Everyone loves free stuff. But once you’ve given your product away for free, you’ve just valued it at zero. People clamor to get free stuff like it is the most valuable thing ever, but once they’ve gotten it for free, they will almost never pay for it, because what they really value is the feeling of having ‘won’ something or gotten ‘something for nothing.’ The ‘freemium’ model of giving away your product today in the hopes to earn dollars from them tomorrow has created a lot of problems that aren’t easily solved. So how do you get the right people to try your product so you can convert them to long term, loyal and PROFITABLE customers?
Building value in your venture at any stage means some form of:
- Getting new customers
- Getting more value from your existing customers
- Converting them all to be a profitable LOYAL customer
Using the 5 bar chart is key: Market, Aware, Like, Try, Loyal
- Fill the hopper with those who ‘like’ your core product
- Ensure only those who ‘like’ move on to try your product
- Make sure there is a quid pro quo to those that try so customers understand the inherent value in the product
- Compel those who have tried your product to become a loyal customer
Building value lies in creating loyal, long term & PROFITABLE customers, the ‘freemium’ model has some pitfalls:
- Beware of ‘free trials.’ If you give your product away, you’ve just valued it at zero.
- Beware the customers you gain from free trials
- You may piss off the right customers by taking away what you first gave for free through ‘freemium.’
- You get the worst kind of customers, the mooch who only wants something for nothing. These customers are costly and high maintenance. They complain and will drag down your brand. Theirs isn’t the feedback you should listen to, but their voice will be the loudest. They may lead you astray while you spend too many resources dealing with them in while your actual core business and product suffer.
Bringing in customers in so they will ‘stay and pay,’ and when they pay, they should feel like it is a great value so much so that it FEELS like a bargain at twice the price.
Freemium has become a misunderstood and misused business model.
- Even in the most successful examples of ‘freemium’ such as Drop Box and LinkedIn will admit they leave money on the table finding the balance of what they give away and what they get folks to pay for
Finding the balance in a ‘freemium’ model is key. So how do you give away something without valuing it at zero? How do you illicit that exhilaration that they’ve won something without giving away the farm?
- Know what is truly valuable about your core product or offering. NOT what YOU think it is but what your CUSTOMER tells you it is…remember, your perception doesn’t matter…your CUSTOMER’s does.
- Find the customer that knows in this world you generally get what you pay for.
- Make sure your customers try your product by feeling like they are getting a great VALUE rather than getting something for nothing because when you give something away for free…you’ve just valued it at zero.
Forget ‘freemium’ and aim for ‘stay and pay.’