Free products are more valuable than discounts

The Vodafone advertising campaign which has been running for the past year or so in the UK really, really annoys me. It is based on two cartoon bees talking to each other about Vodafone’s “freebees”. It annoys me on two levels. For a start, what they are talking about is not completely “free”, but part of the package you get from the phone service you buy. Secondly – and this is the bit that really gets me – the entire campaign is based on a miss-spelling. It is not “freebees” but “freebies”. Vodafone cannot spell…! But we knew that anyway, because they spell “phone” as “fone”.

I’m probably not the only person unimpressed by the campaign – so far this year Vodafone revenues in the UK have dropped by 4.5% and reports paint a gloomy picture, even suggesting a take-over by Verizon may be on the cards.

However, we should congratulate Vodafone on bringing the whole notion of a real “freebie” much greater attention. After all, we all like something free – something, real that is. If we get something free, strange as it may seem we do value it.

In other words, if you sell one item and offer a discount on an associated or additional item, your customers value it less than they would do if you gave the item away free of charge.

This means that giving away things free is more valuable for your business than offering discounts because your customers will value your products more highly when you give some of them away. This is counter-intuitive, but the research showed clearly that people value discounted products as worth less than free products.

So, Vodafone is on the right lines after all by offering something free. But we have to also perceive it as a real free product, not just something we would expect as a matter of course.

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