With the bad economy, rampant competition, and more products and services than consumers could ever possibly want or need available today, getting customers to know who you are, let alone purchase your offerings, can be nearly impossible. In an attempt to get more customers, business owners often give away their products or services for free. This can be a great tactic if it’s used in the appropriate ways, but it can also be the downfall of your business. So, here are some guidelines to know if and when it is appropriate to give your offerings away.
Practice Makes Perfect
I often advocate for entrepreneurs to get plenty of education, practice and experience prior to starting their own businesses to have the best shot at success. This can be done through internships, taking a part-time job in their industry of choice, or even reading business books. So, if you are giving away your products or services in this same spirit- to garner knowledge, feedback, references and experience (especially when first starting your business or launching a new endeavor), this can be a really beneficial tactic.
For example, if you are starting a tutoring business, it may make sense to take on a few customers for free at the beginning to test out your teaching methods before you take on paying customers. If you are opening a new nightclub, it may make sense to do a free soft open before your official opening to increase the word of mouth and work out the bugs in your new establishment. If you are a video game developer, you may want to give away a few copies of your game before you launch to gain valuable feedback about possible problems or issues.
Practice makes perfect, so giving your offerings away, such as in the above scenarios, can really be a great tactic, as long as this is just a temporary strategy. The important aspect here is to set a limit on the amount of “free” that you give away. You can adjust this if you need more time to develop your offerings, but if you give away too much, you will be out of business before you can really even start!
Upping Your Status
Another time when giving it away may make sense is if you gain some kind of status, credibility or can leverage the opportunity in a meaningful way. In other words, you are giving something away, but are deriving some other kind of value from it. For example, you might give away your products or offer up your time to a well-known and established company because being associated with them will up your status or provide major exposure for your business. You can further increase the value that you get out of this tactic by asking for something easy and specific in reciprocity for your help. The easier and clearer you make this ask, the more likely they are to go along with it.
For example, if you are giving away products to a company, ask if they can advertise your business on their website, social media pages or even in their newsletters. If you are helping out at an event, ask if you can sell your products there or put up a banner. And to really get the most out of your efforts, you should also advertise the collaboration in your own media too.
This strategy can be helpful in getting your foot in the door, which can lead to building long term paying relationships with companies, but be very careful when you use this tactic. Make sure that the exposure or clout that you will get is really worth your time and offerings. A lot of businesses will reach out to you for freebies with the carrot of exposure as your payment, but don’t really have much exposure to give you. You won’t benefit much from a business with a website that gets 10 hits a month, so do your research before agreeing to give it away.
Introductions and Bonuses
People are resistant to change, so they are more apt to try a new product/service if they are given a free sample. This is another method that can work to your advantage, especially if you are launching a new offering or just opening shop. This serves as an introduction in the hopes that the customer will like your offering and purchase it in the future. For example, grocery stores and cosmetic companies do this by giving away free samples of new products all of the time.
This tactic can also be employed as a bonus of sorts- giving away a product, service or something of value for free when you purchase something else. This works as a great alternative to having a sale, and works even better if what you give away is of little or no cost to you. For example, if you have written a book, you can offer to autograph it for free when someone purchases it. Or if you have a magazine, you could offer a free online subscription when the print version is purchased.
The main thing to keep in mind when using this tactic is that the ultimate goal is to get customers to purchase from you. So, don’t give away too much or the same thing repeatedly, since it’s hard to get customers to purchase what know that they can get for free.
It’s easy to give too much away, so always keep in mind that your real goals should be focused on garnering paying customers. Set specific benchmarks, timelines and milestones with each give-away, so that you don’t ultimately give your business away!
Do you know another guideline for give-aways in business? Please share them below.Tags: business tips, Money Management