Legos. They're awesome. They're plastic. They're targeted at all ages. And the first Tuesday of every month, the stores give away a small set for free to kids 6 and over... up to age 14.
Free. The price is right.
But who shows up at these shindigs? Why have these giveaways every month? Do these things achieve any purpose? What the heck does this do for Lego?
And let's throw this loop a little wider, why do PodCasting authors like JC Hutchins, Mur Lafferty, and Scott Sigler give away their work for free? Why do companies give Buy One Get One offers? What benefit does it serve FIOS for them to offer 3 months of a service for 99 bucks to new customers?
All right, I'm an N of 1. But I do listen to other people who have opinions to share as well.
Marketing experts I know tell me that these things are called Loss Leaders. I get it. If I offer you something for free, you may come in, and once I have you, my brilliant marketing will encourage you to spend so much more money than you thought you would.
Other marketing experts that I've read have pointed out that the cost of customer acquisition exceeds the cost of customer retention... generally by factors, not percentages.
As that N of 1, though. I will tell you that I have experienced the use of free for customer retention to be more valuable.
I'm not saying that I want you to comp me a month of service every year or so... although that wouldn't be a bad idea FIOS, just saying... but I would like to know that my continued brand loyalty is worth something to your company beyond one more entry in your sale book. I would like to hear from you if I talk about your brand, even if it's just a little hat tip. Let's face it, not only am I an N of 1, I'm in the lower 90% of content producers on 99% of the brands I enjoy.
From a pharma perspective, this may mean that I can get additional patient education opportunities if I sign up for your information. Or, maybe... just maybe... I get the chance to tell you what I want to learn about, and myabe even help create, produce, and distribute patient education material that's relevant to me and my colleagues. It may also mean that I get to be on a list of people who are notified if there's an increase of reports of certain types of adverse events, or packaging changes, or price increases, new formulary wins in the area that I live. With the reams of data that pharmaceutical companies store, making more of them transparent to their established customer base may have the benefit of showing the depth of an honest and open relationship that pharma keeps saying that it wants to have with patients, providers, and payors.
Imagine this simple scenario. I start taking the drug Remembrall (HT to JK Rowling) for those memory issues I have as I reach my middle age. I sign up for the product information, and get notified that Remembrall has just been granted Tier 1 coverage under OrangePlus/RedArmor of New Jersey. And, hey, I happen to use them. Awesome. I happen to go to the doctor for a checkup, go to get my refill, and discover from my pharmacist, or my mail order, that I need to get an additional note from my doctor. Turns out that the Tier 1 coverage includes a prior authorisation. I log back into the Remembrall portal, post a little comment on the coverage notice, and have helped out my peers, and the company that makes the drug that helps me remember things better by doing a little crowdsourcing and reality checking on all that data they rely on so heavily.
Sounds a bit far-fetched... until you realise that comanies are already doing this on a much more basic level with things such as clean toilets, or where the nearest AED is located.
Free can be a loss leader to get people in the door, no question. Coupons can help. Increased customer services, offers of valuable added services, reduction of friction in interactions... these haven't fallen under the umbrella of "free" before... but maybe they're better.
