I read something the other day that gave me reason to pause and consider how my clients and other stakeholders value the services that I have to offer.
You have likely heard of (and perhaps even used) the Michelin Red Guide, the oldest European hotel and restaurant reference guide, which awards Michelin stars for excellence to only a select few establishments. Restaurants in Europe vie to get one, two or even three Michelin stars, as it can have a dramatic effect on the success of their business. You may not however know that this now world-famous guide started life as a mere marketing ploy. In 1900, when there were less than 3,000 cars in France, brothers André and Édouard Michelin published the first edition of the guide for French motorists as a way to boost people’s interest in cars. You see, the two brothers owned a tire manufacturing company, and they hoped that by getting people to drive more and thus buy more cars, it would also increase the demand for tires. The very first Michelin Guide contained a variety of useful information for motorists, including maps, instructions for repairing and changing tires, and lists of car mechanics, hotels and petrol stations. During the last century, the Guide slowly morphed into what is so well-known and recognized today. Interesting fact: when the guide was first published, the brothers had nearly 35,000 copies printed, and gave them away free of charge. This continued (with a short gap during World War I) until 1920, when the story goes that André Michelin was visiting a tire merchant and noticed that copies of the book were being used to prop up a workbench. He immediately made the decision to start charging for the guide. He is said to have declared that “Man only truly respects what he pays for”.
I think that in some aspects, he’s absolutely right. In my leadership consulting practice, when I offer advice and recommendations to my clients, they usually act on them. After all, they’re paying for my expertise. But when I offer similar (and free) advice in casual conversations to relatives or personal friends, more often than not, they are discounted or even occasionally ignored. However, I could just as easily make the case for the opposite. I blog twice a week, offering “free” suggestions and insights on different aspects of leadership and workplace communication. Does that mean I am less respected in this arena, or does it increase my worth in the eyes of others? Are my actions increasing or decreasing my value proposition in the eyes of my clients and other stakeholders?
So I’m interested to know about your experiences? Do you see something similar with the product or services you provide to your customers? What is your value in the eyes of your external and/or internal clients? Do “freebies” increase your market share, or do they dilute the value of what you have to offer? I would love to hear about your thoughts about what increases and decreases your value proposition, both in the work environment, and also even at a personal level. Please add your comment below.
7 Comments
I believe that some free information is needed however we don’t want to give out the whole story free but encourage our fellow customers that we are well informed in our business and they may get guidance for our products or services as necessary.
Hi Merge,
Reading this brought to mind a related adage that I found to be true. “Man is only committed to what he pays for”. I found this out through organizing my family’s reunion. The first time I held the reunion, I paid for the hot dogs & hamburgers on my own. Many people said that they would come to the picnic, but then they cancelled or just flat out didn’t show up. Several years later I asked people to send me a small fee to offset the cost of the food. They sent a check and sure enough they showed up at the event!
Totally agree. Our accounting firm tries NOT to be the cheapest firm in our area so that we don’t compete on price or other manipulations.
That said, we have been running a bi-monthly free seminar on Smart Tax Planning for Entrepreneurs that gives attendees a sample of our expertise without giving away the whole story.
I agree completely that people put less value on something they don’t pay for. One only need look in their own household if they have children … our kids grow up getting the “latest and greatest” stuff because their friends have it or mom and dad want them to “have everything I didn’t have.” Watch how fast the highly-desired things get broken or lost – oh well, I’ll get another one. These attitudes follow the kids into adulthood, where I see it constantly, in many different scenarios.
In our business, we give away things that have nothing to do with the business: candy, pens, little “treasures” a client can take with them to remind them of where they got them. The business items still cost the same, but we are the place they enjoy coming to because they always get something free, no matter how small.
Ha Laurie, I was actually thinking about teenagers when I wrote this blog post. A young person I know recently discounted the advice he had been getting “for free” from his parents, but thought the same advice was absolutely brilliant when he had to pay someone else for it 🙂
Hi Merge,
I have done quite a bit of volunteer work over the past several years and have found that when organizing an event, the only way to ensure attendance is to charge a nominal fee. It seems that if people pay even $1 for an event they are more likely to attend than not attend.
Interesting to read everyone’s comments — apparently Andre Michelin was on to something! I still struggle with achieving the right balance — what should you charge for and what should you give away?