subject: Free is the New Business Model [print this page] Free is the New Business Model Free is the New Business Model
That's right, FREE. Sound crazy? It's not - it's a proven strategy that some of the world's most successful companies use. The best case study for this would be Google. The search giant didn't offer any ads when it started, giving away its service for free without any revenue in return. In fact, it continues to give away its search services- along with a whole host of tools, email service (the widely popular Gmail), calendars, document storage, and more for FREE. Of course, now, Google makes billions of dollars each year in advertising revenue.
Free isn't just online; it's everywhere. Cell phone providers give away cell phones, magazine publishers give away subscriptions, cable TV companies give away DVRs. The idea that there are huge profits in giving away something free, or close to it, is no longer limited to special promotions or one-time offers.
It's the new model of doing business. I can hear you asking, "But how can I make money by giving stuff away for free?"
To put it simply by attracting many, many more prospects.
Most traditional business owners still try to extract as much money as they can from each customer up front, the first chance they get. They EXPECT the prospect to read their ad, respond to the ad, call them and buy all in ONE step. A few prospects will. However, there is a HUGE number of good prospects who will walk away, not ready or unwilling to buy right away.
This "buy now or nothing" mentality doesn't work anymore. A whole generation has been raised on getting music, information, and more for free online, from companies like Google. It's time for you to start leveraging the power of the FREE business model too. Here's how it works: when you offer something for free, you attract many more people who are interested in your product or service, much faster, and often at a far lower cost than that of traditional advertising.
How the Free Gift Works
You need to give your prospects a reason to contact you. Let's use a real estate agent as an example. Being a 'licensed real estate agent' isn't reason enough, to attract clients. This is where you'll really need to find new ways to set yourself apart from your competition. Instead, you should take out a piece of paper and pen (like right now) and spend a minute to thinking about your client profile. Write it as though you're describing a person. What do they want? What is their unique set of challenges? Be as detailed as possible. What does this person do for a living? What do they look like? How old are they? Do they have children? Give this person a name.
The Free Report
What you offer depends on your market, and their needs. The Free Report may be the most misused tool in our industry. Why? Because most are titled something, like "The 5 things everyone should know before buying a home". They speak to everyone rather than to a specific market. As a result, people don't feel compelled to read it. Instead, use a report that addresses a SPECIFIC NEED and your market will want it.
The other mistake companies make with the free report is that they think it needs to be a Pulitzer-worthy novel. Not True. You can go online and easily piece together all the information needed for your report in just an hour or two. Don't make it too long. Keep it short and sweet with only the most useful information you can find. If you don't feel confident with your writing skills, or simply don't have the time to write a report; then hire someone to do it for you.
Almost FREE works, too.
Companies can attract countless new customers by making just one part of their product or service line-up cost next to nothing. If you've purchased a computer in the past several years, there's a good chance at one time or another you've gotten a free or nearly free printer thrown in as part of your purchase. At our house, we have more than we know what to do with.
How can printer manufacturers afford to give their printers away at such a huge loss? They know that to keep your printer running, you'll need to buy ink cartridges. By charging high costs for the cartridges, the manufacturers make money not from the initial transaction with the printer, but from the purchases, you make over the lifetime of use of the printer.
However, be warned; "FREE" is just the first step. Giving a product or service away for free or at cost doesn't guarantee you'll ever earn a cent. For instance, Twitter's free service has a huge following, but they're still trying to figure out how to pay their bandwidth bills.
To monetize those freebies, you must follow up by enticing the user to pay for something. The key step lies in converting this positive attention into real cash flow.
What can you give away to bring in more leads?
Action Steps
The goal of your business is to turn a profit. Nevertheless, in the end, HOW you turn that profit (as long as it's legal and ethical) has to be flexible. If you're still clinging to the idea that every product or service has to have a price, you're severely limiting yourself. Using free as a marketing model is a tried-and-true technique being employed by small businesses and by some of the biggest, most successful companies in the world. Use it today to build more relationships, faster, with people interested in your product or service.
Action Steps:
Step 1: Ask yourself where you could you use the FREE Business Model in your business. What are your prospects and clients looking for? Ideas, information, access, a test trial, or something almost free?
Step 2: List at least 3 things (related to your product or service) you could give away for free or almost free to encourage prospects to contact you or try your products or services.
Step 3: Once you've gotten a prospect or client to accept your free or almost free offer, what comes next? Map out the steps involved in guiding prospects from free to paid, and from paid to highly paid.
For More Information check out our Free e-Book: The Business Owners Guide to Success in the 2.0 World.
