The Perceived Value Of “Free” - Conclusions

Posted by Lisa Preston

October 31, 2008

On July 4th, I wrote about “The Perceived Value Of Free”.

I discussed how in recent months, there had been a notable increase in marketers talking about “moving the free line”, and generally instructing new marketers to give away valuable content to build their lists, in order to create customers in the future.

On the surface, there seemed to be some value in this advice. After all, there are giveaways popping up daily, free reports everywhere… all with the intention of obtaining that all-important email address on a double opt-in form.

I decided to test this theory. (This is the simplified version)

I created a product for a niche I have been active in for some time. (Sorry, I am not going to reveal the niche; suffice it to say that it’s as competitive as the IM niche). The product I developed contained useful software, a detailed info product on pdf, an audio version of the info product and a video showing how to use the software along with the info product.

I created 1 other product of similar value and structure, and two reports with additional, related advice and tips.

I purchased two very similar domain names. I created two websites. One website gave away the product for free, just for opting in to my list.

The other was a basic sales page using similar language, but charged $67 for the product. Upon successful payment, the customer was directed to the download page which included an optin form for the same newsletter.

I employed the exact same marketing strategies to each site. I drove traffic, used PPC, posted in related forums, created articles - all the usual things.

Can you guess my results?

Both websites recieved approximately the same amount of traffic from my marketing efforts.

The website with the free product had an optin rate of around 40%.
The website selling the product had conversions of about 3%.

Of those who downloaded the free product, 20% unsubscribed immediately after recieving their download.
Of those who purchased the product, 80% opted in to the list.

The autoresponder series was loaded with 7 emails.

The first email (immediate) was a thank you for downloading the product, along with their download link in case they weren’t redirected after payment/signup. Almost no unsubscribes from either list.

The second email (two days later) was a repeat of the benefits of the product, and encouragement to take action with it. I also included a link to download one of the two reports I created as an additional bonus.
Again, there were no unsubscribes from either list.

The third email (three days later) was pure content, highly related to the product and included several valuable resources for more information. Oddly, this email triggered a further 20% unsubscribe rate from the “free” list, but zero from the “paid” list.

The fourth email (three days later) was again, pure, actionable content. And again, I lost about 10% of my “free” list.

The fifth email (three days later) gave away the second bonus report. This bonus report was a lead-in to the second product, and in fact had links inside taking them to the product sales page. I didn’t have any unsubscribes from this email, but I did receive traffic from the link in the report - a 20% click through from the “paid” list, which had a 5% conversion! There were zero clicks from the “free” list. (Those who purchased were moved to a new customer list.)

The sixth email (three days later) was again content, leaving off with a teaser at the end about how a specific problem talked about would be solved in the next email and to watch for it. This email lost about 10% of the “paid” list, and a whopping 40% of the “free” list.

The seventh and final email in my test (sent out two days later) was purely promotional, sending subscribers to the sales page for my second product. This product was priced at $47. I lost all but about 15% of my original “free” list, and I retained approximately 75% of my original “paid” list.

Further, I had almost no click throughs to the sales page from my “free” list and only two sales (less than 1% conversion), but from my “paid” list, 60% checked the site. Of those, 10% made the purchase!

My Conclusions

Free products - no matter how good - are perceived as “cheap” and of little value. Often people will download free items and never give them another thought. Those who part with actual cash to obtain a product will often go through it from front to back, usually as soon as they get it.

I also learned that when people have paid for (and liked) a product and are provided with relevant content and additional materials along the way, they are much more likely to purchase a second time. Between the original sale and subsequent emails, you have position yourself as a respected expert who provides real value.

It’s also notable that there was a marked difference in the email address quality between the two lists. The “free” list contained many aliases such as “giveaway@gmail.com” or other obvious throwaway accounts, many using free email services. The “paid” opt-in list was of a much higher quality, most using their own domains or their ISP address.

I’d love to hear your thoughts!!