‘FREE!’ Is Indeed a Magic Word
A number of companies with less than 50 customers took advantage of the freebie. Those with more than 50 customers took a pass on the offer.
The offer bombed and the company nearly went into bankruptcy, saved by whisker when it changed its business model to paid.
Chargify made a huge error in not structuring precise tests.
The Danger of Giving Away the Thing You Are Trying to Sell
Every now and again you'll see a company offering a sweepstakes or a drawing with the prize(s) the very thing that they are selling.
The psychology of the prospect who fills out an entry ticket: "Why buy it when I can win it?"
Sweepstakes and drawings are good attention-getters, but never, oh never, give away what you are selling!
The exception: car dealerships offering a free car. To enter, the prospect has to go onto the lot and into the showroom, and maybe take a test drive. At that point, the romance with the car has started and the dealer has a likely buyer.
Takeaways to Consider
- "Free is a magic word." —Dick Benson
- I have a problem with the word FREE. I find it so powerful that I cannot bring myself to type it in lower case.
- Never give away as a prize the thing you are selling. (Exception: car dealerships.)
- Dick Benson on Premiums
— "A premium is a bribe to say yes now."
— "Promptness is often the best reason for giving the premium."
— "Dollar for dollar, premiums are better incentives than cash discounts."
— "Desirability is the key element of a premium; the relationship of the premium to the product isn't important."
— "Two premiums are frequently better than one."
- "Look for a premium with a high perceived value." —Dan Capell
- "Logical premiums pull better than illogical premiums." —Don Jackson
- "There are two rules in direct marketing—and two rules only. Rule No. 1: Test everything. Rule No. 2: See Rule No. 1." —Malcolm Decker
- Corollary to Decker's rules above: "Don't test whispers." —Ed Mayer
- What Mayer meant is that testing is expensive (although on the Internet it's relatively cheap). For example, don't test $29.95 vs. $29.99. Go for breakthroughs.
- "The Holy Grail of direct marketing is the single variable test." —Don Nicholas