A Lesson From Taco Bell: What Makes Freebies Valuable?

Recently, Taco Bell offered it’s 6 million Facebook fans a free taco redeemable with no strings attached at any participating location.  Interestingly, only 3% of fans took up the offer.  So, what is it that makes a freebie valuable?  What made Taco Bell’s offer so unappealing to its Facebook fans?

For starters, a 99 cent taco lacks the perceived (and real) value that gets a person excited about receiving a prize.  While its great to win anything, 99 cents is easily replaced.

This blog thinks a lack of exclusitivity is what made the promotion fail.  Though it may be true that a promotion corresponding with a new product launch may have increased the perceived value of the giveaway, I do not believe it was the number one deterrant to it’s success.

So what was? 

In my opinion, it was the effort required to redeem the prize that was the biggest problem.  When you think about successful promotions like Tim Horton’s Roll Up the Rim to Win campaign, customers can redeem prizes instantly.  Taco Bell put too many barriers in place for customers to the point that, even if they wanted the free taco, it wasn’t worth the effort.  When it comes to promotions, instancy is the name of the game. 

Though the online landscape has opened doors to interaction between brands and customers online, instant access to physical products has been a barrier to the success of numerous campaigns.  Brands must figure out a new approach to these types of giveaways if they wish to make them worthwhile going forward.

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Mobile Publishing: Mygazines

In an increasingly mobile world, the need for content on Smart Phones and tablet devices can’t be ignored.  But how much should companies be investing to stay on the cutting edge?   With mobile applications still in their infancy and the cost of app development seemingly unmanageable for most small companies, the search for reasonable alternatives begins.   

Mygazines offers a great option for anyone from a freelance writer to a large publishing company looking to make their content mobile-ready, at a reasonable cost.  The service has some impressive marketing functionality as well, with options for content sharing, social media integration, built in RSS feeds and video integration.  The only catch is that the services requires a browser to launch; which takes most e-readers off the market.

Today, the need for app development may be dependent on a number of factors including; industry specific requirements, the types of content being displayed and the price customers are willing to pay to get what they want.   For everyone else, there’s solutions like Mygazines to meet customer needs without breaking the bank.

Price Sensitivity

With gas prices higher than they’ve ever been (and the obvious consumer discontent associated) it got me thinking about the threshold that exists for price increases. Gas is obviously a commodity that people need to get around, but at what point do people get so frustrated with the cost that they look to alternative forms of transportation? In some cases high prices are bearable and not worth the additional effort necessary to change a daily routine. However; there has to be a threshold at which people decide enough is enough. In most cases that threshold will probably be dependent on the cost of switching to a different brand or in this example, method of transportation.

Often publishing companies that operate on a subscription model battle with the best approach to annual price increases. As a product’s readership decreases the price needs to increase to maintain consistent revenues. But at what point will the customers that purchase the product look for an alternative because the cost of the product is simply no longer worth the value they receive in return?

The Van Westendorp Price Sensitivity Meter is an approach to researching pricing that asks the following 4 key questions to set a range within which people will continue to purchase the product in question:

1) At what price do you begin to think a product is too expensive to consider?
2) At what price do you think a product is so inexpensive that you would question the quality and not consider it?
3) At what price do you think a product is getting expensive, but would still consider it?
4) At what price do you think the product is a bargain?

In the digital age, one thing publishers have struggled with is putting a value on “content”.    Most consumers expect that the cost of a book be significantly less on a tablet because there are no costs associated with a physical product.   By implementing a Van Westendorp Study, you can more effectively use customer feedback to set prices in the range that optimizes sales and keeps customers satisfied.

Top 5 Ways to Stay on the Cutting Edge

With the pace at which the online landscape is evolving, it’s easier than ever to become complacent and fall behind competition.  Businesses that are making the transition online need to recognize the importance of paying particular attention to factors that are likely to affect the future direction of their industry.  The following is a list of what I believe are the best ways to stay on the cutting edge and position your organization for the future.

1.  Know What Your Competition is Doing

While we’d ideally like to be ahead of our competition, knowing what they’re doing today will give pointers to where they are headed.

2.  Listen to Your Customers

They may not be able to tell you exactly what they want, but gaining insight to how they’ll use your products is essential to building irreplaceable solutions.

3.  Hire for technical expertise

Today everything is happening online.   If you don’t have the technical expertise, you’ll be left in the dust.  Even worse, the longer you wait to adapt to new technologies the harder it will be to get back into the game.  

4.  Do as an Entrepreneur Would

With the pace at which businesses and technologies are moving today, bureaucracy should be avoided at all costs.  Put decision making in the hands of people capable of making the right decisions and give your products a chance to grow.

5.  Involve Organizational Youth in Decision Making

A colleague recently told me that he heard “if you want to understand why Blackberry Messenger (BBM) is so popular, you’ll have to ask your kids”.  The youth may not have as much experience, but in many cases they’re closer to the innovations that will allow your business to flourish. Don’t forget their voice.

Failure to Launch

Today, the Harvard Business Review featured an article by Umair Haque on the importance of failure.  While it is often difficult for people to look at failure positively, it’s usually failure that allows us to grow both personally and professionally.   Failure gives way to new learnings, new solutions and ultimately, innovation.

“A system that fails to fail lacks the capacity to evolve — much less to gain resilience, or, above all, wisdom.”

Similarly, Seth Godin’s book “The Dip” discusses the importance of knowing when to quit.  A product marketer that spends too long on projects that are likely to fail will have less success than a person that identifies the projects that are unlikely to succeed earlier in the development process.  The difference is that the second person fails faster, allowing them to get to the good ideas quicker.

In a perfect world we’d all be successful at every attempt we made.  Unfortunately, without failure we’d never gain the insight required to come up with truly innovative solutions. 

Besides, without failure we’d never have discovered the post-it note!

Would You Pay for Online Content?

A recent poll conducted by SmartBrief on Social Media asked readers if they believed media companies and publishers should charge for online content.

No, content wants to be free – 48.73%
Online content should be based on a “freemium model” – 28.48%
Yes, there will be buyers for all kinds of relevant information – 22.78%

The results weren’t surprising, but point to a couple of issues that publishers need to be aware of going forward.

  1. The increasing availability of content online is making credibility an important element of a publisher’s ability to charge for use.  Almost 30% of respondents thought that a “freemium model” was an appropriate approach, meaning potential customers would have access to a limited selection of content free of charge.  This approach gives exposure to the content and let’s potential purchasers see the product quality before making a decision.
  2. A person’s willingness to pay for content is partially dependent on their demographic and the type of content they’re interested in acquiring. For example, a professional that needs credible information as a part of their work responsibilities is more likely to pay for content than someone look for casual reading.
  3. The missing piece to most content you can find online (other than confirmed credibility) is the context.  Generally facts are easy to come by; however, the explanation of a trained professional is likely to have a much higher perceived value.  (See http://www.newmediacy.wordpress.com for  more information on the New York Times new pay-for-content plan).

My answer to whether or not publishers and media companies should charge for content is, it depends.  Customer demographics, the purpose of the communication and the ease of acquiring similar information elsewhere are just a few of the many considerations that need to be made before making a decision.  Content marketing has become an important component of the marketing mix for companies hoping to gain credibility with their target market, and the social landscape is increasingly used to facilitate the conversation.

The Daily

On February 2nd, the Daily became available on Apple’s iPad app store with a mission to provide a unique online news experience specifically for the iPad.  For some time the publishing industry has struggled to monetize online news content because of the availability free information on the Internet, but the creators of the Daily appear to be taking a step in the right direction.

Below is an overview of the Daily and some of it’s unique functionalities:

Described as living news, the Daily “combines text, image, sound, video and movement to tell stories that come alive the more you touch, swipe, tap and expolore”.

3 Reasons It’s Different

  1. Much of the Daily’s content is opinion-based, differentiating it from free sources of information that focus primarily on “the facts”.
  2. The Daily has been built specifically for the iPad, offering a superior viewing experience to competing offerings.
  3. It’s customizable and interactive; customers can indicate preferences including local weater and their favourite sports teams.

Recognizing that potential customers may need to experience the Daily to understand it’s value, the product is available for free on a two week trial.  Regularly the Daily is sold for only $39.00 a year or $0.99 a day.  If you don’t yet see the value proposition, I suggest you give it a try.  If nothing else you’ll get a taste for the direction the publishing industry is heading and the new formats publishers are testing to enhance the value of their content.