FREE! FREE! FREE! How attracting the word is!
Let’s crack the corporate whip on this word, which says “there are no free lunches in this world”.
True to its nature let’s talk about how the concept of FREE affects your business and how you can leverage in these market conditions!
For any business, customers who pay nothing or very less, are subsidized by another set of customers which are essential to a vast array of the business. The trend is common across various business platforms including shopping, real estate, IT service providers, print and online media and employment services. Some of the most talked about businesses in the current market.
According to one estimate, this business model accounts for a majority of the revenues of 60 of the world’s 100 largest companies. With the prevalence of FREE services on the internet , the prevalence of so-called two-sided markets is likely to grow. (Source: Harvard Business Review)
The rationale for this approach, of course, is that by charging one set of customers little or nothing, the business will attract the critical mass of them required to draw in large number of another set of customers, and the income generated by the latter will handsomely exceed the cost of acquiring and serving the former.
The real challenge is in figuring out the true value of each FREE customer.
Most of the managers focus on serving the high value customers. Knowing the life time value of FREE customers is crucial to determining the following:
1. The growth path for your brand/offering
2. The flexibility in the vision of the organization
Well, if you answer these questions right, you may just brush shoulders with luck.
In these extremely volatile market conditions, so to speak of the local market, the buying power of the middle class is taking a hit, hence even the most intelligently placed retail chains are looking at revamping business strategies and predicting a slowdown in revenues.
If we look at the FREE business concept, well its simple. We all agree how ever we advance in our communication, word of mouth is probably one of the best way to market and make a sale. And the sale occurs in a lesser time consuming lesser of your sales energies. So if you have a sound volume of FREE customers who probably may not help you achieve numbers and revenue targets, they may always be the landing strip for someone else’s plane (your high flying jet customer) to land.
Though a point to argue may always be valid that more often than not, a person always feels comfortable moving within his community. Thus the financial grounding of the consumer may always be questioned. Thus its not always true that your FREE customer would always get you the one you were looking for.
Times are a changing, in this world of Social Media, you just connect and not due to the financial status but due to a plethora of many other reasons.
Hence the word of mouth in the offline world happens online! Thus its kind of viral marketing which works for your brand. A research shows how blogs affect to a great extent the buying behavior of informed consumers.
Its all about knowing the lifetime value of your FREE customer
If you do this step right, probably you would be saved from the above discussed doubt as well.
Somewhere I read if you don’t move, you grow roots, thus I feel for businesses its time to move, to take action, and innovate in their day to day operations. Things could be done differently, a back to basics strategy may be a good option, so you don’t go back to the drawing board, but you definitely can fine tune the engine if you know that its getting cold outside and the engine needs a clean!
