Freemium by Earn with Nayak

One of the most powerful techniques available for customer acquisition is giving away a free product or service. You can see the success of this with companies like Amazon , Flipkart , Google, Facebook  etc.

Understand if you are willing to market your product free then the trick to doing Free or Freemium business models right is to ensure that the product/service that you are giving away free is of very high value to the customer, which should result in both high customer satisfaction and a likelihood that they will tell others about your product/service, leading to viral effects .  The usual temptation is to stop short of this, and take out the valuable features that would make the product interesting and valuable.

The entrepreneurs and executives that I work with fall into one of two camps: those that get this, and those that don’t. The smart crowd that do understand this, realize that in a typical business the single biggest expense is sales and marketing, and recognize that offering a free product/service is an extremely smart way to acquire customers at a low cost that can then be monetized in a different way.


The importance of Footprint or Market Share

Another powerful effect of using the free strategy is that it usually results in a far larger customer base using the free products, who become proponents for your company. This expanded footprint or market share can have a huge effect on the price that acquirers or investors are willing to pay for your company, as they recognize that even though these customers have yet to be monetized, they represent a great potential for future monetization. Twitter and Facebook & all new age businesses are two perfect examples of this.

The entrepreneurs and executives that fall into the “wrong” camp, are so focused on trying to extract the maximum money out of every customer, that they fail to realize that this only leads to very slow (and usually expensive) customer acquisition, and consequently a small footprint or market-share.


Using Engineering for Marketing

Conventional thinking places the burden of acquiring customers on the people in marketing and sales. A free strategy requires a different way of thinking that usually has to come from a founder or CEO. In the Free strategy, the company is going to shift the expense of customer acquisition to the product development group.

If it is done right, the costs of the few engineers that develop the free product can be many times lower than the costs that would be expended on traditional marketing mechanisms like trade shows, advertisements, etc.

Think hard about your audience and whether there is an opportunity to build a similar free web service that would draw them in, and provide great value.

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