The 4 Letter Word That Can Grow Any Business | Dean Holland | TEDxBolton

Summary

The speaker shares insights from a decade of entrepreneurial experience, highlighting the power of 'free' in growing businesses. He emphasizes three key strategies for business growth: acquiring new customers, selling more to existing customers, and encouraging repeat business. Drawing from his visit to Borough Market, he illustrates how a cheese store's free samples attracted customers and increased sales. He suggests that offering free items, even if it seems counterintuitive, can be a highly effective marketing tool due to the law of reciprocity. The speaker encourages businesses to consider how they can apply this principle, whether in physical stores or online, to attract customers and build trust, ultimately leading to increased sales and business growth.

Takeaways

• 😀 The speaker emphasizes the importance of having an entrepreneurial spirit and learning from both successes and failures in business.
• 📈 There are three primary ways to grow a business: acquiring new customers, selling more to existing customers, and encouraging repeat business.
• 💡 The speaker highlights the power of the word 'free' in marketing, as it can significantly increase response rates and customer acquisition.
• 🧀 The story of a cheese store at Borough Market demonstrates how offering free samples can attract a crowd and lead to sales, illustrating the principle of giving value first.
• 📚 The concept of 'reciprocity' is mentioned, where customers feel obligated to buy more after receiving something for free, thus increasing sales.
• 🛍️ The idea of 'free' is not just about giving away products but about creating a relationship with the customer and establishing trust.
• 💡 The speaker suggests that the value of a physical item given for free can be perceived higher than a digital one, which can be more effective in attracting customers.
• 💻 The speaker shares examples of how 'free' can be applied to online businesses, such as giving away physical USB sticks with digital content and charging for shipping.
• 🎁 The strategy of giving away free items related to the business (like makeup brushes or books) can attract the ideal customer and lead to future sales.
• 🚀 The speaker encourages the audience to think creatively about how they can incorporate the 'free' strategy into their own businesses to grow and succeed.
• 🌟 The overall message is that offering something of value for free can be a powerful tool for attracting customers, building trust, and growing a business.

Q & A

What are the three primary ways to grow a business according to the speaker?

The speaker identifies three primary ways to grow a business: 1) Getting new customers, 2) Selling more to existing customers at the point of sale, and 3) Encouraging repeat business from customers.

Why is customer acquisition considered a key challenge in business growth?

Customer acquisition is a key challenge because it involves getting strangers to trust the brand enough to part with their money, especially when there is significant competition.

What is the significance of the Borough Market story in the speaker's presentation?

The Borough Market story serves as a real-life example of how offering free samples of cheese attracted a crowd and led to sales, illustrating the power of the 'free' concept in marketing.

How does the speaker suggest using the concept of 'free' in online businesses?

The speaker suggests giving away physical items related to the business, such as free makeup brushes or USB sticks with valuable content, to attract customers and establish trust.

What is the psychological principle behind the effectiveness of 'free' in marketing?

The psychological principle is the law of reciprocity, where consumers feel obligated to buy more when they have received something for free, as they feel indebted to the provider.

What is the role of the 'free' offer in the context of the cheese store example?

In the cheese store example, the 'free' offer serves to attract a crowd, capture attention, and create a sense of excitement, which leads to customers trying the product and making purchases.

How does the speaker use the concept of 'free' in their own business?

The speaker uses the concept of 'free' by giving away physical items like USB sticks with valuable content, charging for shipping to cover costs, and using this as a way to attract new customers.

What is the importance of targeting the right audience with the 'free' offer?

Targeting the right audience with the 'free' offer ensures that the items given away are relevant and appealing, increasing the likelihood that the recipients will become paying customers.

What is the role of trust in the process of converting free offer recipients into paying customers?

Trust plays a crucial role as it is established when customers receive a valuable free offer and enjoy it, making them more likely to consider future offers and become paying customers.

Can the 'free' strategy be applied to various types of businesses?

Yes, the 'free' strategy is universally applicable to various types of businesses, as demonstrated by examples from the beauty market, a software service, and a chiropractor's offer.

What is the impact of giving away free items on the growth of a business?

Giving away free items can significantly increase business growth by attracting new customers, establishing trust, and creating opportunities for future sales.

Outlines

00:00

🧀 The Power of Cheese in Business Growth

The speaker begins by sharing their entrepreneurial journey and the key to business growth they've discovered over the years. They introduce the concept of increasing customer base, selling more to existing customers, and encouraging repeat business as the three main avenues for growth. The speaker then pivots to a personal anecdote about Borough Market in London, where they observed a cheese store using free samples to attract a large crowd. This strategy not only garnered attention but also led to sales, as customers who enjoyed the samples were offered the chance to purchase more. The speaker is intrigued by this marketing tactic and begins to consider how it could be applied to their own online business.

05:01

📈 Leveraging the 'Free' Strategy in Sales and Marketing

In this paragraph, the speaker delves into the effectiveness of the 'free' strategy in sales and marketing. They recount their experience at Borough Market and how the cheese store's approach to offering free samples led to significant sales. The speaker then discusses the psychological aspect of free giveaways, referencing the 'law of reciprocity' where consumers feel obligated to purchase after receiving something for free. Citing an article from Time Business Magazine, the speaker highlights a successful case study of a company that increased sales by 38% through a free product giveaway. The speaker emphasizes the importance of targeting the right audience with the right free offers to attract customers and build a foundation for future business.

10:03

🛍️ Practical Examples of the 'Free' Strategy in Various Businesses

The speaker provides practical examples of how the 'free' strategy can be applied across different types of businesses. They discuss traditional marketing tactics such as leaflets, coupons, and free offers in restaurants and chiropractic services to illustrate the universal applicability of the strategy. The speaker then transitions to online marketing, suggesting that while digital giveaways are common, physical items carry a higher perceived value. They share their company's shift from offering digital to physical freebies, such as shipping USB sticks with valuable content, and how this has significantly impacted their business growth. The speaker also mentions other businesses, such as a beauty market subscription service and a software company, that have successfully used the 'free' strategy to attract customers and grow their businesses.

15:04

🔑 The 'Free' Strategy as a Key to Business Growth

In the final paragraph, the speaker concludes by emphasizing the power of the 'free' strategy as a key to growing any business. They explain that offering something for free establishes trust, gets new customers through the door, and sets a benchmark for future business. The speaker encourages the audience to consider how they can incorporate the 'free' strategy into their businesses, as it has been proven to increase response rates and customer engagement. The speaker ends with a call to action for the audience to explore the potential of the 'free' strategy in their own business endeavors.

Keywords

💡Entrepreneurial

The term 'entrepreneurial' refers to the quality of being enterprising, innovative, and willing to take risks in business ventures. In the video's context, the speaker describes their personal journey as an entrepreneur, which has led them to explore various business opportunities, both offline and online. The entrepreneurial spirit is central to the video's theme as it embodies the mindset required to grow a business and test new strategies.

💡Response

In the video, 'response' is used to describe the reaction or engagement from customers towards a business's offerings or marketing efforts. The speaker emphasizes the importance of increasing response rates as a key to business growth. The concept is illustrated through the example of the cheese store, where giving away free samples elicits a positive response from customers, leading to increased sales.

💡Acquisition

'Acquisition' in the context of the video refers to the process of gaining new customers for a business. The speaker identifies customer acquisition as one of the three primary ways to grow a business, and also as one of the most challenging and expensive aspects. The video discusses strategies for effectively acquiring customers, such as offering free samples or products to pique interest and build trust.

💡Reciprocity

The law of reciprocity mentioned in the video is a social principle where people feel obligated to return a favor or respond in kind when someone does something for them. The speaker uses this concept to explain why giveaways or free offerings can boost sales, as customers who receive something for free often feel compelled to reciprocate, which can lead to making a purchase.

💡Value

Value, in the context of the video, pertains to the worth or usefulness that a customer perceives in a product or service. The speaker discusses delivering value to customers as a means to facilitate an exchange, which is the essence of business. Providing value is also a strategy to encourage customers to return and make repeat purchases.

💡Giveaways

Giveaways are promotional items or offers provided for free by a business to attract customers or incentivize certain behaviors. The video highlights the power of giveaways as a marketing strategy, using examples such as free cheese samples and free books to illustrate how they can drive customer interest and sales.

💡Trust

Trust is a crucial element in the customer-business relationship. In the video, the speaker talks about how offering something for free can help establish trust, as it allows customers to experience the product or service without the risk of a financial commitment. Building trust is shown as a key step in converting first-time users into repeat customers.

💡Marketing

Marketing, as discussed in the video, involves the strategies and tactics used to promote a business's products or services. The speaker shares their insights on marketing, particularly focusing on the effectiveness of offering free items as a way to attract customers and increase sales. The concept of 'free' is explored as a powerful marketing tool.

💡Sales

Sales are the process of selling products or services to customers. In the video, the speaker discusses three ways to grow a business, one of which is to sell more to existing customers. The video also explores unconventional sales techniques, such as offering free samples to encourage purchases, demonstrating that sales can be influenced by creative marketing strategies.

💡Customer Retention

Customer retention refers to the strategies used to keep a customer coming back to make additional purchases. The video mentions that the bulk of a business's profits are often made once a customer is acquired, by bringing them back to buy more products. The speaker uses examples like free offerings to illustrate how customer retention can be achieved.

Highlights

The speaker emphasizes the importance of being entrepreneurial from a young age and its influence on transitioning from offline to online businesses.

Three key ways to grow a business are identified: acquiring new customers, selling more to existing customers, and encouraging repeat business.

The majority of a business's profits are typically made by bringing customers back to purchase more products.

Acquiring a customer is highlighted as one of the most difficult and expensive aspects of business due to competition.

The story of Borough Market in London and the effectiveness of offering free samples as a marketing strategy.

The concept of reciprocity is introduced, where customers feel obligated to buy more after receiving something for free.

An example of a 711 annual Slurpee giveaway is cited, which surprisingly increased sales by 38 percent.

The importance of understanding the ideal customer and offering items that appeal to them for free is discussed.

The use of digital downloadable products as giveaways is contrasted with the higher perceived value of physical items.

The strategy of charging for shipping costs while giving away products for free is detailed as a way to cover costs.

The idea of using free offers to attract the ideal customer and then upselling additional products or services is explored.

Examples from various industries, including dog training, beauty, and website building, are provided to illustrate the versatility of the free offer strategy.

The psychological impact of free offers in creating trust and establishing a benchmark for future business is explained.

The long-term benefits of offering free items to build relationships and increase response rates are discussed.

The concept of 'free' is identified as a powerful word in sales and marketing that can significantly grow any business.

The speaker encourages the audience to consider how they can incorporate the strategy of offering something for free into their businesses.

The transcript concludes with a call to action for entrepreneurs to simplify their approaches and not overcomplicate effective strategies.

Transcripts

yeah that's maybe instead of my

presentation today is to essentially

share with you perform a naked

probably over a decade of testing I'm

somebody that from a very young age has

been very entrepreneurial and that has

led me from some kind of interesting

failed offline businesses into the

online internet business world and

despite all the different things that I

do try and that I do test there's

constantly one thing that continues to

increase response and grow the

businesses that I am their own or and

involved in or advisor and that's what I

want share with you today and the story

is actually going to revolve around

cheese so we'll come back to that in a

short moment but just before we do I

want to just make sure everybody's clear

for those of you that pass do have

businesses or I'm looking to have

businesses there are only really three

ways for any of us to grow our business

the first of which is to get the

customers okay it stands to reason that

customer comes through the door of your

business or visit to your website and

purchasers that you are growing their

business the second of which is to sell

more to the customers at the point of

sale we're all familiar with walking in

the supermarket or a store and you've

got those items conveniently located

just for us to grab the chewing gum the

candy the sweets all these different

things they're there to obviously grow

that business to increase the

profitability of that business and the

third of which is to actually have those

customers return and buy from you again

at a point in the future now

incidentally as we look at these three

ways to grow a business and there really

is no other way ultimately to grow our

business other than this what I can tell

you from the different businesses I'm

involved in is typically the bulk of any

business

prophets will actually be made once

you've got the customer by bringing that

customer back to buy more and more

products but despite that none of that

can obviously happen unless you have

customers in the first place so as I

always look at business I always look at

these three areas first of all how do I

get more customers second of all now I'm

getting them how do I sell more to them

how do I deliver more value to that

person so that then exchange of value

takes place because that's ultimately

what business is about I'm giving you

value you're giving me some back and so

one of the key areas and one of the most

difficult I would say and one of the

most expensive parts of any business is

to actually acquire that customer in the

first place is to get a stranger

somebody that's never met never seen

your brand ever come across your

products never seen your website never

seen anything to do with you to have

that person actually trust you enough to

part with their valued their money and

give it to you especially when there is

so much competition for most businesses

that you're competing with so this

brings me back to my key story now I am

a big food lover in probably not to my

own health I absolutely look through

that to travel I love to eat

and try all different experiences that

generally revolve around anything too

much

and one of my favorite places in the

world just by all the places that I've

ever visited

I love Borough Market in London and one

of the very first times that I visited

for a market I remember walking around

and I was completely amused and in

complete my element that you could try

food for free agent walks around and

every moment it's excitement like the

kids just trapped in the swing store

like walking around the child is food

and we're picking just get it for free

and then I can decide what I want to buy

afterwards when I discover that and I

remember this experiences I walked

around and I remember looking at all the

different stall owners all the different

business ocean that was stood there kind

of quiet like texting on their phones

might not that's not cool and as I

walked around I also notice this huge

crowd I don't know if any of you would

like me but whenever I see a huge crowd

my curiosity takes over like what is

going on over there I've got to go and

take a look and so I stood there

actually she's proud of people and

everything look busy and buy or another

thinking what is happening as far as I

got closer and closer I realized that

was a cheese store now as I got closer

and closer I noticed these two guys all

dressed in white looking like chefs and

they're clean chef whites and one of

them was actually standing in front all

these different cheese samples like

little shavings of cheese and everybody

was crowded around trying it was like

free throw all along the cheese every

means they're trying some ago there's

momentum behind us that's amazing

and the other guys stood next in it also

in whites and as people were trying the

cheese he would say to those people what

do you think of it and as I got closer

and closer I was intrigued by my

marketing brain started taking over what

is going on over here so I got closer I

just listened then I just watched I

noticed something to my amazement the

guy was saying

and some people would say that not

really my favorite but others and quite

a lot of those people would actually say

I love this and immediately upon that

reaction you would say well would you

like to take some time if you want to

come over here and take a look I can get

some for the toughness and you can take

that home you would leave those people

to one side out of the way of the crowds

and we'll make a sale and I remember

standing back thinking huh

so you've attracted all of these people

this frenzy this crowd the swarm to you

and there's other GG store owners all

around but you've got this crowd you've

captured their attention and you've not

only given away this cheese for free but

you're making sales because of it I

remember thinking how different that is

to me in the time but how differently

you've not tried to persuade those

people to come and you've not tried to

force them it it's kind of the opposite

of what you might see as like the

traditional sales environment you know

that the car salesman is chasing you

around the car trying to get you to

purchase and they always chase you away

right we all have experiences like that

some of these try to force a sale on you

and really all it does is make you just

retract and grow and these guys are just

they're like because it's great product

there some of it for free

now you try again would you like to

purchase more they were making a lot of

sailors that way and I remember standing

back thinking man how could I do this

with my online business how could i

engineer this same approach and as I

came away and I went into my madman

scientist zone of doing some

I began to realize that ultimately one

of the most powerful if not the most

powerful words when it comes down to

sales and marketing this four-letter

word three four letters free now in a

context of things a lot of people when

they hear that they think as a business

owner even though most of the breeds and

that sound expensive doesn't that sound

counterintuitive like how am I going to

stay in business if I'm giving away

everything for free well I wanted to

show you a few things and then tell you

how we've adopted this into my business

and just get your mind thinking about

how it could be applied in anything that

you may be doing now or in the future

this is actually an article I came

across in time business magazine and

obviously I won't read all of this to

you but just to give it to you excerpt

handled wisely giveaways are all but

guaranteed to boost sales why one of the

reasons as a consumer you feel obligated

to buy more there is a law of

reciprocity taking place you given me

something I feel almost indebted to you

how many times have you felt that before

somebody's giving you something or

treated you well and if somebody's took

you out for food you think well next

time it's on me why is that because you

feel indebted to that person right now

there was also a test it's further on in

this article Americans at least 711 they

do an annual Slurpee giveaway it's like

absolutely

I guess and they'll add 4.5 million

drinks for free by all accounts you

would think this is going to be a huge

loss

they literally open the doors and say

come in how about for free it's a free

slurpie exhibition just come in walk

through the door get it for free

anything to me they actually increased

sales by 38 percent of that day because

what people do they got the free one

they loved it and they bought more think

about that just give it away for free so

when it comes to giving away stuff for

free to get customers then what do you

have to think about what process do you

have to go through well for me I'm

thinking will do is my ideal customer

who do I want to attract in the first

place

if I have a dog training business would

it make sense to give away cat treats no

right it's not going to serve my

business I have to think about who is

the ideal customer that I need to

attract what items what appeal to them

you know it again coming back to the dog

training example I've got a dog training

business what is going to actually

appeal to the right person the my

consultant I want people that are not

right attack perhaps a particular breed

of dog you know I've got an English

bulldog so for me if I was going to be

given something for free I want it to be

relative to my dog that's going to

attract me now if you're a business

owner with additional things to sell me

to do with English bulldogs I'm now a

prime custom of your business and you

attracted me to you by giving me

something for free

related to them how could we offer it to

you no I use websites ok and how can we

get an improvement it's obviously what

we talked about doing advertising we

have so many platformers now to get our

message in front of people but it's

actually become very very easy to get

the right message different to the right

people now I know not everybody is

obviously for most online business

internet e-commerce so I just want to

show you a few examples that you would

have seen in your everyday life because

what I'm saying to you here today isn't

necessarily revolutionary new it has

been used for decades and decades but

along the way somehow as entrepreneurs I

like to over complicate things and we

forget simple matters because when

something works we tend to think well

that seems too easy let me find it hard

away Emira complicate this so just to

show you how many times have you had

leaflets posted through your door before

you found them in stores or you've been

in restaurants and you find this is like

a coupon allow Joe looks like

pre-dessert nobody have to do to claim

the brief deserve we probably have to go

in and buy a meal but I've attracted you

you could be you could have two options

of two restaurants one you've got free

dessert for where am I going to go

they're both near each other but I can

redeem this factor at this one with a

free dessert I might prefer the food

over there you know what I can say two

pounds on the free dessert over here so

I'm going to go there and it's crazy as

human beings we actually almost can't

resist something that's great in it you

know that's a laugh just recently I was

in the news agents buying some some

breakfast that's picking up some bacon

various things and the lady behind the

counter just sew a seam each that okay

would you like a magazine

yeah it's women's magazine I couldn't

resist

and I still remember better all right we

look for Easter

chiropractors you happen to be a

chiropractor guess walk through the door

by offering them something to frame I

just think I'm showing you two examples

here restaurants and a chiropractor this

is universally applicable I believe to

any type of business what can you offer

for free to get your ideal customer to

take that first step through the door

and when that door is a physical

brick-and-mortar store or it's a website

ecommerce what can I offer for free

let's get that person through the door

now I said I've been able to when I

first saw that thing at the chief store

and where a market my brand started

thinking how could I possibly apply this

to online marketing TG commerce now a

lot of people it's very popular and very

common to give away digital downloadable

products like a free video or white

paper or report something you download

but that the C value of something

digital to compare to physical it

doesn't quite match a physical tentacle

item that you receive carries a much

higher value and that's what I saw with

the cheese this wasn't just some

make-believe picture of cheese like our

food and just look at it this was a

physical thing try the cheese buy the

cheese and so this is what I've been

doing in my company for the last two

three years and it's completely changed

everything and I mean everything I've

gone from for example giving away a free

video or a free downloadable white paper

to taking those same things and having

them put onto like USB sticks and now we

ship those at we give those away for

free

now incidentally because you're probably

thinking oh there has to be a cost to

that well there is but what we'll

actually do we give the items wait for

three and here's the clever part of this

we charge for the postage we charge for

the shipping okay so we don't

necessarily lose money because if you

recall the three ways to grow a business

won't get more customers that's what

we're able to do at a very high volume -

to solve lots of those customers at the

point-of-sale so when people order beans

free things and making is that small

normal amount of the shipping the

postage costs we then they're able to

offer them more things so this is just a

very effective way to attract out of

their customers ideal market into the

business so that we can then flow the

server further add value here's another

one I hope you don't find it too hard to

believe but I have involved in the make

of the beauty market so what do we do we

giving away free makeup brushes why do

you think the people that request and we

send out these free makeup brushes - do

you think they're interested in buying

additional major beauty products yes or

no absolutely absolutely we have a

subscription box service so they receive

stuff on a monthly basis the growing up

having hundreds and hundreds of people

just by giving away free stuff here's

another example a friend of mine right

he gives away free books this is one of

his books given away just under acting

about 100

right now he's not what human classism

author he's he owns a software service

an internet-based website builder by

giving away free books the company was

launched three years ago they are

approaching I believe 60,000 paying

members with a valuation approaching of

1 billion dollars in launched three

years ago gives away three books people

to get a free book they're interested in

building websites the office of the

membership to the website builder giving

away free book so why does free work

then let's just be very very clear on

this

it gets the great product that you own

or sourced into the hands of those that

want to need it without the risk without

having to sell them something so you

don't know me you don't know my company

you don't know the value that I can

bring to you so I got to give that

opportunity of creating that

relationship with you without asking you

to take a risk on it have a free thing

if you like it and I'm sure we'll do

business together again a future so I

there's some wealth and what you'll find

is long if sense about serving to give

it value in your business more will than

words it establishes trust it gets new

customers through that for a door like

the free deserve the brief chiropractic

get someone to take that step through

the door and it establishes a benchmark

to do future business because if I give

you something great that you enjoyed do

you think your parent or more attention

to me in future the answers yes

so guys this is the full letter word

that can grow any business and I want

you to look in all areas of business and

life going forwards how you can

incorporate this as much as possible

because nothing increases response rates

like the word three so thank you very

much Dean home

[Applause]

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