The usual thing in business is to make money by selling a product or service. However there is an alternative in just giving it away! Is it possible to make money by giving your product/service away? Well, obviously at some point you have to sell something for money in order to make money, but giving something away is definitely one way to facilitate selling something for money.

Two common models in which a a product/service is given away in order to make money later are:

• Give something away to sell something later
• Give something away to gain/enhance reputation

Give Something Away to Sell Something Later

This involves giving away a product/service – for instance, a limited service or a product with limited functionality – in order to sell a product upgrade, or in order to sell the continuation of the service.  Here are a couple of examples:

• Solicitors, accountants, financial advisers, etc., often see a client for free in the first instance. Typically this will range from half an hour’s to an hour’s consultation, with no fee and no obligation. The money making idea here, is that the client will require significantly more time that can be charged. The initial free consultation draws in the client because, to the client, there is nothing to loose by having the initial free meeting. At the same time, this gives the consultant a chance to convince the client that it is they – i.e. this consultant, as opposed to a the competition – who can best serve the client’s needs
• Software products often have a free version given away with the idea of selling an upgrade. Actually, it’s not just software products, but they make good examples because it’s so common with software. There are two common variations: one is to give away a basic version with unlimited use (time wise), and the other is to give away a fully functioning version with a limit on the time for which it can be used. A good example of the first variation is found in products such as virus and spy-ware checkers, and personal firewall products. Several of these are given away in a version with limited functionality. Another variation is to give away the product but with a license allowing only limited use – for example, allowing personal use but prohibiting any form of business/commercial use. Naturally, the limited license and limited functionality ideas can – and often are – combined. A good example of the second variation – i.e. the trial version that stops working after a limited time – is the trial version of Microsoft Office found pre-installed on many laptops

Give Something Away To Gain/Enhance Reputation

This is a less concrete give-away model that involves giving away time and information in order to promote a product/service by enhancing reputation/credibility. This is a much less tangible model than that (above) of giving something away with the idea of selling later; that is to say, it is very hard to measure how the expenditure of resource (predominantly time) involved in the giving away translates into actual revenue. Here are some examples:

• Experts are often found giving away their knowledge on forums on the web. This can build confidence in their expertise – that is, the expertise of the individuals, the companies they work for, or both – among the community in which they sell (or wish to sell) their services. I remember a few years ago, coming across the case of a mechanic who specialised in high performance cars, who freely gave away his help and advice on the enthusiasts web forums. His reputation was such that high performance car owners would travel hundreds of miles to get their cars serviced by him. Also, when someone I know found it necessary to look into a legal matter and familiarise himself with the relevant law in a certain field, I discovered that there are quite a lot of solicitors out there who spend quite a lot of time giving away their knowledge on web forums
• Business’ web sites often carry articles, written and given away for free. The model of how this translates into revenue is pretty much the same as that where experts give away their knowledge on web forums. Again, it is common for legal firms to carry, on their web sites, articles on the area of law in which they specialise

Finally

Giving away products/services in order to build brand recognition is all part of inbound marketing – although this is a bigger topic with a lot more to it.

Are there other ways of making money by giving something away? If you know of any please comment, whether it’s a tried and tested idea or something you’ve thought of that you think will work.

I was listening to the car radio on a long drive – it was one of those shows where people can text/email in. I can’t remember quite how it came up, but the subject of people at work on their birthdays was the topic. Then someone emailed in to say he ran a company with just over forty employees, and he gave each of them a holiday on their birthday! His reasoning was that an employee at work on his/her birthday will:

• Spend a lot of time reading well wishing text messages and emails, and taking calls on their mobiles
• Distract other employees who will be wishing them happy birthday, and generally hanging around for a chat
• Go to the pub at lunch time and take their colleagues with them. When the workforce returns for the afternoon, they are likely to be suboptimal!

On the first point – re people being distracted by texts/emails/calls – giving that person the day off will obviously not recover any of the time lost. However, the fact that they will loose a lot of time anyway, means the employer isn’t really giving away a whole day. On the second and third points, the employer gains because he/she does not loose the time of other employees who would also be distracted by their colleagues birthday.

When I first heard this I thought “what a good idea!” Just give people the day off. As the guy observed, his work force think he’s a brilliant employer, and he’s cunningly giving something away to get much more in return, so everyone wins!

However, having thought about it, I’m not so sure. This guy said it was working for him, but there are some things I would definitely like to ask him if I could (which obviously I can’t because he was writing in anonymously to a radio programme):

• What happens the following day? Doesn’t the person who had the birthday get distracted by colleagues asking him/her what they did on their day off – and don’t the colleagues doing the asking get distracted spending their time asking?
• Isn’t there a lunch time expedition to the pub the following day, anyway, because the person was away on their birthday?

Giving employees the day off on their birthday would be an interesting experiment to try. However I would be very cautious about doing so, because if it doesn’t work it would be very difficult to take the privilege away afterwards.

This is one of those articles that is essentially just a list of hints/tips. Some of the entries in the list are linked to other articles that provide further explanation, but many are not. However, such a comprehensive list is very useful to have around, because it collects all these hints and tips in one place! I’m pretty sure I will, in the near future, be using it as a source of inspiration when I’m wondering what to write about on this blog.

One of the advantages of such lists is they do not take long to read, while providing much food for thought. I recommend taking a look!

We live in a time when we all need to be careful regarding our personal security and the security of our personal information. With this in mind, businesses should be mindful that, when they approach potential customers, they should be careful about asking for any personal information. In particular, if they do ask for any personal information, the potential customer is likely to want to do some checks before giving that information.

The door to door double glazing salesman is something of a cliché, although having said that it’s so long since one knocked on my door I thought the practice had been abandoned! Until today, that is.

My house is already fully double glazed, but the guy asked if he could give me a quote for the soffits and fascias. He pointed out the quote would be good for a year and I had no objection to him giving a quote until the guy started asking me for some personal details. OK, he wasn’t asking for anything that’s exactly a secret, but I have a (healthy) paranoia about giving out any of my details at all! My general rule is I only give out details if – within reason – I need to. It follows that I’m not going to give out any information whatsoever to a stranger who has just turned up at my door.

The guy pointed out that the information I gave wouldn’t be passed on and would only be kept in the office. In doing so he demonstrated he was clueless as to the problem. From my point of view, if I were to give him any personal information whatsoever I would have to:

• Verify his identity, so he would have to show some credible document such as a driving license (photo card) or passport
• Call the company he claims to be from, and find out if he really works for them

If this sounds like an overkill, well, these days I really do believe being this careful is justified. Consider this: it would be far easier for me to approach companies for a product or service than it would to deal with someone who has just knocked on my door. If I approach the company I get their contact details from the phone book, from their web site or from some other credible source – via a referral from someone I trust, for example. Then, when I call them I know who I am talking to (or at least I have much, much greater confidence that I know who I am talking to). Then when a representative calls, he/she will be expected, and I will have confidence they are who they say they are. None of this is foolproof of course, but like most things, it’s about managing the risk involved.

I suspect most people are not as paranoid as I am (although I think they should be), and wouldn’t worry about giving out simple personal details such as their name and address (note that this is a general comment – obviously someone standing at your door already knows your address, but I still wouldn’t give them my name). However, as abuse of people’s personal information becomes more and more of a problem, I reckon more people will become this careful.

I think it will not be long now, before caution about giving out personal information makes itself felt in business. One day, it will make many established forms of unsolicited approach to individuals obsolete.

Let’s look at three things that irritate me the most about the cold calls I receive. Fixing the following problems won’t change the general view of cold calling, but it’s a step in the right direction.

• Asking “how are you today?” irritates me because I know they don’t know me and they don’t care how I am. This kind of thing – i.e. a greeting which is pleasant when you’re called by someone you either know or already have a rapport with – is just blatantly and obviously sycophantic when coming from a cold caller. I’d rather they just got to the point and established whether there is any point in discussing whatever it is they’re selling or trying to interest me in.
• Going round in circles with their rhetoric is just a waste of my time and theirs. I still remember a call from a “wealth management” firm a couple of years ago. The guy on the other end of the line introduced the company he represented and told me (in a rather drawn out spiel) what their service was (“wealth management”). I tried to get something more specific out of him, but was met once again with an explanation of the service (“wealth management”) which they were offering. At this point I lost patience and pressed the red button on my (mobile) phone. I’m quite ruthless about hanging up on cold callers.
• Keeping me on hold when I answer the phone means you won’t even get to speak with me! In case anyone isn’t clear what I mean: I’m talking about the call centre technique of having a computer dial a number, then keeping the person called on hold while an operator becomes available. In effect the company calling me is saying their time is precious but mine is expendable. In this situation I used to hang up straight way when I realised there was no one on the other end of the line. Now I wait until someone speaks to me and hang up without replying. Why doesn’t everyone do this and help to irradiate this abysmal practice?

Therefore if you’re having a cold calling campaign, please, please please ensure the following happens:

• The person calling introduced themselves and who they represent
• The person calling understands the product/service about which they are calling, and can (within reason) answer questions about the product/service
• The person receiving the call gets to speak with someone immediately they answer and isn’t kept on hold

Cold calling is well known to be a numbers game. However I see nothing wrong with improving the quality and this helping to stack the numbers more in one’s favour.

• You want more time for yourself/family. Here some realism is necessary. For most businesses, you will have to work very hard at some point when building up the business. It is possible when things are up and running, you may be able to trade off money for time by paying people to do the work. However, the likelihood is you will need to work at least a full working day for quite a while. Depending on how the business is set up and what kind of business you’re in, it is still possible you may benefit time wise. The benefit is likely in being able to choose when you work rather than how many hours you work – but that is in itself a considerable benefit!
• You’ve been made redundant. Some people who have been made redundant choose to invest much or all of their payout in starting a business. Here you need to think carefully about whether going into business is right for you, as opposed to looking for regular employment. Going into business is not something to do on a whim! Naturally, one factor in this equation is how you rate your chances of getting another suitable job.
• You are fed up with working for someone else. This reasoning is often that of people who have had bad experiences with their bosses. That is, people who are not impressed with the abilities of the people from whom they have to take instructions. Many of the comments that apply to redundancy (above) apply here. Starting your own business is only a good idea if you know what business to start, you know how to market it etc.
• You have an original idea and want to do something with it. The great advantage here is that you are starting from a position of having no competition. Therefore, if the idea is a success, there is potential to always have a head start when competition appears. The downside is the level of risk involved. The idea is completely new and it is therefore untested. In this case, trying out a proof-of-concept form of the business first is especially important. When got right, original business idea can be very successful – YO! Suchi for example.
• You can see a way to add value to an existing area of business. You might think that – in contrast to having an original idea – entering an existing field of business carries a much lower risk. Well, it doesn’t and it does. It doesn’t because the idea is already tested – it is known to have a market and it is also known that profit can be made. However, the question is whether or not there is room for one more in the market place.
• You want to have control over the success/failure of what you do. Perhaps this is because in the past you’ve worked for a small company and you’ve been able to see opportunities that have been missed. Alternatively you may have been made redundant and you think if you have your own business you will at least be in control of your own destiny.
• You want to get rich or at least make more money. Whether this is achievable will depend on you and on what business you go into. Some people seem to think that people who run their own businesses get rich, whereas in truth many work very hard just to make a living. Many make a comfortable living, but the majority certainly do not make their fortunes.

I recommend you also read the Business Opportunities and Ideas article Don’t Start a Business, which discusses the distinction between wanting to start a business and being an entrepreneur.

1. Pay Attention to Keywords

The online Google Keyword Tool is your friend here. Using this you can find out how many searches where made on any particular key phrase in the UK for the previous month (or for the month before that, depending when the update happens). Also, you can see the average number of monthly searches globally for the past twelve months. The more popular keywords will cost more to bid on that the less popular ones, so consider using lots of different long tail phrases. Also be sure to put separate bids on each of the cases where: (a) the bid keywords appear generally in the user’s search, (b) the keyphrase is a phrase within the user’s search, and (c) the keyphrase matches the user’s exact search; this way, you’ll be able to see where the clicks are coming from.

2. Pay Attention to Negative Keywords

Negative keywords are the words (or phrases) that, if they appear in the search the user typed in, cause your advert not to appear. For example, if you’re selling an ebook about online marketing, you might want to include the negative keyword ‘free’ so your advert doesn’t appear when someone searches for ‘free online marketing ebook’. Given that you want to sell your ebook, it makes sense not to encourage those looking for a free ebook to click through on your advert because that will cost you money where your chance of making any is pretty slim.

3. Ensure the Keywords are in the Ad Title

Typically – and this is certainly the case with Google Adwords – if words included in the user’s search appear in the advert’s title, they will be in bold. This has the effect of drawing the user’s eye to the advert much more effectively than a generic title. Therefore, create variants of the advert tailored to the different keywords/keyphrases you’re bidding on.

4. Aim for a Position That Converts

Many advertisers go to great expense to get the top position, or at least a high one. I was reminded of this when I read The Ubiquity of Competition posted yesterday on his blog by Seth Godin, in which he remarks:

There are 30 places that sell bumper stickers. One shows up first in the Google ads when I do a search. Which one gets my business?

I’ve always thought it odd that, In my experience, the higher positions get better click through rates, but for some reason do not seem to convert into actual sales as well as the adverts in the lower positions; I found positions 6 or 7 on the first page of search results achieved the best conversions (but note that both click through rates and conversions suffered when my adverts where not on the first page). I can’t explain this, it’s just what I observed. It may, of course, depend on what you’re selling. I think the bottom line here is that you need to test/monitor the relationship between the position in which your advert appears, the click through rate achieved, and the conversion rate achieved.

I’ve visited this territory before in my E-Business Testing post of a couple of days ago, but I thought giving the topic a post to itself, to collect the methods I can think of in one place, would be worthwhile. This is a list of four things you can do, but that doesn’t mean you have to do all of them. Also, which ones are appropriate for your site depends on various factors: the nature of your site and your budget, being two examples.

• Targeting the free search engine listings (using search engine optimisation). The most traditional method and, because it targets the free search results, the one most likely to bring the best results in terms of the longevity of large amounts of traffic. The downside is you have to do quite a lot of work to do in terms of learning. Besides the things you should do, there are quite a lot of things you need to be aware of that you should avoid doing. Also, typically it takes a lot of time for a site to achieve high rankings; this may well mean three months before you see results, and it could mean six months or even a year! This is not an article on search engine optimisation practices so I won’t go into it in any depth, however you must read Google’s Search Engine Optimization Starter Guide as the most basic introduction.
• Buying search engine traffic using pay-per-click advertising. Pay-per-click (PPC) advertising is among the very cheapest approaches to advertising that reaches lots of people quickly. You need to be aware that the value you get from this will depend very much on how much work you put into planning your ad and also into your keyword targeting. Both of these are quite large topics but just a quick word about the latter: besides paying close attention to the keywords/key-phrases for which you do want your ad to be shown, also pay attention to any negative words/phrases for which you do not want it to appear. Sorry not much detail there, but hopefully an article about it (at least one whole article is needed to cover the topic) sometime soon.
• Distributing leaflets or business cards. Just get lots of leaflets and/or business cards printed with brief information about your site on them; obviously this information must include the web address! There are several online services that will do this for the cost of postage if you allow the service to print a small advert for their own services somewhere on you card/leaflet. I’ve advised in favour of using a paid service (thus not having the provider’s own ad) in my article How Not To Present a Business but I think in some cases promoting a web site is one of the exceptions; it does depend, though, on who you are targeting – in particular whether it’s businesses or the general public – and you also just have to apply common sense. Of course, when using this approach, you do have to think carefully about whether you have access to sufficient places to distribute your promotional leaflets to make it worthwhile. Also, bear in mind that for most sites, just distributing the leaflets will not get you enough visitors – it’s just a way of getting a few initial visitors and you are relying on them telling other people, and the spreading of the word of mouth in general.
• Advertise on television. Not much to say here except that obviously this is the most costly method, but the one likely to get the most visitors in the shortest amount of time!
• Advertise on the radio? I must admit I’ve not idea how effective this is or how much it costs, but I thought it would be worth having it on the list. Please comment if you have any information. To be honest I’m sceptical about the effectiveness of advertising a web site on radio: I just think it would be too easy for people to get the web address wrong from just hearing it spoken, too easy for it to be forgotten, or both!

When you get into it, the web site for this would cost quite a lot to develop. Therefore, the question is: what testing can be done on this idea? I’ve been thinking about this for a while and I’ve come up with a general plan, although it still has at least one gap in it. Rather than try to fill in the gap I’m going to write about this plan anyway.

It goes like this:

• Put up a web site telling people about the business. Make it clear that the competition is not yet running, but say what the prizes would be and what – when the business is up and running – visitors will need to do in order to try to win one of them. Also, on the home page, ask the visitors if they would have bid. Web hosting is an issue here, in that you need hosting where you can track both the number of visitors visiting your site and the number who answer “yes” to the question of whether or not they would have bid for a prize. Note that you don’t need to do any programming to achieve this – you just need hosting that allows you to install a web stats package (such as AWStats, for example) that can track how many visits your web pages have received. Putting up this test web site will not cost very much: there is the hosting cost, but beyond that the investment is just some time to do the work. See my comments on web hosting in my post entitled Advantages of Online Business post.
• You now need to get visitors to the web site. Note that one of the best sources of traffic – namely the free search engine listings – is not applicable here; the free search results take some time to achieve and this experiment, by its nature, needs quick results to achieve its goal. One obvious method of advertising your site is to use pay-per-click, which will cost more money but is still a relatively cheap method of advertising. Beyond the use of pay-per-click, publicising using conventional (i.e. non-online) methods can be used. This is the “gap” I referred to above: my marketing knowledge is almost entirely confined to online methods, so I don’t have many suggestions to offer here. However, things like producing and distributing business cards (or leaflets) advertising the site springs to mind. In my previous post How Not To Present a Business I criticized the use of getting business cards produced for free from (typically online) companies that put adverts on the back of the card. I suggested that while using these online services is not a problem, the paid for services that don’t involve having the card producer’s advert on the card are sufficiently inexpensive that they should be used instead in order to give a more professional look. However, I think having leaflets/cards advertising a proof of concept web site is actually an exception, as is is a good way of getting lots of advertising literature produced for free (or for the cost of postage).

I’m not putting this testing approach forward as an exact science, but it should at least give some indication as to whether an online business idea is worth pursuing further. I’m pretty sure there are several other online business ideas that could be tested using this kind of approach. Of course, testing an online business idea is only applicable in cases where the real business idea will need some substantial investment. Many online business ideas are cheap to get started and in these cases, naturally, it’s best just to go ahead and do it.

As always, if you disagree or have anything to add please comment.

The following statement from this article caught my eye though:

The masses don’t want a better PC laptop. They just want the one with the right specs at the right price. It’s not because people are selfish (though they are) or shortsighted (though they are). It’s because in this market, right now, they’re not listening. They’ve been seduced into believing that all options are the same, and they’re only seeing price. In terms of educating the masses to differentiate yourself, the market is broken.

This statement puzzled me because although it mentions the “right specs at the right price”, it seems to go on to be blame the customer for looking only at price. Maybe they do – that is, people believe that all options are the same, and they’re only seeing price – some of the time, or even a lot of the time, but I think there’s something being missed here: that is, the option available at the cheaper price might well be good enough for most purposes. To illustrate, let’s use the laptop computer example. Now, I reckon that most people buying laptops want to do simple things such as write letters, read/write emails, surf the web, and do basic accounts. That certainly applies to the people I know who own a laptop. It doesn’t matter whether it’s for personal or business use, the tasks I just listed account for the majority of laptop use – and for this type of use, a cheap laptop (such as the ones some of the supermarkets are now selling) is all that’s needed! No need for anything fancy or expensive.

Perhaps there’s something I’ve missed or not understood?