Number One Rule for Business Online

A few months ago I went to see a new online business with the view to working with a PR company, myself doing their social media. Unfortunately we didn’t win the work, they chose a PR agency with some large companies in their portfolio, who were big players in their industry.  Of course it was sad that we didn’t win the work (and I’m not going to name names btw!), but throughout the two meetings I had with them it really struck me how the impact of the internet has crept up on a lot of business people without them realising.

Their plan was to sell their service for, say, £25 and then sell products on behalf of another company. It seemed a lot of money when people wouldn’t be 100% sure of what they were getting. I worked hard at researching competitors, all of whom offered a similar service, but for free. The client said their service was better than all their competitors, which I had to take their word for.

In our final pitch meeting I tried to explain that their targets were unrealistic and that they would be hard pressed to pursuade enough people to spend the money.  The internet is a crowded place and throwing money at something won’t make it a success. In a futile attempt to win the account I tried to explain why Spotify is such a success – they allow people to try before they buy. They offer their customers the option of paying a monthly subscription with no adverts or they can have the service for free, but with adverts. People realise what a great service it is and consider paying a monthly fee. Some people don’t mind the adverts, so they continue with the free service, which is still great for Spotify.

(Sadly, Spotify now only offer the service free with an invitation. But this is because they were so successful!)

Now they sell music as well, which they make extremely easy to buy. They built mobile applications on both the iPhone and Android platforms. They could well beat illegal downloads and save the music industry (maybe I’m getting a bit carried away!).

The point of the Spotify story was to show them that people online will spend money, but first they need to trust the company they’re buying from. The internet is so overcrowded with various services that people don’t give a lot of thought to something and certainly won’t spend money on something they’re not sure about.

Number one rule if you’re starting an online business – be prepared to give things away for free. If your product is good enough people will spend money with you.

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