MBA1387 The Dangers of Free + Free Ride Friday

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Hey, before we begin today's episode, two quick announcements. There's only a few days left to enroll in the automated Webinar challenge that we just launched. It closes at the end of the day on November 3rd. If you want to get more leads and more sales on Autopilot, then join our 30 day challenge. To learn more, just go to webinar ninja.com awc Also today's free Ride Friday so make sure you hang on to the end of the episode to hear who won this week's Free Ride. Every Friday we give away a lifetime membership to one of our programs. You can easily win. Just leave us an ITUNES rating and review to enter our weekly random draw and listen in on Friday to see if you won. That simple. Alright, let's jump into today's episode. Hey O. Welcome to the $100 MBA show, the business podcast that gets straight into the good stuff every day with our daily 10 minute business lessons for the real world. I'm your host coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's episode you will learn the dangers of free. Whenever you offer something for free and you label as free, whether it's a free account, a free service, a free book, whatever it Is there is a cost to free that is not talked about enough. I'm not talking about the cost of producing this item. I'm talking about the cost of gaining a customer on the basis of free. This is a delicate balance between content marketing and offering products and services for free. I'm going to give examples of exactly what I'm talking about and how you can make sure you strike the right balance with your business. So let's get into it. Let's get down to business. Recently, a meetup.com made an announcement. Meetup is a website where you can schedule or create any kind of local meetup. You can offer to charge for tickets, or you can make it absolutely free. Now, in recent years, Meetup has been bought by WeWork, and they decided, hey, we want to start charging for people organizing these meetups. It's not charging exactly, but they can't offer free meetups anymore. They have to charge at least $2, $2 a ticket to, you know, attend the meetup. If they don't want to charge $2, then they're gonna have to absorb that cost. The meeting organizer. And there's been an uproar on Twitter, on social, on the Internet, because people have been using Meetup for years, nearly a decade, and it's been absolutely free. They've been getting all the benefits, all the great features of Meetup for free, not a dime. And now that they're charging or asking you to charge $2 a ticket, they're getting a lot of negative backlash. This is just one example of how dangerous free can be for your business. Once you offer something for free to a customer, to an audience, this becomes the standard. This is what they expect. They expect XYZ for free. And once the expectation's not met anymore, people get upset. This is just like going to your local favorite restaurant and they charge you for tap water. You're used to getting it just for free. It's the free option of a beverage, right? If they start charging, you know, $5 for tap water, you'd be like, outrage. What are you doing? This is water from the sink. I've never paid for tap water. What is this? Even though, from a business point of.

View, you know, whether it's meetup or.

Their local restaurant, they're paying for that water. There's a water bill they have to pay, right? Meetup is paying to supply the service, online service space and employees and infrastructure costs and support costs. Even though it makes total sense, your customers will still be upset. And you can't explain why you're not making it free anymore because they're so blinded by the disappointment. So if you ever have something that's for free in your business, you have to think very wisely before you offer it, whether it's a free plan for your software. Free trials are totally different. It's temporary, it's a short period of time. But like a free plan, a free service, anything that you're offering for free that you're thinking about offering for free for an unlimited time, not time bound, you're asking for trouble because at some point you're gonna have to try to absorb that cost somehow. Now, a lot of people see this as a customer acquisition model. Like you're paying for the, you know, the cost of supplying this for free to get potential customers. Now, my advice to you is so you don't get in trouble and have to reverse that free plan or that free, whatever is run the numbers, it's gonna cost you minimally the same or less. Of acquire customer via a Facebook ad. For example, if you can get a lead for $3 on a Facebook ad to a, you know, free piece of content, for example, like a course or an ebook versus your product or a version of your product for free, then it makes sense. And of course, if it's free, then you need to make sure it's limited to the point where they upgrade. That's a whole different episode. But the point here is, is that if people get too comfortable with your free product, they get accustomed to it. There's no urgency to change or upgrade or add or buy more products. You're asking for trouble. The other cost of free that a lot of people don't talk about is that you're getting a free quote, unquote customer. A customer that is not paying. This type of customer doesn't have the same buying power value. Everybody's good on a personal level, and we all value people. But when it comes to the economics of business, they don't have the same value as somebody who's willing to pay $100 or $1,000 or $50,000. If you have a product, an app, a membership of some sort, somebody who's willing to pay $100 is a lot more valuable than somebody who is willing to just give their email address. They're not willing to pay. If you want somebody to do something to implement what you actually offer and use your product, they get out of skin in the game. They have to pay for it. I've actually learned this the hard way throughout the years whenever I ran promotions or products is that when it's free, implementation levels go down. The percentage of people that actually implement what you teach or offer or use the product that you're giving them really drops because there's no stakes, there's no reason to do it. But if there's somebody's paying regularly or paid for a product, they have, you know, buyers bias, which is basically, they need to confirm that they made the right choice by doing something with the purchase. Let's say, for example, you bought a pair of shoes that you couldn't refund. They fit nice and they're comfortable, but you're not super in love with the way they look. They're okay, but they're not. Wow. You best believe if you can't return that shoe and you can't get rid of it, you're going to wear it. You're going to just try to wear it because, hey, I paid for it. I might as well get some use out of it. And the same thing goes with your product and your customers. Now, obviously, you're going to have a great product that they're going to love. But the point here is, is that when you pay for something, you feel compelled to use it. So when it's free, the engagement and the involvement is just not there. It's not the same. Subconsciously, they are devaluing the actual offer. The product if it's free, there's no urgency, and they don't really feel like it has value because they didn't actually give up anything. So these are things you need to consider before you offer something for free. Now, what about content marketing? What about offer I mentioned, you know, running an ad and having a course or an ebook. What about content marketing? Blog posts, videos, YouTube channels, this podcast. Right. How does that fit in? This stuff is free. Yep, it's totally free. And it's content that people can use, but its main purpose is to lead them to my product and my services, to my website. It's a chance for me to build a relationship with them, to grab their email address and be able to give them more value. Content marketing is supposed to be valuable, but you don't need somebody to implement anything from your content in order for you to actually have a solid customer. Let me give you an example. If somebody listens to this podcast and they don't actually do any of the things that I recommend, it's okay. They'll listen to another podcast. I don't require that of them. But if somebody's going to sign up for a webinar, ninja, my Software, I need them to use the software or they're not going to get the benefit from it. They, they're not going to be able to share with other people. This is where my bread is buttered, my product, my service, this is where I make my money, right? So I need to make sure that they're actually implementing, they're using it, they're valuing it. And this is why we have a free trial where we give you free access for 14 days with any plan. But it's time bound, it's 14 days. So they got to do something with it in 14 days, get a result. We support them throughout the way. We have a whole campaign to help them for their first 14 days to get going. Then after that you gotta put some skin in the game. Whether it's monthly or annual. The point here is, is that there's value in the product, there's a value in implementation. So I really need to make sure that exists with my product now. Everything that leads to the product, the content, it's a way for me to build a relationship, whether it's brand awareness, whether it's actual building relationship. As you hear me every day and you trust and like me and say, hey, I want to give his products a shot. But once you sign up, I need you to feel the value to value what you just purchased or tried. Now obviously this is especially important if you're self funded, if you're bootstrapping your business, if you have tons of funding like Meetup had, or wework for that matter, you got, you know, dollar bills to blow, right? It's okay. But for most of us, that's not our situation. We need to be pennywise and we need to make sure that when somebody becomes a user, a customer of some sort that, that they value their purchase and they give it value by paying for it at some point, whether it's after a trial or immediately when they try it, even if it's an entry level product, I even believe that, hey, charging $99 as a small product and then, you know, upselling them later on, giving them other higher offers is a better model. People that pay are committed and will be more likely to do something with what you offer.

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To wrap up today's lesson. Understand that whenever you do something, you make a decision whether you charge $50 $100 $1000 free. Everything has a pro and con. You can't just say, hey, everything I decide to do is all pros. No know what you're getting into. Understand the costs of your decisions so you understand if the cost is worth the return. Thank you so much for listening to the $100 NBA show. Today's episode's not over though, because it's Free Ride Friday. Make sure if you have not yet, leave us a rating and a review. That's how you can win a free ride with one of our programs. We announce it every Friday, just like right now with a weekly random draw. It's that simple. So go ahead and do that right now. Let's see who won this week's free ride. We're giving away easy course, our 30 day course on how to build your own online course. And the winner is. Ricardo Salinas. Ricardo says priceless 5 stars the name of the podcast is $100, but the truth is it's priceless. It doesn't matter if you're a beginner or an experienced entrepreneur. Each episode you will learn tips and strategies that you can practice in real life. Wonderful job Omar. You are a master. Thank you Ricardo. I really appreciate that you are a free iFriday winner. Your mission is to email me at omar100mba.net so I can hook you up with that lifetime access to Easy Course, a $500 value over at EasyCourse co. If you want to win, just leave us a rating and review. Before I go, I want to leave you with this. The thing about free even with content, it has a shelf life. It can perform well for a certain amount of time months, years. But at some point the value of it really declines and you're going to have to replace it with something else. So understand that too is a cost, the production cost. It's not a once and done. Things age and they need to be updated or changed or scrapped all together. Thank you so much for listening. Have a wonderful weekend. I will see you on Monday. Take care.

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