Entrepreneur tips

Offering a Free Service to Increase Customer Loyalty

Offering something for free can also improve (or keep) existing customer loyalty. Suppose you have developed a new functionality for your software or an entirely new product, which you intend to sell to new customers. It may be a good idea to offer this new thing for free to current customers, and in this way provide a ‘thank you’ for their continued support. In return, you can expect users to be loyal to you and your product. One example of this is ‘grandfathering’. In this strategy, current customers can keep paying the current price for an improved product, and new customers pay the new price. In a sense, current customers simply get more functionalities for free. Grandfathering is often done in Software as a Service (SaaS). The reason is that with SaaS, you continuously get new customers while you still want to keep your old customers happy.

Acquiring Customer Data (or: The Consumer as the Product)

If you’re not paying for the product, you are the product

This famous quote encompasses quite well the reason why we (as users) often get products for free without feeling any pressure to pay in the long run. Consider for instance our email inboxes (Gmail) or social media (Facebook). The reason why companies offer such products for free is to ‘make the consumer the product’. This can work in different ways, but usually this means that the customer’s data is somehow monetized. A classic example is Facebook. On Facebook, users share a lot of information about themselves. Facebook uses this information to allow third-party advertisers to run laser-focused ads. Ads on the Million Dollar Homepage Although Facebook does not have a great track record concerning privacy, seeing the consumer as the product is not inherently bad. Even in such cases, you do actually provide value to users. Personally, despite its faults, I’m happy that Facebook exists. (note that I could care less about the million-dollar homepage, but that still made a million dollars!) And if privacy is an issue, anonymization may be the solution. In some cases, a business can anonymize user data without losing its value to third-parties.

Getting More Customer Feedback

Another reason to go free is simply to get more customer feedback. Although the startup mantra is to ‘monetize early’, sometimes monetization is not an option. Particularly if you have an unfinished product or MVP (minimum-viable product), you may want to offer it for free to get more customer feedback. In this situation, it is important that you make it as easy as possible for customers to offer that feedback. And ideally, there is a way for the product managers to directly contact the users and ask follow-up questions.

Engaging in Side-Project Marketing

A third reason to go the free route is comes down to so-called ‘side-project marketing’. The central idea of side-project marketing is that you offer product A for free, in order to get paying users for product B. One great example of side-project marketing is Unplash. Originally, Unsplash was a website for free stock photos created by the founders of graphic design marketplace Crew. The founders of Crew simply wanted more ways to attract attention to their product, and in order to do that, they built an entirely new product. The starting premise of Unsplash was simple: offer 10 new license-free stock photos every 10 days. I like to use this example, because Unsplash has been very successful. After gaining some early traction, Unsplash grew incredibly fast, and Crew was acquired by Dribbble. Interestingly though, that means that it isn’t a great example for side-project marketing. Why? Because rather than fulfilling its purpose of marketing the founders’ main product Crew, it became a stand-alone product. Perhaps a better example then, and on a much smaller scale, is what we do at Enter Network with our weekly Entrepreneur Sessions. Every week, we bring a variety of entrepreneurs together in a short check-in. We discuss what everyone is working on, and talk about potential problems or challenges people are facing. While it is great to bring entrepreneurs together in this way, it also proves to be a great marketing channel for our other products. We’ve gained several paying customers for our monthly support group and meetups by offering this service for free.

Trial Users — Offering Your Product For Free Temporarily

Freemium can also mean temporarily free. Many software products provide a free version of their product for a specific amount of time. After this time runs out, you have to pay. Netflix is a good example, which used to offer a month-long free trial. It’s like giving out a sample of your product. Users can ‘taste’ it, and then decide to buy or stop using the service altogether. Compared to freemium, putting a time restriction on free use has several benefits. First, you don’t have to maintain two separate versions of the product. You simply do your best to offer the best product as possible; you do not need a toned-down version of the main product — or one in which ads are served. Second, because you only have one product, trial users know exactly what to expect. They will not be as demanding as freemium users. Freemium users may feel entitled to certain new functionalities or support when something goes wrong. This is the reason that companies like MailChimp have a strict ‘no support’ policy for users who do not pay for their service. In contrast, trial users will get all functionalities of a product, and know that they get this for a limited time. In that sense, they know what to expect and feel less entitled. As such, they require less service and support than freemium users.

Not Using Real-Life Examples

As an expert in your field, you may assume that the audience can consume the theoretical work you present. However, the concept could be too hard for your audience to follow. Regardless of the technicalities of the subject, you can always boost the impact of the speech with stories. You can go through case studies and research reports to find real-life experiences for your talk. You can split the supporting material into personal anecdotes, statistics, and stories.

Develop a Winner’s Mentality and Attitude

As it’s rightly said, whether you think you can or you can’t, you’re right. This is the nature of the human mind. Develop a positive attitude when going into everything. A positive attitude will help you set the atmosphere for everything you do. You will be more active in situations and not reactive. A positive outlook will help you set and influence the tone of your interactions throughout the day. What other people say about you is irrelevant. What you say to yourself about who you are and what you can do is the most important thing. A great way to change your mindset is to repeat positive and uplifting affirmations to yourself every morning. Become conscious of your thoughts and capture any negative thoughts before your mind acts on them.