Saturday, March 04, 2006

Free Samples

The real title is: Free Samples as a Marketing Approach for Knowledge Workers

There. I’ve done it. I’ve just turned off all my normal blog readers (all 12 of them) by giving a dry, pedantic title to a post. And I’m doing all this for you, Carnival of the Capitalists readers. You’re welcome.

If you’re looking for the standard Scratching Post fare, let me point you to the political humor, the morality posts and the animal sections of the blog.

Well, now that they’re out of the way, we can get down to, ahem, business.

Everyone is familiar with the free samples stands at stores like Costco. The company gives away a tiny amount of its product in order to entice you to buy the big box of it. Let me suggest that it is an effort to build trust with the consumer.

“I know I like cheese and I know I like crunchy things, but will I like Cheese Crunchies? (crunch crunch crunch) I do! Let’s buy 10!”

Uncertainty is replaced with certainty and another $10/box wends its way out of the customer’s wallet into the fat coffers of the multinational megacorporation CheeseCrunchies, Inc. and the customer ends up having to buy new leaf springs for the rear suspension of their 1985 Buick Skylark because the things snapped under the weight of the boxes of Cheese Crunchies in the trunk. But I digress.

Knowledge workers, as defined by Peter Drucker, are those people who are hired to apply their knowledge to a customer’s problems. Typically, they represent a far more serious investment than a box of Cheese Crunchies. The investment can be far more than the direct cost of the knowledge worker, abbreviated hereafter as KW.

Say your company is building a new type of wireless, networked camera so people can watch their cats sleep while they’re at work. Knowing nothing about wireless networking, you hire a KW who designs the wireless connection for the camera. He’s expensive, but the camera is projected to sell well. It will be the first one on the market with special GroovyCam features that has the ability to show the cats with those weird special effects they used in the psychedelic movies in the 60’s and 70’s. It’s anticipated to do well with aging hippies who are flush with disposable income. Your competitor, SwineCorp is working on one as well, but they’re months behind.

The cost of the KW is not just his salary, but also the anticipated return on his work. If the KW turns out to be a charlatan, the project will be delayed while a new KW reworks the design and SwineCorp will have won the race to market. They will have all the press and customer buzz you wanted for yourself.

The upshot of this is that hiring KWs requires an enormous amount of trust. As animals, we react to heightened risk with heightened caution. Risking the GroovyCam on an untried KW may be too much to take. For the KW, selling yourself, which is the product when you’re a KW, requires winning the confidence of the customer. For CheeseCrunchies, Inc., that trust is won by giving away some of your product for free. For the KW, it may be that you have to do the same.

I am currently marketing our firm to an organization that represents a whole new customer base. Our firm is made up exclusively of KWs. This new customer would open up a vast wealth of teaming opportunities and fascinating and vital work. One of our competitors is thoroughly entrenched with this customer. We have certain capabilities that they lack and cannot easily duplicate. For the sake of discussion, let’s use the GroovyCam example and say that we were the wireless networking KWs.

Our competitor offered to create the GroovyCam for the customer, but had a poor design for the wireless network. Our first reaction was to march in to the customer and reveal our competitors for what they were, pig-headed morons who at best were fit to slop hogs. At the proposal meeting, a grand melee would ensue and our customers would see that we were the ones they should trust.

Or at least that’s what we dreamed. In reality, the confused and non-technical customer would sense heightened risk and uncertainty and would probably deep-six the whole GroovyCam project and instead go with the less risky HaggisCam proposal, an idea best not described.

In order to win the day, we needed to team with our competitor and allay the fears of our new customer. Both our prospective teammates and customer were uncertain as to our value.

So what did we do?

We followed the example of CheeseCrunchies, Inc. and gave our product away for free. Not all of it, mind you, but enough to gain their confidence. In addition, we gained something more valuable than that: their gratitude. Everyone involved had seen combative bloodbaths before. By giving free samples, we averted a war and made our customers a success.

It’s been very rewarding.

KWs are usually reticent to give free samples since their samples are so much more expensive than a bowl of Cheese Crunchies. With KWs pocketing $100-$200 or more per hour, 2-3 weeks of free samples can cost thousands of dollars in lost revenue for the freelance KW or the KW firm. Nevertheless, trust has to be earned before the customer makes the purchase. Free samples can be the cost of doing business, both for the cracker maker and the KW.

I wrote about the hidden value of kindness previously on this blog. When we were in the middle of this effort, I never thought in terms of free samples, I thought of an act of kindness. As I analyze the results and mechanics of the sale, I see the analogy to free samples. Just thought I’d share. For free.

That was fun. Now let's do some begging.


Jennifer said...

Free is good! I joined quite a few market research groups.... granted I'm not getting a free car to try out, I am getting other free stuff every once in a while to try out then answer questions about the product.... i just got a free face moisturizer in the mail on Saturday to try.... "try before you buy"... it's pretty effective

Jennifer said...

so what are you sending out free to your readers... seeing as i am the only one to comment... i think that red ferrari would work... is it possible to order it in pink though?