According to a study by computer tech support company iYogi, 42% of people pay for new products and services after they first experience them for free. In fact, the success of Rovio’s Angry Birds, LinkedIn and Skype is based on their use of the so-called "freemium" business model – giving away a basic version of a product or service for limited use but charging a fee or a premium for long-term or more advanced use. Small businesses, from software and web services, to career coaching and therapy, also employ the model and it makes business sense for accountants too, if you know what you’re doing.
Return on investment
Askews Accountants in Coventry offer a free financial health check to prospective clients. "We’ll do a certain level of work on every prospect and then more for more substantial ones," says managing director Neil Askew. "For a typical owner/manager company turning over £500k, the check would be worth £500."
80% of those who take up our free financial health check offer become clients
Elaine Clark, managing director of online practice CheapAccounting runs free tax clinics, both in physical locations and on Twitter and Facebook: "People just ‘pop in’ when they have a set of accounts or a tax return to complete and something’s playing on their mind. Admittedly, giving a tax answer in 140 characters is a challenge but at least we can provide links to further information."
There’s plenty of evidence the freemium model works. "80% of those who take up our free financial health check offer become clients," says Askew.
For Clark, the conversion rate is 50% and she doesn’t worry that attendance at the physical events can be low. "It’s about quality not quantity. We only had four people at our last clinic in Kent but they had burning tax issues and two have since become clients worth several thousand pounds in fees - not a bad rate of return for a small investment of our time," she says. In fact, Clark reckons the return is much better than what you might gain from putting yourself in front of prospects at a traditional networking event. "People come along to the clinic seeking advice, not to sell themselves," she explains.
Getting it right
If you want to make freemium work in your business, target the right audience. "We get good conversion because we target people with a specific need," says Clark.
Response is better when the offering is quite specific, too. "Rather than a free seminar on general tax planning, perhaps focus on ‘end of year planning’ in March, ‘estate planning’ for older prospects or ‘small business taxation’," says Nicola Mitchell, managing director of financial PR consultancy Mitchell Moneypenny.
The content needs to be right, too.
"You need to give them insight they don’t already have or advice that acts as a call to action," says Georgie Cameron, managing director of Admiral PR. "And make sure you’ve got another reason to get in contact with them after the event." The follow up is necessary if you want to turn tentative leads into meetings: "You need to move them along the value chain," says Cameron.
For smaller practices, Cameron also recommends partnering with other, complementary organisations: "Rather than create your own event, jump on the coat tails of someone else’s – for example a larger legal practice or a bank that perhaps want to make their event more interesting by bringing in another speaker," she says. "You get credibility by linking with such brands, too."
Then promote, promote, promote. "If you’re putting a lot of effort into preparing good content, put as much effort into making sure the right people are there," says Cameron. "The most cost-effective method of promoting is via social media, but only if you’ve built up the right following and have the right communities within your reach."
Unlike in other sectors, those offering freebies in financial services needn’t worry too much about attracting time-wasters who want something for nothing. "This model works for us as financial advice is generally something people look to commit to beyond a quick freebie," says Askew.
Still, anything you give away for free is a direct hit on your bottom line, so where and how do you draw the line? "The challenge is to add value in a generic and educational way, but to also make it clear any advice will need to be individually tailored and paid for," says Mitchell.
How do you know if what you’re doing is worth your while? "So many people forget to test and measure what they’re delivering – what they get in return, how they can improve the conversion rate and whether it’s worth doing again," says Cameron. Also, many people make the mistake of preaching to those on their database. "If you really want to attract new clients, target those that haven’t heard of you," says Cameron.
Beat the competition
Let’s be honest, free tax clinics and free business reviews are nothing new. The ICAEW's Business Advisory Service is another example, where businesses can have a free advice session with a qualified ICAEW chartered accountant. So, to give yourself an edge, do something your immediate competitors aren’t doing. "There's so much content on the internet that you can re-purpose in your own words," says Cameron. You don’t have to do all the work and research by yourself, either. "There are a lot of statistics out there, for example those from the Market News Service," says Cameron. "You could provide free events linked to these - that’s where it becomes much more joined up and clever."
As for your follow up, be a little bit cleverer than the accountancy practice down the road, too. "For example, send them a short white paper you’ve written as a result of the statistics, with expert tips and hints for those in retail if that’s the sector you’re targeting," says Cameron. "That’s how you add real value and how you get noticed. This will happen, too, if yours becomes more of a positioning exercise, where you give your free event on a regular basis and when you foresight your topics by linking in with the tax calendar and the budget."