Insight #14: "FREE" - This Four-Letter Word Can Make You A Lot Of Money...

This Four-Letter Word Can Make You A Lot Of Money...
No Matter What Business You’re In

We’re going to discuss a marketing technique: How to use the word FREE to generate increased sales and profits. We always hesitate to talk about specific techniques because there are always people in the marketplace who try to use the techniques without first gaining the understanding of why it works in the first place. So please read this article with an open mind and remember that we’re trying to paint with broad strokes so you can understand the general concept. Then, you can draw specific conclusions, which can be applied to your business later.

In case you didn’t know, FREE just happens to be the most powerful word in marketing and advertising. No other word draws as much attention. No other word can generate as much action. On the other hand, no word is as overused and under-utilized as the word FREE. Often customers become jaded when they find out that the wonderful FREE (whatever) is really worthless, nonexistent, based on unrealistic conditions, cheesy, stupid or just plain NOT FREE after all.

Let’s find ways to use FREE to make favorable impressions with your prospects and customers...and to make them want to do more FULL PRICE business with you. After all, any idiot can give stuff away for FREE or at a discounted price. It takes a skilled marketer, however, to properly use FREE and still make a full profit.

To prove that FREE isn’t just for a cheap, lowbrow, retail-oriented business, let’s start with an example straight from a very upscale metropolitan magazine that’s distributed only to the richest of all citizens. It contains a bio of the most prestigious companies in its marketplace. It’s sort of like a Yellow Pages for rich people. Two past clients in that publication, a high-end carpet & rug showroom and a cardiology group, both use the power of FREE to make more money. Here’s how.

The cardiology group makes money by performing procedures on patients referred from other less specialized physicians. The key then is to have as many physicians as possible referring patients to their group. In our research, we discovered that the office manager of the referring physicians often makes the decision on where to send their patients for cardiology. How do we influence the office manager to choose our client over all the competitors? And how does FREE fit into all of this?

First of all, there was a video that does a nice job of explaining the advantages of the cardiology practice. We could have sent a FREE video out to all the office managers of all the doctor’s offices. But, that idea had one problem. Almost none of the office managers had a VCR at the office. And, they surely weren’t going to take a work-related video home to waste their valuable personal time.

So, we took the FREE offer to a much higher level...a level that inspires action. We went to Blockbuster Video and Boston Market and bought gift certificates from both places. Then we sent the video and gift certificates to each of the office managers with a simple, short letter:

I know that you get solicitations all the time from all types of doctors, pharmaceutical companies, and medical supply vendors. I too am trying to gain your interest in doing business with our company.

But, instead of wasting your time with the usual office visit and literature, I’ve arranged for you to spend a relaxing evening at your home. Please accept these coupons for two FREE movies and $15 worth of food. When you get a chance to use these coupons, all I ask is that you do me one small favor. Either between movies or after the kids have gone to sleep, please pop this short 9 minute video in and see what we’re all about. Thanks for your time.

Guess how many watched the video? Just about 100%. What kind of impact does it have on the prospect? Highly favorable. This approach makes follow-up easier, too. Instead of the usual follow-up call, “We sent you a video, did you watch it yet?” The conversation started like this: “Have you had a chance to use those FREE coupons yet?” Whether they have or haven’t, the reaction is always positive and favorable. This approach directly led to much more business.

Let’s look at the upscale carpet and rug showroom. Since they rely on interior designers for a large percentage of their business, they wanted to find a way to make themselves “A Better Deal” for designers. They also wanted to find a way to compete for retail customers with the do-it-yourself carpet places like Home Depot. The FREE strategies for both situations (designers & retail buyers) are good examples of how to maximize FREE-ness without losing profitability.

For the retail buyers, we developed a program that provides FREE carpet cleaning for a year with the purchase of carpet or rugs. Wait a second! How can you give away FREE carpet cleaning and not go broke, you might ask. Simple. We made an arrangement with a carpet cleaning company that already spends a ton of money on advertising in Val-Pak, the yellow pages, and other expensive media. Their advertising cost to acquire a new customer, we found, was actually pretty high.

So we made a deal with them to give us a discount equal to (actually greater than) the amount they spent on advertising. This was roughly half of the regular price. When the customer buys carpeting, we give them vouchers good for two FREE carpet cleanings (a year’s worth) that are dated and signed. When they actually redeem the coupons, the carpet cleaning company then bills our client half the face value.

Since their average standard job runs about $70 (special treatments are extra and not included), the out-of-pocket cost is about $70 (2 x $35). But it’s actually less since not all of the customers take them up on the two cleanings. Now, look at the math. If a customer buys 200 yards of carpet for $18/yard, that’s a $3,600 job. There’s plenty of room in there to cover the measly $70 cost of the program. And just by offering!

If the price for XYZ brand carpet is exactly the same at two different providers, but one store says they’ll clean it for you for a year for FREE, where are you going to buy?

Let’s look at the Designers scenario. In addition to offering designers FREE carpet cleaning, which can be passed on to their end users, our client also created the “Designer Club.” Membership in this club entitles the designer to a myriad of FREE benefits, including FREE office space (including FREE use of copiers, phones, computer, fax machines, etc.), FREE use of the conference room and showroom, FREE drinks, coffee, and snacks at any time, FREE credit union and insurance plan enrollment, MASSIVE DISCOUNTS on travel, couriers, dining, rental cars, health club memberships, and about 17 other things. The designers are also enrolled in an incentive program that allows them to earn points for purchases they can cash in for expensive prizes.

What does it cost a designer to join this “Designer Club?” About $200 a year. But, if they hurry, they can get one of 100 Charter Memberships for FREE...if they meet certain requirements. This program cost very little to implement, but brought massive rewards to our client. There was no other showroom in their marketplace that was offering even one of these FREE benefits.

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