We’ve been hearing the word “Commodities” more and more ever since the Internet Revolution went into full swing and replaced the Industrial Revolution. Simple reason… today it’s really easy to find the same product or service at a lower price somewhere on the World Wide Web.
As more companies offer the same (or similar) products/services and are willing to continually lower their prices to attract customers, it becomes more “commoditized” and price becomes the differentiator, not your company. When the price declines it triggers an emotion in the customer that there is probably a lower price out there somewhere if you just keep looking…until it hits FREE.
The lower the price, the less someone is looking for or expecting an awesome experience. So when the price goes as low as it can…FREE…it trumps the experience. Businesses lose their differentiation with FREE because FREE is everywhere and that becomes the reason for buying. The experience becomes secondary if at all.
Translation: If you are a company trying to differentiate with an experience, FREE is not a way to get there. It drives the audience away from the experience and into commoditization…where you get to be with all the other competitors…differentiation is lost. And as soon as you try to add your experience back into the equation, the audience goes back to those offering FREE.
Free is a dangerous place to live if you are trying to differentiate based your experience.
Think about all the “commodity” companies that have surfaced…Groupon, Living Social, Amazon Prime, and the other 100 in the space today. You don’t shop them because they offer the best experience…you shop them because they offer the best deal on a particular commodity.
If you want to be an “experiential company” and offer an incredible experience as one of your key differentiators, FREE is not a good place to live. It will confuse your audience because they will have thought of you as someone who offers a great experience for a certain price. FREE means you don’t believe in your experience enough so you have decided to participate with the other commodities. FREE also just gives away your profits…for nothing other than competing with the other companies who have decided they want to be a commodity.
DON’T DO IT!!
Make a decision and stay the course…either you want to compete as a commodity at the lowest price or differentiate yourself as an experiential company by offering an incredible experience…you can’t play in both sandboxes or your customers will be confused. And as we all now, confusion causes customers to leave…they hate confusion. FREE simply tells them which sandbox you have chosen.
