We direct marketers really thought we had an edge on marketing techniques, one being the free trial. We have used this technique to get everyone from safety officers to company presidents to try our wares.
I've used free trials to sell everything from magazine subscriptions to computer systems costing tens of thousands of dollars. But we're neophytes compared to the use of this technique by Internet mavens like Netscape.
Netscape not only gave away the Internet browser for a free trial period, it's still giving it away every time there is an upgrade. Why is it giving away its product? Two reasons: Metcalfe's Law and what I will coin the Netscape Strategy.
Metcalfe's Law is based on an observation by Robert Metcalfe, founder of 3COM, that technologies are valuable only if many people use them. The law as a formula is Utility=User squared. In our daily lives, we have examples of technologies we see as utility but that took decades to move from development to common use: electric lights, telephones, recorded music, fax machines. The Internet is reaching utility status in about five years. According to a Nielsen Media Research study about the Internet last month:
* 79 million U.S. users over age 16 (8.9 million in Canada).
* 20 million people who have made online purchases.
* 48 million people are using it to research products/services before making a purchase.
* 13 million users (17 percent) are over age 50.
* More than 50 percent of 16 to 34 year olds use the Internet.
* Online purchases are growing at the rate of 8 percent a month.
The Internet is reaching technology utility status. It's creating a revolution in communications, and we are still experimenting with how to use it. Which leads me to the Netscape Strategy, an example of Metcalfe's Law applied to a technology inside a technology. The Netscape Strategy is to give away what you sell.
From its launch in 1994, Netscape has given away the desktop browser. Why? So Metcalfe's law would be realized and people would use the Net with Netscape's browser. Netscape also gave away the browser software to gain market share since the only competitors, at the time, were sponsored by the government. In addition, Netscape wanted to provide a set of users so it could sell its server products to companies that wanted to provide information to the people who had the browser.
Thus, the grand free trial, giving away what you sell on an ongoing basis. The razor people have tried this strategy from time to time. They will give away the razor to sell the blades, but they won't do it on a sustained basis. At some point, economics override vision and the razor is no longer a freebie. However, Netscape has sustained the strategy since the beginning. So successful is it that Microsoft had to adopt the strategy to win market share. Rumor has it that Microsoft president Bill Gates was furious at the initial suggestion to give away the Microsoft Internet Explorer browser. He saw it as un-American, or at least counter-capitalistic, to give away what you sell, but he had to relax and go with the flow. There's one price you can't beat, particularly in a largely nonunderstood product, and that price is free.
What can we learn from Metcalfe and Netscape that can improve our direct marketing skills? If you want to provide a utility, you need many users — and the way to acquire them is to give it to them. Sounds like a great idea to me. Give away what you sell so a lot of people will use it. Then once you have market share, sell people who supply them something that makes what you gave away deliver what is expected. And keep in mind that if you don't adopt this strategy, your competitors will and then you'll be a market follower instead of a market leader.
Ponderous. Give your technologies away, get a lot of users and you will be what? Profitable, no way to make money on free. The market leader, if you can sustain your business. Perhaps the reward is more altruistic, you will be providing a utility that could change people's lives, train people to use new approaches or redirect the future. Maybe the unwritten soul of the Netscape Strategy is to benefit humankind. Perhaps Metcalfe and Netscape know something about the free trial that I don't. That by giving away what you sell, you will build utility and somehow be able to convert that into success. Here goes a step into the mystique of laws and strategies.
Two technologies we sell are online selling (e-commerce) and online lead and customer management. We have many clients we support and who pay us money for these services. However, to test Metcalfe's Law and Netscape's Strategy, we are going to give away these two services in hopes that great things will benefit you and hopefully us with this new free trial (without any stated conversion, no strings and no cancellation).
If you would like to sell products or services online, go to netplaza.com and select the free service option. If you want to use the Internet as a private Extranet for lead and customer management, go to www.ultraleads.com and select the free service option. Both come complete with do-it-yourself guidelines and are secure to protect your information.
This direct marketing test may become a new direct marketing Internet offer. Somewhere down the information superhighway, I'll let you know what happened. I hope Metcalfe's Law and Netscape Strategy are from genius and not conjecture.
Tracy Emerick is principal of Taurus Direct Marketing, Hampton, NH, a direct marketing agency and consultancy, and president of Receptive Marketing Inc., which provides Internet site development.