Staring into a recession, one would thinking that giving away your product or service for free might be the dumbest idea in the world. The idea that ‘Why $0.00 Is the Future of Business‘ was floated last year by Chis Anderson, author of the Long Tail, in Wired back in February last year. While many business ideas floated last year have probably sunk by now (even Anderson’s Long Tail theory isn’t exactly recession proof), ‘free’ is flourishing.

Walk down any high street and you’ll see discount signs taking up the entire window space in a bid to draw in shoppers. A sign of retailers desperate to shift stock. But rather than looking to free up inventories, the lure of ‘free’ can be used to focus on profitable segments. For example, walk down Dublin’s Georges Street and you’ll pass Brasserie 66, a trendy restaurant which has a large poster in the window advertising a BOGO (Buy One, Get One) free offer. First thought that passes through your mind is they must be desperate to get customers through the door. One person’s customer is good enough, but watch how profitable they become if you get a second person through the door. A glass of wine suddenly turns into a bottle and there’s a better margin associated with that than an extra lamb chop. It’s well known in the cruise industry that they can run similar BOGO offers because the money they make from the additional passenger’s custom in the form of meals, drinks, etc is far more valuable than the ticket price.

‘Free’ isn’t all about driving volume either though. When you’re selling an expensive product, it’s more important than ever to make sure customers feel they have made the right decision in the post purchasing phase. For example, one of my clients Canon offers free training to their customers who buy a digital SLR camera from one of their resellers in Ireland. The programme is highly successful with classes regularly full to the brim and participants regularly comment that they end up taking more pictures than ever afterwards. If you look at any gadget, chances are you will only end up using it to a fraction of its abilities. This simple, yet innovative training offer makes customers feel confident about their camera and they leave the class eager to show off their skills and impress friends with the quality pictures they take. While that might sound like I’m singing off the hymn sheet, I own a camera and have participated on one of the courses and have nothing but praise for the Institute of Photography who run the classes on behalf of Canon.

With the recession in full swing, ‘free’ also offers opportunities for companies eager to tap into the societal trend of entertaining at home. I’ve seen a few spirit brands go down the route of offering a free mineral or some sort of glass with a purchase of a bottle, but why not take a leaf out of Canon’s book. I’m actually surprised I haven’t seen a spirit brand offer cocktail classes. Regular customers could be invited to a bar to learn how to make exotic drinks in the comfort of their own home.

To learn more about why ‘Why $0.00 Is the Future of Business’ have a read and listen to the In Business Interview with Chris Anderson on Radio 4.

Piaras Kelly
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