The Power of Free, Enter The Behavioral Economics Realm
Posted by Itai Boublil on Fri, Aug 27, 2010 @ 07:45 AM
In the inbound marketing realm, 'free' rules! We have free webinars, free ebooks, free data charts, free content, etc. Have you ever wondered, though, why companies are willing to invest so much time, effort and resources to create 'free' incentives?
Enter the behavioral economics realm, where two worlds known as social norms and market norms exist side by side.
In the social norms realm, friendly requests and free offers, created by companies through the use of social media, shape the daily interaction. In this world (in the context of inbound marketing), companies provide us with insightful free knowledge, refer us to free webinars, or even let us download free ebooks that detail a topic that interests us. All for free!
Why, then, the allures about all that is free?
The short answer is that social norms are wrapped up in our social nature and in our need for a community. This type of norms are usually 'warm-and-fuzzy', and don’t require any instant paybacks. It is like keeping the door open for that person walking right behind you.
From a business perspective, social norms are not only inexpensive, but often more effective in the long run. While webinars, ebooks, and daily blog articles are all financially inefficient (it costs money to produce them), they are still important social lubricants.
It is this type of social norms that help us build long-term relationships and make friends that can sustain us through the ups-and-downs of our business. (Read this great example.) Sometimes a 'waste' of money can be worth a lot in real terms when taking the social norms approach to promote your business.
Market norms, on the other hand, is a world where exchanges are sharp and often time include fees, prices, and paid packages. In the marketing realm, these actions are also known as traditional marketing, and it’s when companies try to push their products on us, using tactics that leave us resentful and, worse, with products and services we don’t want. (For example, a two year locked contract).
Marketing Takeaway
When developing your inbound marketing plan, keep in mind the rules of social norms. It is important to remember that money can only take you so far, and that social norms are the forces that can make a difference in the long run.
How do you use social norms in your business?
About the author: Itai Boublil is a marketing manager at Princeton University and can be found on Twitter as @ItaiBoublil.