Wednesday, February 4, 2015

If It's Free, Are You The Product?

Note: This is a respite from the Creating an Online Presence series, but it is part of the next step in the discussion.

"If it's free, you are the product."
- Somebody on the Internet

It sure sounds clever and when people first hear this phrase, it can be enlightening if only to expand your sense of perspective.  But it seems to be used rather sloppily and heavy-handedly. The end result can be the closing of minds and misunderstanding, things we should not propagate.

I feel there is a better way to think about this.

Part of the Product?

There are certainly times when information about you is part of the product.  Free mobile apps provide arguably some of the best examples where the title phrase often makes sense.  But even then, your information is usually only part of the product.

The simple fact is that your information and access to various features on your phones are needed to benefit from most of these apps.  It's not nefarious, it's necessary.

Let's consider Runkeeper.  This is a cool little app that will track your run, provide many optional audio cues (average pace, notification at each km/mi, etc.), and sync to a website where you can manage that information and even choose to share it.  To track your run, it has to know where you are, so GPS access is important.  To sync with the server and store your data, it has to have network access.  And so on.

To provide you with the service you expected when you downloaded the app, it has to have access to a variety of things. In fact, you can read about exactly what they request and why on this page.  Can that information be monetized? Of course it can.  Does that mean you should delete Runkeeper?  I don't think so.

Being a product and a customer are not mutually exclusive things.

You Are Still A Customer, But Maybe Not The Only One

Ultimately, if I create a product for you to use, you are a customer.  Whether or not the revenue stream originates with you, you are still a customer.  I need to manage that product to provide you with services that you want to use.

The revenue stream to the provider of the free app may come from somewhere else, e.g., advertisers, but even in that case, you are still a customer and, in the grand scheme of things, you are still the primary customer.  If no one uses an app, it provides no value to anyone.

But you may still be the only customer, especially if the goal is conversion.

A Tool For Conversion

If you are familiar with sales and customers, then you are probably familiar with the term conversion or conversion marketing.  These terms are pretty broad and the scenarios vary quite a bit, but the end result is the same - they convert you into a paying customer.

Just a taste.  Many services offer you a limited constrained subset of their full set of features or services with the hopes that you will opt for their "premium" services.  Some provide a good, functional subset for free, like LinkedIn.  Others provide a painfully small subset that is clearly not viable; I will abstain from calling them out here, but you probably have your own examples.

In-app purchases are another form of conversion - I provide you something you like to use and then I give you opportunities to buy things while using it.  Many applications provide a service that is simply a gateway for explicit monetization through in-app purchases:
  • Opportunistic sales - For example, if you are using Pandora's free streaming and enjoying a particular song, you can click a link to go buy it.
  • Pay me to remove these hurdles - Some free gaming apps are designed, by default, to be artificially time-consuming or difficult, with an ability to spend money to speed things up
  • Let me sell you some pixels - This really took off with avatars and personal profiles on gaming systems.  Basically, you spend money to get a cute pet, article of clothing, etc. for your avatar. I think The Sims really pioneered this concept, but it has become ubiquitous now.

But What About Open Source Stuff?  Surely That is Truly Free

Yes and no.  There are certainly things that people have created out of true altruism. I know I have.  But that does not stop others from trying to drive revenue from those efforts.

A very good example is when a business or technology leader first hits on the notion of using an open source software solution.  "Think of the savings!"  Well, it's more complicated than that.  That software needs to be evaluated for impact to your other systems, implemented, integrated, maintained, etc.  You may not pay for an expensive license, but you may end up paying more to use that "free" software in terms of paying for the skilled staff or negative business impacts.

A Tool For Marketing

Sometimes, the goal is even more indirect.  The free service/app is simply a vehicle for fostering your good will and strengthening a relationship with you.  Having happier and more satisfied customers is good for the bottom line.

Should You Distrust Free Apps?

You should evaluate free apps in much the same way that you evaluate paid apps.  Does it meet your needs?  Are the services valuable to you?  Is it user-friendly enough for you?  Is there a better option?

For most of us, the time we spend using an app is the higher price we pay.  If an app costs $5 but it's twice as useful as its free alternative, then it may be a better choice.

But you should not discount the freedom to explore free products.  There is a great deal of value in being able to just play around with something and see if it meets your needs, without having to pay up front or sit in a meeting room with a sales person walking you through a heavily-guided demo.

Free apps are fine.  In general, just about everything is a product to someone, including you and your information.  Enjoy your value.

My version of the lead quote would be:
"If it's free, then you may not be the only customer." 

No comments:

Post a Comment