.st0{fill:#FFFFFF;}

“FREE” is the Ultimate Brand Erosion Strategy…5 Reasons and an Opportunity

 September 19, 2016

By  Blaine Millet

Free leads to Brand Erosion and doesn't differentiateWhen someone offers something for FREE, there are lots of things that happen…most of which end up destroying your brand. But for those that take a different approach, there is tremendous opportunity to capture a much bigger market and solidify your BRAND.

To start, it’s important to understand the difference between building “Brand Awareness” and “Solidifying your Brand” when it comes to establishing a Brand Strategy. Often times I see these two becoming comingled which can end up leading to “Brand Erosion” for a business. Seeing this doesn’t happen is one of the key responsibilities of a leader (CEO or Business Owner)…not the responsibility of marketing or sales or any other silo inside your organization.

Building “Brand Awareness” is about introducing new people (potential customers) to your brand…allowing them to see that you exist in the marketplace. It is an attraction strategy…one filled with education and excitement for a potential customer. It is about sharing with them something within your business that can help them improve their lives (or business) they didn’t know about before. It’s getting the word out to an audience you know you can help. It is NOT about FREE.

To me, FREE is a “lazy marketing” way of building Brand Awareness. It’s easy…offer anything of value for FREE and you will attract people like a magnet. This isn’t rocket science or strategic marketing…it’s just easy and doesn’t take a lot of expertise. Do we really need a marketing department to do this for us?

There are 5 key issues with offering FREE that can ultimately result in BRAND EROSION…

  1. It does not guarantee any further purchases…just because someone checks you out on one of your free offers doesn’t mean they will ever come back and pay for your products in the future. The hope of every marketer is for the customer to see such an incredible product or experience they will want to come back and spend their money…most customers don’t. Unless your experience rocks their world and is something they will want more of, products usually don’t bring them back…they can find similar products at a lower price somewhere else. This is the commodity world of today where customers can find as good or better products at lower prices.
  2. It’s giving away margin/profitability which impacts other areas and products…your product or service wasn’t free for you to create or acquire so anything above free means you are giving away valuable margin and profitability. When you do this, you have to “cover it” by either increasing prices on other products/services or lower the margins on your top products/services. Both of these are bad ideas from the standpoint of both the economics of your business and your Brand. And the customer keeps on expecting this over and over again…continually lowering profitability over time.
  3. It attracts “bottom feeders” to your business, not your desired customers…the majority of time Free does not attract your desired “Customer Personas”…the ones you really want to get more of…it attracts those simply looking for cheap/FREE deals. This can become a HUGE PROBLEM for your Brand when you consider the ramifications. If you attract the “wrong customer personas” by offering free stuff, then your “desired customer personas” will start to assume they aren’t the type of customers your business is trying to serve since you are catering (targeting) to these other personas. This has a “double negative” implication because you end up with more of the wrong personas while losing more of the desired personas. This ultimately can CHANGE YOUR BRAND from what you want to something you don’t want very quickly. Many businesses end up in this situation and never have a clue how they got there. This is one of the prime reasons businesses end up having a lot of the wrong personas as the majority of their customer base.
  4. It tells your customers who paid for something else they were ripped off…if you were a customer of a business that was offering FREE offers to others (not you) it would make you feel like you were either not important or being taken advantage of by the company. It sends a loud and clear message to your existing customers that they are funding the free customers because they are the ones paying. This never ends well. The best customers wonder why this is the case and get more and more upset when they see others getting free offers and they keep paying premium pricing. Banks are experts at this “bait and switch” strategy of luring you in with free and then charging you a fortune in fees while they continue to offer FREE to the “new customers only” instead of the ones they have already acquired. This is a great strategy if you want to turn your business into a commodity and competing on price…but very damaging to your brand strategy.
  5. It lowers your brand value in the mind of potential (desirable) customers…similar to number 4 above, offering FREE sends a very clear message to your potential “desirable” customers that this may not be the right business for them to buy from because you cater to a different audience with your free offers. It has ramifications in your products, services, and customer experiences. Here’s a simple example…you sell purses that cost $500 and you offer smaller purses for free to new customers…with the intent to attract more customers. When your potential (desirable) customers see this, they immediately feel the value of the brand has been lowered and that your purse really isn’t worth the $500 they would have paid for it so they move to another brand with higher brand value. You end up attracting more of the lower end customers and never attracting the higher end desirable customers.

There are other impacts of FREE…these are ones I feel are the most detrimental to a BRAND and to your BUSINESS.

But here’s the OPPORTUNITY for those who understand this and decide NOT TO PLAY in the business game of FREE. To start, simply do EXACTLY THE OPPOSITE of the 5 issues I listed above…go in a different direction and DON’T OFFER FREE. Tell marketing they are being lazy. Ask them to be creative and innovative in “telling your story” and targeted to your “desired personas”. Let your potential and existing customers know without a doubt how you can help make their lives/businesses better by using your products and services.

Your leadership team should agree to offer only top products and services for your desired personas AND make a commitment to create a CUSTOMER EXPERIENCE that is incredibly amazing and will unquestionably demonstrate you are OBSESSED OVER YOUR DESIRED CUSTOMERS. If leadership commits to making this happen, you will not only keep the desired customer personas you have but start to attract others who are just like them…desirable new customers.

This strategy will help you to start weeding out the non-desirable customers you have picked up along the way since they will start seeing what you offer (products, services, and customer experience) really isn’t for them and they should move on to another business…hopefully your competitors. Let your competitors deal with these less desirable customer personas while you attract more of the right customer personas.

When leadership (CEO or Business Owner) creates this BRAND STRATEGY and directs marketing (and other groups) to find creative and innovative ways to deliver and communicate this message, you can be back in control of the brand you desire instead of one that is dictated by your non-desirable audience. This allows you to change the game, set yourself apart, and be differentiated in your customer’s eyes. This is a BRAND STRATEGY that STOPS BRAND EROSION and allows you to BUILD THE BRAND YOU WANT.

Blaine Millet

Follow me here

About the Author

Blaine is an author, speaker, and President of WOM10. He is a thought leader in the area of Customer Obsession and generating massive Word-of-Mouth for organizations. He has a laser focus on helping companies become "REMARK"able where their customers do their marketing for them.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Subscribe to our newsletter now!