The Dark and Light Side of FREE

4 October 2018 | 36 Comments

Last week, a great local burger place in St. Louis shared the news that they would be giving away 1,000 burgers for free to celebrate the 150th episode of a TV show called Bob’s Burgers. Several people–perhaps knowing how much I like Hi-Pointe Drive-In, sent me the story.

As a result, here’s what the line looked like on the free burger day (this is a screenshot from a news report–I did not attend the event):

The line went all the way around the block even before the restaurant opened.

I was pretty impressed by the impact of this promotion. To a significant number of people, saving $7 on a great burger was worth waiting in line for several hours. That’s how powerful FREE can be.

Also, the story generated lots of publicity. There’s organic publicity–like people sharing the news of the event with their friends–and traditional media publicity, like the local news channel that covered the story. Even if you didn’t attend the event, you may have learned about Hi-Pointe for the first time as a result.

That’s the good stuff. But as I’ve discussed in the past in Kickstarter Lesson #178: The Danger of Free, there are some downsides–or at least some concerns–of FREE.

  • Are bargain hunters the customers you want to attract? This is not to insinuate that all attendees of the event are bargain hunters, or even that bargain hunters aren’t invaluable customers. We all like a good deal. But in the long run, Hi-Pointe needs paying customers to stay in business. If you were willing to wait in line for 2 hours on Saturday to save $7, how likely are you to return as a paying customer in the future?
  • How many customers will actually return? This somewhat ties to the above point. Hi-Pointe basically invested $7000 on Saturday in the hopes of retaining enough new customers that they can earn a return on their investment. Is there data to suggest that a free giveaway results the addition of enough future customers to justify the up-front cost? I’m curious if any stores who participate in Free Comic Book Day can speak to this.
  • I wonder how the 1001th customer felt. I’m not sure how Hi-Pointe actually dealt with the 1001th customer, but let’s say that customer learned at some point–either in line or at checkout–that they just missed the cutoff for the free burger, and now they had to pay. They’ve been preconditioned to expect FREE, and now they must pull out their wallet. I’m sure this felt much worse than if they showed up at Hi-Pointe and expected to pay. Hi-Pointe may have even had to deal with some rather angry customers.

As you can see, I personally think that FREE can cause more harm than good. FREE has such a powerful psychological impact on us–it can make us act in rather odd ways. Here’s an example from Stonemaier Games.

A few months ago, I offered Scythe fans the opportunity to design 1 of 32 new encounter cards. I posted the art for all 32 cards, and people could choose one and fill out a form with their proposed text. If I selected their idea (or some version of it–I ended up revising all of them in some way), they would get their name on a card and get a complimentary copy of the Scythe Encounters boxed set.

We received nearly 300 submissions, and I selected 60 winners (for a number of cards, I combined several different ideas)…and that’s when things started to get a bit weird.

I’ve received multiple messages and comments from people whose ideas weren’t selected asking if they could get free copies too. Of course, these requests don’t make sense–if you try out for your high school basketball team and don’t make the cut, you aren’t compensated for your time. Try again next year.

So the request is weird in itself, and it puts me in an awkward position. But even odder is that it seems that these people–not everyone, just those who have asked for a free copy–is that they simply can’t justify the expense after nearly getting a free copy.

That, my friends, is the dark side of FREE. I don’t think it makes us more likely to become paying customers–in fact, in some cases, it has the exact opposite impact.

I can think of one notable exception: Unexpected FREE. Like, think of how that 1001th customer at Hi-Pointe felt. Now imagine if instead they showed up on Friday expecting to pay $7 for their burger, but when they pulled out their wallet, they were told that their food was free. That feels awesome, and I bet they’re significantly more likely to return as a paying customer–without expecting anything for free–in the future.

I’m not saying that FREE is always bad. I genuinely hope it works out for Hi-Pointe. But I think FREE is a tool used sparingly and strategically, lest you encounter the dark side of it.

What are your thoughts on FREE? When has a FREE experience in the short term for you resulted in you becoming a long-term paying customer?

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36 Comments on “The Dark and Light Side of FREE

  1. I agree with you. I like “unexpected” free. For example, when folks have a damaged or missing part, I often throw in a free promo card with the replacement part. I like being able to take an ostensibly negative situation and turn it into a positive experience for that customer.

  2. Krispy Kreme just did that in Dublin a week or 2 ago. It caused huge traffic jams and they got national news coverage, well a few pages in.

    I agree with you in 99% of situations, but in the 1% of cases in which you can cause a big impact and get hundreds of thousands of dollars of mainstream news coverage for 7k and that is your goal, not coverting free customers, then it might be worth it.

    But with board games you could give away $100,000 worth and it probably wouldn’t make it on the mainstream news.

    What do you think of win a free game competitions on BGG? Is there a good reason to do it? At the moment I can’t see one.

    Maybe free is bad, unless you can stop traffic :)

    P.S. Sorry to hear you had to deal people wanting free copies of the encounter cards for their failed designs. That is crazy and shameless. What about game submissions, are their reactions worse or better?

    1. Gerald: Yeah, for the reasons mentioned in this post, I would not use free-game competitions, probably not ever.

      Sometimes people get angry that we reject their game submissions, but it’s pretty rare.

      1. I guess some non-winners, who don’t express anger directly to you, express it by not buying the boxed set. That probably has wider implications as applied to running competitions, whatever the prizes—especially if entrants are followers or subscribers because non-winners may become less enthusiastic about the product.

        1. Dorothy: Absolutely, I think that’s a distinct possibility. That’s the tough thing about contests: They inherently create winners and losers, and I’d rather have everyone feel like a winner.

  3. I get all your feelings here, yet I do “FREE” for a very different reason not mentioned.
    When I do “free” I primarily do it just because I simply enjoy being generous.

    I know how valuable “FREE” can be when I myself can’t afford. So when I CAN afford … to GIVE… I usually do. It’s authentic though. When “Gate Keeper Games” does “Free”, it’s really “John” doing “Love”. I can’t help myself.

    We’re giving away lots of free stuff in almost every pledge Tier and have stupid-low stretch goals on our Reality Shard kickstarter right now, but it’s not just a hope to convert. I’d feel remiss if I didn’t act with generosity. Maybe it hurts my bottom line, but if it helps someone get something they couldn’t otherwise achieve… they’ve won and so have I.

    There’s a lot in “FREE” that goes deeper than “can it convert to a customer” or “what’s the ROI”. The “I” is the “R”.

    John Wrot!

    1. John,

      I think Jamey helps people and also thinks how can he run the business well and keep the brand value up rather than “can it convert to a customer”.

      Jamey gives to people in need through charities rather.

      I don’t even know how you can tell if a backer couldn’t afford/achieve paying for your free offerings. Even an IP that indicates the person is in a “developing nation” wouldn’t indicate that, as there a millions of people in developing nations that can easily spend $100 on a game.

      Anyway, I’m sure people think it’s cool to get that free stuff.

  4. Very interesting subject here.
    I’d love to see someone try this in a way that can be measured: randomly give away (free) 1% of all orders (or meals, carwashes, etc). I suspect that it would generate an increase of more than 1% in sales, or maintain sales with a price increase of more than 1%. Plus, I suspect the recipient of the free order would be much more likely to place another order out of gratitude or obligation.

    Unfortunately, any change in behavior on the customer side due to a promotion like this kind of equates to gambling.

      1. You could simply have a notification on checkout of a web store that your order was free, though I don’t think it has the same impact online as it would in person. I imagine the greatest psychological impact comes from a cashier informing a customer in a checkout line.
        Of course the hardest part is to measure the increase in sales. A board game company would struggle to have a control group for the experiment.

        1. That’s a good point. I think it’s something that could be done manually. One way to measure it is instead of refunding the cost of that order, you could send a webstore gift card or a future discount code to the customer–that way you could track whether or not they return.

          1. This might be a good idea for consumables, such as food, but I’m not sure that it would work on non-consumable products without a lot of stipulations. For example, if a consumer knows about the randomly-free promotion, they might try to game the system by buying and subsequently returning non-free purchases.

            It’s an interesting idea, though. Lottery tickets, especially scratch-and-win tickets, advertise something like “1-in-3 tickets are winners”, and many people like those odds. I assume most low-value wins get sents in more lottery tickets, thus preventing a lot of actual payouts.

            I could see possibly giving a free gift working better with the stipulation that the order cannot be returned. You won’t be able to prevent resale on the secondary market, but you still basically keep your revenue.

  5. Interesting article! I don’t know about light vs dark side, but my wife and I have noticed a weird phenomenon with trying to sell or give away baby stuff on the second hand market via Facebook Marketplace. If something is set as being free, people have these strange expectations that you’ll go out of your way to get it to them, that they can pick it up whenever they want, that they can be rude, etc. As soon as a price is set, even if it’s very low, then people act like you’re doing them a great favour and it’s almost the opposite!

  6. What an interesting and timely article! Today in Seattle they did a “friends and family” event for the opening of Shake Shack in the next week. First time I have ever been (only went because a coworker wanted someone to go with him). Luckily the wait was only like 30min and we got up to $15 free food.

    To be honest I probably wont return. I enjoyed the free meal and the bonding time with a co-worker. But with just average food. I even took advantage of their most expensive burger (about $11) because it was the local focused burger using local beechers brand cheese. It was ok. I would have paid $5 for the burger to be honest.

    Hope the promotion pans out for them, but I definitely think surprise free is so much better of a strategy.

  7. I have noticed that when I give out free lessons, my students don’t invest as much effort or time into their practice. Their parents don’t treat the activity as a serious venture and are not invested in it either. When lessons have compensation, here is more vested interest to succeed.

    Simply put, people appreciate activities or products more if they have invested into them.

  8. After reading through this and the comments, I started to think about my own behavior related to this. I do think there is something too the notion of “surprise free” being a feel good. What about a rewards program that earns free stuff? My wife and I frequent one gas station over the other because every 10th drink there is free. It’s only saving me 69 cents, but for something that I’m buying anyway it still feels good to not have to pay for that 10th drink. I know it’s kind of a dumb example, but I think it hits that same positive feeling of getting the free thing without setting me up for anything negative. I realize board games are not a 69 cent drink, but maybe there is still space for a limited “rewards” type program? maybe not, a lot of stuff you could offer like free shipping on the 5th (or whatever number) game someone buys, you already do with Champions – but maybe the reward program would reach a different group? I don’t know…lol sorry, I feel like maybe I fell down a rabbit hole there :)

    1. Marc, that’s a good point. Earned free.

      Something like buy 5 games through Stonemaier Champion and get a free expansion. People would probably be more likely to buy their friend’s Stonemaier games a gifts to get their numbers up, and get their other friends to try Stonemaier game and then say “I can order it for you and get a discount with my membership” :)

      Although the free shipping for U.S. customers, subsidized shipping for EU customers, and the discount is fantastic as it is.

  9. Giving things for Free or with high discounts will set future expectations. I understand when you want to reward returning customers, but just giving things away for free creates strange thought processes. As you mentioned, if you get something for free, how likely will you pay the full price the next time.

    Personally I prefer when you get something extra like a sample, in the burger example if I would get a small ice cream to test that. Sometimes when I get packages the company has added a small piece of candy in the box.

    In the kickstarter world it almost feels the opposite if you want die hard fans. Charge a huge amount of money so people invest, then you will have a lot of people fighting for you and their investments.

  10. I do wonder though, how many of those free burger receivers may have also purchased extras. Like a serve of fries and a drink. Maybe it wasnt a 7k loss maybe it was much less. Let alone the fact that each burger is not costing them $7 lets say each burger cost them $4 to make then take away the profit made from other sales it may not have been as expensive a publicity as first thought.

  11. A lot of times the fine print can kill a deal too (thinking of discounts in general not necessarily free). I’m one of the odd guys out here but for me, if I have to go out of my way too far to get the deal, I won’t. There’s no way I would have stood 50 people back in that line to get a free burger. I get deals from restaurants right up the street from work that say “dine-in only.” I end up going elsewhere because I wanted carry-out. Since I couldn’t get the deal they were offering I just wasn’t going to go there at all (even though I go there on days they don’t offer discounts).

    In your scenario the fine print was “winner’s only” and for some that wasn’t worth the time and effort they spent on their submission (or they just aren’t good at taking rejection).

    Also, in the free burger scenario, if the burger I liked and anticipated ordering was excluded from their free burger promotion I would have been upset standing in line so long for something I didn’t necessarily want.

    If you’re going to do promotional deals, be sure to have a good reason to exclude certain things from that promotion. I’m not saying you have to tell your customers that reason, but understand that there my be unforeseen side effects.

    1. Jeremy: Oh, I think you’re far from the odd man out. I suspect that a lot of people who love Hi Pointe avoided it at all costs on Saturday–I’d much rather wait in line for 2 minutes and pay $7 than wait in line for 2 hours to pay $0. :)

      I think you make a great point with your warning.

  12. My experience with free, that works pretty well, but they also have much larger marketing budgets than mere mortals, is movie industry.

    Landmark Theaters, a national chain that shows more art house/indie films has an e-mail list for the Twin Cities and often get offer for free movies. What is nice about how they do it, and I think has some great lessons, is their process. They send an e-mail with clear send in a e-mail by end date to be considered, they let you know the time and location of the me, but most importantly they let you know that it is overbooked. Overbooking is huge for free stuff, because when I don’t put any money down, if something comes up or I don’t feel well, it is very easy for me to not show up, and they don’t want a bunch of people doing that. However they are also letting us know that if it is a movie with a lot of buzz already, they are notifying you to get there early…I have seen The Kite Runner and Slumdog Millionaire with these free movies.

    I know they are doing this to create buzz among people especially since Hollywood makes such a big deal on opening weekend.

    Speaking of free movies, my adoption organization had a conference of about 800 people, and there is a new movie coming out that some presenters at our conference consulted on. The studio actually was good to work with for such a last minute ask, but arranged for two screens at a local theater to show this preview (2nd week of August for November release) and bused folks who signed up from downtown to the theater in the suburbs. Folks are raving about the movie, it was a nice shared experience for those at the conference, but what the studios got, was ambassadors throughout the US and Canada, many who are trying to set up screenings prior to the release to create even more buzz. I am not sure how many returns there are on the secondary screenings as that has to cost a bit, but maybe that is already in their budget which is always so much bigger than almost any other industry.

    1. Those are interesting examples, Josh–thank you for sharing. I’m not sure I necessarily agree on the value of buzz (versus the ROI of free), as buzz is hard to quantify. I think this is related to a problem that a lot of artists run into–sometimes they’re asked to work on a project for free for the “exposure.” Exposure is great, but the value an artist contributes is worth more than free–they deserve to get paid for their work. I think the same applies to any medium.

      1. Jamey,

        I totally agree that the ROI isn’t worth it for most. Hollywood is in a whole different class, including the marketing department budget.

        And the work on it for free as exposure is awful and evil in my opinion. I think it is how Huffington Post got so big, they do provide some exposure, but definitely use their content creators unfairly.

        All that being said, back to my work though, we don’t pay our presenters at our conference. Some present at our conference for free for that exposure (some get other paid speaking gigs/consulting from being seen), others for love of our organizations, and finally others would attend anyways so they get a free registration (if members) for presenting.

        But we are non-profit and are clear on that we don’t pay anything for them. Granted some of the presenters work for organizations and get their way paid by them and paid for their time there.

  13. I cannot think of a time when a free offer retained me as a customer. However, my time is valuable, and I also would not stand in line for a free burger.

    Unexpected free (or excellent service) on the other hand has resulted at least in a return visit, if not future loyalty.

    I only buy things when I can afford them and when I need them. Getting a discount or freebie on something I expected to pay more for is just a bonus.

  14. Curious what you think of this, Jamey: https://smashburger.com/smashpass/. Not quite “free”, but an interesting deal that seems risky. Seems like they’re betting a profit on people either 1) buying lots of soda and sides, 2) bringing their friends along with them, or 3) getting really sick of eating a burger every day for 100 days (which isn’t exactly ideal for business). I’m not buying it, but it definitely got my attention on their business.

    1. Interesting! That’s a lot of burgers if you want to get your money’s worth. :) I think your #2 point is really clever–the idea of using a promotion to get people to bring their friends along is neat.

  15. It may have been mentioned above, but there is an alternate way to think about it.

    The lack of interest of the people that did not win may also have to do with psychology.

    it was contest where they created something that was rejected. Something that was perceived subconsciously as a direct critique of their ability,

    If it was just a random number draw they would not have such reaction.

    I don’t believe that free is bad as long as you use it correctly. The burger example you mentioned did not target to treat 1000 customers in order to retain some of them. It aimed to create an event that would have a greater advertising impact that 7000 would buy on regular advertising channels

    1. Especially if you consider that the number is not actually 7000 but rather the cost of said burgers. You could consider the opportunity cost but then you assume that they would sell 1000 burgers in one day.

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