October 06, 2007

The Free Lunch

So, there's no such thing as a free lunch?

Well, I was invited to one on Friday and left it well-fed but wondering how the whole thing around perceived value plays out when something is offered for nothing.

A couple of times a year, I'm a guest of the Hong Kong Ireland Business Forum when they host a dignitary from the city that was my home for ten years back in the nineties. I've been attending for the past four years or so, and in that time, I've never once been approached by anyone there to talk about how my experience of running a business in Hong Kong might be useful to others in the forum. Or how I might build on my own links to do business there. As a result, I attend now for reasons that are more sentimental than businesslike. On top of that, the other guests are always an interesting mix and the chat at the tables (although only occasionally about Hong Kong) is usually good fun.

Whilst I suspect that we're invited more as bit players to put on a good show for the visiting bigwigs, this is a real missed opportunity for the Forum which is in danger of devaluing the potential for business between the two economies (as well as the individual contributions that could be made from around the room). I'm not suggesting that the Forum charges for lunch but they should seek a premium of some sort even if that's by way of purposeful dialogue.

In the same vein, there's an ad that runs on local radio here that insists that good advice should be 'free, free, free'. Unsurprisingly, I don't agree. I can't recall what they're promoting - and even if I did I'm not sure I'd tell you as I'd hate to think that I somehow gave those clowns more publicity - but it's expertise of one kind or another. Free expertise.

I find that free advice is usually ignored as the one receiving it puts no value on it. And although it sometimes seems a clever way to attract new business, it almost always results in a lop-sided relationship where it's more give-than-take for the business owner. Which leads in turn to the resentment, begrudgery and corner-cutting that leaves neither party truly happy. It's one of the reasons we at Islandbridge don't participate in tender applications that usually amount to nothing more than free consulting.

When it comes down to it, there's no such thing as a free lunch. Someone somewhere has to pay for it.

The music group Radiohead know this. They're releasing an album In Rainbows and inviting buyers to pay what they want for it (queries on 'how much?' are answered with 'It's up to you' and follow up queries with 'No really, it's up to you') which has led to some in the press suggesting that they're giving it away for nothing. But it's not for free. Radiohead are tapping into the deeply respectful relationship which they enjoy with their fans and it's no surprise to learn that the average price being paid for the album download is US$10. The Radiohead fan knows that nothing of any worth is for free and the group's confidence in the goodwill of their fanbase looks like being rewarded (in addition to attracting heaps of well-deserved publicity).

So don't fool yourself that you can offer a free lunch and get away with it. Even though a generous invitation to dine or take advice at your expense is always tempting, the issue of perceived value must be tackled by the brand-owner as it sits right at the heart of the positioning of the brand in its market. If left ignored, it can quickly devalue the business in the eyes of the customer and leave the owner out of pocket, resentful and feeling like a mug.

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