding. For Zane's and for any business, when it comes to giving it away, it's all about the numbers. How much can you afford to give away to delight your customers enough to a) keep them coming back, and b) tell their friends about you?
Let’s take a look at what Zane did to set his business into high gear:
These are all classic examples of how to give business away and make more!
VerticalResponse CEO Janine Popick speaks frequently about the extreme value in initially giving business away. In fact, much of VerticalResponse’s business model is based on free trials of the product. Here’s what Janine had to say in a 2013 issue of Smallbusinesscomputing.com:
If I told you that you can grow your business by giving away your product or service for free, you'd probably call me crazy. Sure, for some businesses -- the kind with high start-up fees or entry-level products, for example -- it might be cost-prohibitive to give a sample or trial run for free.
But for other small businesses, it can well worth the investment.
In the software business, for example, lots of companies give away a free trial of their tools. The hope is that potential customers will see the value of the product enough to pay for it once the trial period ends. Big companies such as Salesforce, Norton AntiVirus and Autodesk all offer free-trial versions of their software.
“Common sense says you should charge for your product; however, you might make more money by giving it away for free.” Says Ioannis Verdelis, COO of Flesky, the makers of the fastest, most customizable keyboard. Verdelis pointed out, in a gaining customer segment, In the early days of email, users could choose between miniscule storage limits or hefty annual fees. But in 2004, Gmail’s beta upended the market by offering a gigabyte of storage—for free.
What may have initially seemed like a sacrifice of revenue was actually a strategic tradeoff. Since its public release in 2009, Gmail needed just three years to become the world’s most popular email service. And with Gmail’s extensive user base, targeted advertising helped Google bring in $16.86 billion in the last quarter of 2013 alone.
So, I know what you’re thinking, “I’m a cash-strapped start-up and the prospect of giving my premier product or service away seems counterintuitive to the laws of business growth.” Am I right, yes I know what you’re thinking (largely because I initially thought the same thing until I used this very same principal). Yet some of the most profitable companies have built empires around free technology. The reason is simple: When you charge nothing, you attract more users.
And with a bigger user base, you get:
More word-of-mouth marketing. The more people talk about you early in the product lifecycle, the bigger increase in long-term brand awareness you'll have.
Critical feedback . Non-paying users are often harsher than paying ones, but their criticism is vital for product development.
More revenue . You were going to charge $2 for your product; instead, you release it for free and get 20 times more users. Now, you simply need to earn 1/20th of $2, or 10 cents, from the average user.
A competitive advantage. Especially if yours is the only free product in your market, free pricing can allow you to steal market share, even from established players.
When I first started as a business consultant, I called businesses of interest (mainly in healthcare) and offered to solve a business problem for them for free. Smartly (and gratefully for me), one company Awakened Alternatives Home Healthcare, took me up on this offer! What happened next is amazingly consistent with what the aforementioned leaders reported. The solution that I provided was innovative and highly customized, so much so that this organization hired me on as a paid consultant and have enjoyed a product business relationship ever since.
I took this same approach to Fiverr. I started with one gig—a business SWOT analysis—and gave customers EXTREME value, again utilizing innovation, strategy and customization. The responses to these gigs were remarkable. I reached Level 1 seller within my first month