S1 Ep3 - Free is not neutral

Free feels like a win, but you can also feel like a warning. People sign up fast, then they disappear faster. Today we're unpacking why free is not neutral. If you use trials, discounts or freemium, this will save you some pain. Welcome to ThinkShift, the podcast where neuroscience meets business. This episode is for you. If you're for a free trial, a free consult, a free audit, or a freemium product, you'll learn what free signals to the brain and how to use free without training people to value your views and views. Hi, Leanne. Hi, thanks. Yeah, good. How are you going? I'm all right. Key question for you today, Leanne, is when someone sees free, what is the brain doing in the first second? The first thing we think it's doing is that we're getting something for nothing, but it's actually not what really happens. It goes, "Oh my God, what's the catch?" "Oh my gosh, this is a risk. What am I going to fall for? Is it something that I'm going to regret later?" And even though it isn't icing and we see free, we think we see free and go, "Oh, I want to get that." But deep down, we're actually looking for risk. So it's not as. It's like, "What's the catch?" I know, that's right. Yeah, so it's not as elaborate and enticing as we think it is. And often I'll talk to someone around, "Why did they purchase this product or what was the incentive behind?" They go, "Oh, they said it was free." And I'm like, "You know, it's not. That's just the byproduct. It's actually not that it's free. There was something else that drew you to that to solve a problem." And then it just happened to be a free, something on top. But that is not the instigator. Right. That's not the catalyst. All right, let's talk a bit about the science. Why is free, not as powerful as we think? Yeah. And because we do think there's a risk and it's a catch. Also, we're conditioned now to think there is something behind this. Nothing is for free. I'm going to be paying for it somewhere. I'm going to. There's a cost somewhere. I just can't see it. So we're starting to lose trust. And also, there's a bias called loss of version. And loss of version is that we put twice as much power into gaining something, than losing something. So if something is free, we sort of don't care. If we think we're going to lose something, then we actually stand up and go, "Hang on a minute. This isn't right." But if we're going to gain something, twice as much power in losing something, then gaining something, we're going, "Okay, status quo is okay. I feel okay how I am now. Free is good. There's no powerful if you're about to lose it." It's interesting around the whole free model. And I know there's a saying that if the product is free, then you are the product. A bit like when you sign up for social media or any of those online platforms. Oh, it's free. I can sign up, but that's because you are the product. You're the one that's paying the price in some way, whether it's eyeballs on ads or whether it's whatever it might be, data mining, whatever it is. So yeah, free isn't all that it's cut out to be. No, it's not. I mean, look at these apps and a lot of games that have in, you know, in-app purchase, which they have to advertise by a law. They wouldn't if they didn't have to, but they have to. So what happens? They get you hooked. They get you your dopamine, huge, opening spite, you feel good. They'll give you a certain number of games. We start scoring on the board, start feeling good. I can do this. The next thing is no longer free. Yeah. But because you have committed what we call commitment bias, or we are, there's an ownership towards that particular thing. We've put, you know, I've been spending how many nights, you know, getting a score and even if there's a leaderboard, and I'm now third on the leaderboard, look at me. Am I willing to give that up? Am I willing to relinquish that? No. So what happens? We start paying. So even though it seems like it's free, it's not. And people know that. So when they see something that's free, they go, okay, I'm bound. It's going to be a cost. But until there is a cost, we still think we're getting it for nothing. Let's talk about perception for a second. Why can free reduce perceived value? So again, coming back to risk. What's going on here? Why are you in a position to give something away for free? What is it that you're hiding? What is it that you want me to do? Is this in my best interest? Normally not. Normally not. I want the consumer, I want the customer to act or do something for me. But it's actually not about you. It's about the customer. So the word free on the intent free is what's in it for me as a business owner, which is wrong. It should be what's in it for the customer. So the primary insight is in secondary emphasis is around the wrong way. So we start thinking, we do fall forward absolutely, was we see free? We don't realize that it's actually giving us a cortisol boost, which is, oh my god, should I or should not. But we do get sucked in because we think at the end of the day, it's going to be best for us. And people do it with good intentions. But unfortunately, that's just not the case. I think as well, with a brand that has offered many free items, I can't think of one off the top of my head, but it signals low confidence. I've signals low confidence. And why is it so free? It must be low demand. No one wants it. Yeah. Why is it free? Like it's a real way. You're giving it away. Yeah, that's giving away. It's distrust there. 100%. You're giving away because you can't sell it. Yeah. You're giving it away because it isn't any good. You're giving away because no one's going to learn anything from it. I'm not going to get anything from it. And it's certainly not going to solve anyone's problem. So and a lot of people see it in free now as a lead magnet. You're just trying to get me hooked. You're just trying to get me in. You're trying to get me on your database. You're trying to get me to engage. Well, if you want that, do it properly. What is it that you can offer me rather than just throwing away a something that's free? So we're touching on users here a little bit and it sounds a bit sassy. What we're talking sassy. Sassy. Sassy. S-A-A-S. Different sassy. Why do free users often churn or ignore onboarding? So commitment, right? So you've got it for free. What does it mean means nothing? So even if you paid a dollar or two dollars, there has to be a decision that needs to be made, a decision to buy something. But it's not so much that it's the decision to commit. I've put some effort into purchasing something no matter how big or small. So I'm going to make use of that. I've deliberated, done some due diligence around is this good for me or not? Because I've got to pay. I have determined, yeah, this is a great product for me. So I continue. And once we have commitment by its ones, we start, we tend to, if we've made a decision, we tend to continue. So we go, well, I did this for a reason. I want to prove to myself I made the right decision because I don't want anyone to tell me that I made the wrong decision. So I'm going to continue and I'll then onboard and then I'll start using the product. But when it's free, there's no incentive. There's no reason. I was like, it's just there. Why would I bother? And so the decision process and how the brain, what we call decision sciences and how the brain interprets that, it's very different feel. So we have to actually make a decision to do something. It's not just a subconscious action. So I've mentioned before this very famous study by Professor Brian Newton from Stanford University. And what he did is he got a group of people and put them into a, an FMRI and an FMRI, so he stands for Functional MRI. So they go into an MRI and MRI stands for Magnetic Resonance Imaging. It looks like a CT scanner. It's sort of as a big gantry, a big tunnel that you go in and images any part of the body, but in this instance, in image the brain to see it's function in real time. So you could have a look at it and you can see, well, this is what's happening. Wow, look at that. It's amazing. So he had a box of chocolates and he showed these participants a box of chocolates, which is yummy, right? He doesn't want a box of chocolates. Right? So he showed, and he showed these images for four seconds. He showed them box of chocolates and he had a look at the part of the brain that highlights reward and pain. So when he showed them the box of chocolates, the area of the brain for reward, activation highlighted. Yep, that's makes sense. He then showed them the box of chocolates with a price. And now I think I'm not sure which way this is going to go. Well, I'm a whole, the reward activation part of the brain highlight again. So even though there was a price there, it didn't matter. But then he showed them a picture of the box of chocolates with the price and a yes or no. And they had to actually make a decision about whether they're going to purchase it or not. So start looking, thinking about consequences, whether this could solve a problem. What am I going to do? What happened? They thought that the reward activation was going to highlight as you would think in a complete opposite happen. The pain activation areas of the brain highlighted. People couldn't make a decision. People decided I don't know anymore. What's in it for me? Is this good? Is this good? Is it bad? I need to weigh it up. I haven't got enough time to weigh it up. I only saw it for four seconds. So the decision that we make is more important instead of the actual, is this good for me or not? Right. We've talked about brands that are known. Yeah. What about when brands are unknown? Is it more catastrophic? Yeah, I mean, the use of the free concept is catastrophic really for any brand, but more so for brands that are unknown brands that are known can leverage their reputation and you know product expertise services. Client-based reviews testimonials, social pre-authority and they can sort of get away with that where unknown brands don't have that to rely on, don't have that to leverage. And he can give the perception of you don't know what you're doing, you're starting out, you don't have expertise, the products know good, the services know good, you're your, there's a sense of urgency or desperation. And consumers pick that up, we really do, I mean, think about yourself, you pick it up, they're trying to do this, you know, even trying to get people on the database, you know, trying to, you don't do it that way. So it actually can really backfire, especially for those starting out for startups and new founders, yeah, it's something that I would stay well away of. All right, let's talk about business application now, so I want to make it practical because most businesses use free in some form, I would say at some point, for better or worse, mainly worse. Do you use free in your business or even on your website, you do? Absolutely not, never. I don't even give pricing away because I think it requires a conversation, but also I'm in the service base game. I don't have a product per se, but yeah, all my work is bespoke, so it needs to be priced accordingly, depending on who's buying it from me. So that's definitely no freeze on my. No, no, no, no, one thing I do have, and I think we will need, we need to talk about this too, is I have a thing called borrow my brain on my website where people can get a complimentary, right, it's not free. It's complimentary, which you think, oh, that's the same as free. No, it's not actually easy. And there's a complimentary, you know, 30 minute borrow my brain, we can talk about things, however, it needs to be suitable and it needs to be for the right people, it's not for everybody. But it certainly is free. You will actually not see me right or use the word free anywhere. What's the difference in the brain trigger? So complimentary, if we go back to that loss a version of we put twice as much emphasis on losing something, then gaining something. So if the status quo is like, hey, I'm okay, how I am, I'm going to get something free. Well, do I really want to know I'm okay where complimentary is I am not losing. So the interpretation of complimentary is there is no loss, rather than there is a gain. So I'm able to borrow the brain of an expert and it's not going to cost me, it's at no cost, rather than I'm going to gain something. So I've purposely positioned it in a way where the customer, the consumer will look and go, I'm going to get something, I'm not going to lose anything by talking to me or my team. Rather than they're going to gain something by talking to me or my team. So I've positioned it a different way when people realize they're not going to lose anything. They're more likely to trigger and agitate them to make a decision. Plus also more often it's the right decision rather than people just thinking, I'm just going to use it. It's free whatever doesn't matter. I'll just see in there, yeah, tie kickers and time wasteers. So there is a there is a definite difference in the way that we interpret both these words. How do you make a free offer? Feel premium or cheap? We're giving it a value. They're not free at all. A dollar. A dollar. There was a study that was done where there was an offer at a gym. And the gym, they had two sort of cohorts of people, two groups of people. And the one was, here's your free seven day pass to go to the gym or here is your seven day pass for one dollar. So those that paid a dollar were committed because even though it was just a dollar. It's commitment. commitment bias, right? Yeah. So we talked about commitment bias. I put some effort in. Even though it's a dollar. I've still actively done something. And so those that actually paid a dollar were more committed and actually used. And the seven day pass and then went on to become a subscriber and join the gym where those that were free, majority of them didn't even turn up. Yeah. So the best thing to do is give it a value, even if it's minimal because it needs required effort to get commitment. Skin in the game. I found this with my fitness guide. Okay. And I think it's because if it was free, no one would want it, but as soon as I put a dollar value, even if it was $47,000, the downloads for that went through the roof because of that perception that not only the perceived value, but if I actually pay some money, I would then go through with the training program. If I don't pay for it, I won't do it. No, no, I'm the same. And we're so hyper connected and so busy these days. There has to be an incentive and there has to be a nudge, what we call nudge, as you know, to activate us to be able to do it. And the other thing too, that's really interesting because I have a number of ebooks and guides on the website, which get downloaded a lot and of course they are all complimentary, which I've written, they are complimentary. And I have had a number of people that have said to me, why don't you sell them for a low cost? Why don't you sell them $4, $10? Why don't you sell them for $15 or even $5? I mean, I think $5 is a bit of a joke really. Yeah. I mean, that's a bit of a silly value. It does. But the thing is, is I'm also known, and this is where your own, your corporate identity, as your business, but your own identity within the work that you do comes into play. I'm known, you are exactly the same Clint. We are both known to give a lot of guidance and help and offer people a lot of our IP. I mean, we're doing it here, a lot of the work that we're doing. And so we're known to help. We get a lot of clients that will then engage because, you know, it's an extremely intriguing, interesting topic and it's powerful and it works. So we are known to offer these things complimentary and we're happy to do it. If I then all of a sudden decide or you decide, that's now going to have a cost, it changes the whole perception and model of how we operate in an ethical space. So this is the other thing too. Optics, right? That's one of your favourite works. It is. You said a lot. So the thing, you write, it's true. So and this is where I don't want our listeners to go, right, I've got all these downloads that I say, which I'm sure a lot of you do, free download, change the complimentary. That's great or at no cost, which I know we're going to come to. But don't all of a sudden then if that's how you operate and that's what you are and how what you do. Don't all of a sudden say, well, I lean and Clint said I need to put a value to this and now sell it because it actually contradicts how you operate yourself. So you need to be very careful with that. So I'm not saying that everyone go out there and anything you got free, put a cost, it's rewriting the way that you have the offer for your customers and your clients, but also a need to marry with how you operate your own business. And I know we talked about this an episode or so ago. And that was if you are going to increase that value from zero to something, then you must increase the value of that product some way. Absolutely. Add additional make it V2, V3 or whatever it is. Add additional resource to be able to change the scope and therefore you can now add value at a different price. Yeah, exactly. Yeah. The reason why now has a cost is because inside we include ABC. Yes. Totally fair at that point. Yeah. All right. Free trial, the freemium, the money that guarantee which is safest for trust. Yeah. So free trial, I just get a red flag and that is for a lot of people. It's like, yeah, right. You know, again, coming back to watch the catch, what the catch is, is that often the free trial you need to put any credit card details. Or it's limited. Or limited trial. Or it's not all funculey. Yeah. So which is silly. There is nothing used for free. I just want to put that out there. It's big core, but nothing used for free. There is a cost some way wherever it is or however it's maneuvered into the economy or the commerce of this, the economics of it, it does. And we spoke about this before, particularly with freemium. Yeah. So they get you into this platform that you now can't live without using the entire suite, pre-charge all the features. And now I'm so intrinsically tied to this system that I can't leave. I've spludged sweat and tears to get this set up. Now I'm not going to leave and I'm going to waste it all that time. No, I'm not. No, I'm not. So I am going to, it is cheeky. It does work. It does work. My name is Garantine. Now you know the relationship I have with that word, Garantine. I said in one of the previous episodes, you know, Garantine, life is death. And taxes. Oh, yeah, taxes. Yeah, actually, funnier. I was teaching an awesome group company in the US. And of course, taxes, yeah, in the end they said, "Death and taxes, death and taxes." I'm like, yeah, you're right. With Garantine, nothing is Garantine. And we aren't silly. What are you going to do if, you know, what's the expectation of Garantine? Is my Garantine the same as what you're Garantine? And if all of a sudden I say, "Well, you Garantine, this isn't happening." What's going to happen? The rigmarole and the caffuffle that you've got to go through to either get your money back, or the correspondence is not going to happen. not worth it. So it actually means nothing. And in fact, you can't guarantee anything. I did have a client that did a part of his proposal was that you will get three conversions per month guaranteed. And when he told me that, I said, that needs to be removed because what are you going to do if they don't? And he goes, well, they very, very do. And I said, I didn't ask that question. The question was, what happens if you don't? He's like, oh, no, well, you've got to give the money back. And the thing is, it's not just straightforward because it's reputation or risk. They're losing trust. They're not going to, they're going to give you a bad review. It's not worth it. So if you can't promise it, or there's some kind of risk, no matter how small, do not guarantee, in fact, it's a word that is not even in my vocabulary when I use it when it comes to business. It's just, yes, dangerous word. Yeah. I know we've kind of put food free across the board here. But if you were to use it, yeah, you were, yeah. Is the word free better than zero dollars? Yeah. So again, yeah, no, sounds like we're put food free. We see it everywhere. But there are other alternatives that are much more powerful and much more effective to use. So complimentary is one of them. And I explain the reasons why behind that. The other thing is the words at no cost. So again, we're bringing in that loss of version bias. So we're not losing anything. So it's powerful or zero dollars. So the dollar sign with a zero. So it's actually costing me nothing. So again, it's not free. It's actually costing me nothing. Very, the interpretation is very, very different. The brain triggers are very, very different. If we go back to the experiment, I just explained around the reward activation and the pain activation parts of the brain, the at no cost is actually the reward activation, not the pain activation. So go, oh, at no cost, not going to cost me anything. It's not going to, you know, alapocket. I don't need to commit. It's safe. It's what's the, there is no, what's the cash because at no cost, I'll give it a go. So you more inclined to actually sign up, engage, download with something that is at no cost, dollar sign with a zero or complimentary. We spoke about this before we came on air and free shipping is one that comes to mind quite often. Yeah. And it's also, it's always a experience of the user. Well, for me, at least I can't talk for everybody. Then when you get to the checkout and it's free shipping, you feel that you've won the lottery. It's like, oh, thank goodness. And if, in fact, it wasn't free shipping, you had a close, close browser. You'd be like, no, I'm going elsewhere. I can get a free elsewhere. Yeah. Yeah. So that is the free shipping is, there is an expectation. And we, and I, we feel it. We, we feel this, this, this, this, this, this not in our tummy. When we go to the checkout, you know, checkout now is, and we see the little shipping come up underneath the product description of what we've got. And it might even say to be calculated or calculated and check out. I know. Right. And you're going, what on earth is this going to be? And then it might say free or zero. And you like, oh, fantastic. Yeah. Yeah. Don't remember this is brilliant. And it is incentive to then go ahead and, and complete the purchase. The thing is, is that even with free shipping or complement you shipping, they're still shipping. It's just that it's in the cost of whatever you're buying. It is hidden. And it may not even be just that particular product. It's the way that the company is structured their shipping policy and their shipping framework. But it is there. I mean, it costs to ship rightly so. So, but that in that, that perception of, well, I'm actually getting something for nothing. Again, that loss of version bias. There isn't anything else I need to outlay the cost of the product that I expect is the cost of the product. We then go, click checkout, check out your details. And next thing, you know, with what we've purchased it. It's interesting when you compare like for like and look at products in two different sites, you'll pay slightly more if the free shipping is there. Yeah. It is interesting. I mean, I don't know how many times, and I'm sure you've done this Clint and you guys listening to that, and it's very cleverly done. And it would be designed by and you're a designer, someone like Clint, where you've got your little, the line that goes across the top, how close or how far away you are from free shipping. And sometimes it might be like, and it does my head in six dollars and five cents. And you're thinking, what on earth am I going to buy? What can I add? Look at that. If you're a six dollar, but the thing is you go back, and you have a look, what can I add? Yeah, it's a, yeah, it's a, some more clips from my hair. I know something that you think, what can I, but when you think of it, I'm spending money to save money. And often, which is what they bank on, which is the whole reason the nudge behind this is that you will go back and you will actually spend more money with them than you would if you just paid for the shipping costs. So you might end up getting, I might get, you know, a lipstick that's $25, where just the shipping itself was 10. My wife loves this term, spend and save, which is a contradictory term, but she loves it. That's a spend and save on. You know, that means you're spending, you can't save and spend it. That's not, no, it's genius. Yeah, it is. Yeah, it's so good. So good. All right. So the real question is not should we offer free? It is what behavior are we training? What behavior are we training? What decisions are we being conditioned to make? So what is the behavior? How do we make these particular decisions? Why and getting the understanding behind why we're making these certain decisions? Why is it that we see free? And we go, we think we're getting something when we know and we know. So it's, yeah, it's conditioning and a different way of thinking and the way that we conduct our decision making. Here's the shift. Free is never neutral. It changes what people expect. It changes what they pay attention to and it changes what they think you are worth. One practical action for the listeners out there today. This week, look at your free offer. Write down the exact behavior it attracts. Then ask, is that my buyer or my bargain hunter? That's think shift. I'm Clint. On the end. One idea on shift in under 30 minutes. This change how you think, show it with someone who makes decisions for a living and we'll be back next episode. This is a much made media production.