Why giving away things for free can be good for your brand

Are you still under the impression that your product is unique and special enough to generate sales without letting anyone have a sample? That tactic may have worked when the concept of SaaS was brand new, but it’s simply not sufficient in today’s market.

In an era of product abundance, a strong social media following and loyal promoters with digital influence aren’t always enough. Your company needs to develop a sustainable system of giving things away for free in order to boost your customers and up-sell rates.

Don’t Give Away the Farm

Every brand has a different threshold of how much they can afford to give away for free. Musician Lady Gaga teamed up with Zynga apps to give away some of the songs from an upcoming album, but didn’t give away the entire collection. 7-11, Dunkin’ Donuts and other food chains have giveaways of certain products to boost their exposure to people who aren’t typically customers.

In order to ensure that your free trials and sample peeks of upgraded service are sustainable for your organization, it needs to be calculated as part of your cost of customer acquisition (CAC), and remain lower than your average customer lifetime value (LTV) to ensure your company stays afloat. Here are several reasons why giving things away will boost your brand’s reach:

1. Reward Your Loyal Customers

Every company has a small segment of customers who are unusually loyal. Rewarding your most-engaged and satisfied customers with a trial upgrade might not only result in an upsell, but it could also decrease the chances they’ll churn and generate more word-of-mouth recommendations.

Rewarding the most-engaged and loyal segment of your customer base is nothing new, and marketing blogger Mike Essex highlights the fact that supermarkets have been using this tactic with club cards for at least a decade.

2. Reduce Unhappy Customers

Your current customers who have a particularly low satisfaction or engagement rate with your product are another excellent segment to target with free offers. Providing an extension of their service, discount or sneak peek at a new feature could potentially turn their opinion of your brand around, and move them from being a detractor to a promoter.

British clothing retailer ASDA offers a 100-day return policy on purchases for this reason, because the fiscal loss associated with a return that can’t be resold is less than receiving negative comments on social media.

3. Leverage Social Voices

If you can’t afford to give away something to everyone, targeting the portion of your market who are highly engaged on social media platforms could yield the highest returns. JetBlue recently gave away 1000 free flights via Twitter, effectively targeting social engagement within their market who were the most active users of the platform.

Marketing blogger David Sorkin recommends targeting your free promotion as much as possible to ensure you’re not filling a demand that you can’t afford.

4. Encourage User-Generated Content

Musicians are often pretty clued into the fact that fan-created videos, images and art can boost their visibility. Encourage your users to submit reviews, or trade free subscriptions for feedback from your trial users. Holding a contest through social media to giveaway a product can expand visibility without the cost of giveaways to everyone interested.

Not every brand who has attempted to giveaway product has succeeded in their mission. Notably, McDonald’s sponsored a food giveaway during the 1984 Olympics that resulted in losing far more product that their analysts predicted.

Ensure your CAC is reasonable, and determine how you can reach the most fans at the best possible cost.

What is the freemium strategy of your SaaS business? Please share it with us using the comment box below.