Most Internet startups probably have not heard of Bob Hacker. And the readers of this blog will either be disciples of his philosophy–perhaps without knowing the name–or have no idea what I’m talking about.
Let’s talk about the philosophy that many web startups have intuitively grasped. From the great man:
It’s the offer, Stupid! If you do not get the results you need or response is flagging, check the offer first.
Said in another way, by Denny Hatch:
The offer should be so clear and simple that an idiot can understand it.
Every direct response marketer knows that offer is 40% (at least) of your marketing.
It turns out that a lot of great startup companies understand this. A few examples:
The companies listed above are changing the way we use the Internet and how we work and play. And what’s their offer? FREE. You get to use a significant part of their product absolutely FREE and, if you like, pay for more.
I suspect their Marketing Cost per Offer (MCO) approaches zero dollars. After all, there’s no guarantee of backend revenue to support a higher marketing cost. And the brilliant part about the freemium model is that you can focus limited resources on addressing market problems and building great products to address those problems.
I also suspect these companies have sales forces with sizes in the neighborhood of, oh, zero people. More resources that can be channeled to software engineers to make yet better products and beat your–yes, your–company into the ground
What should you do? Test better offers, constantly. Start with FREE and make the offer even better, if you find the response flagging. Take the profit and hire more software engineers and smart developers. Channel Bob Hacker, use strong offers, win.