Take Advantage of the Free Ride

There was a time when you would talk to people about Internet Strategy and you would hear the same thing over and over again.

I agree but... You're always going to need real people, in real places, selling real things!.

It's quite ironic that we now have multi-million dollar, one-person businesses operating entirely on the Internet - selling nothing more than "electrons". The Information Marketer is perhaps the most visible of the 21st century entrepreneurs who have capitalised on a phenomenon that became known as Free Riding.

Its actually been around almost since the inception of commerce itself. Wikipedia has a description of the problems arising from free riders.. With the advent of the Internet however, Free Riding has been taken to a whole new level.

How Does Free Riding Work?

Barry is looking at purchasing a new high-definition video camera and heads out to get information from a variety of camera stores. He walks into one store and starts talking with Robin (a salesman with quite a bit of knowledge in digital video production).

Barry makes the most of Robin's knowledge and is now interested in purchasing the Canoltikon Z37. It's low cost, high quality and portability make it the ideal camera for him.

Unfortunately the price quoted by Robin needs to include a portion of his salary as well as other overheads related to running a bricks and mortar store. Barry knows this and instead of buying the camera from Robin, he leaves, goes back home and starts surfing online where it is not unrealistic to pay as much as 15%-20% less than Robin's best price.

By spending as little as 10 minutes with Barry, only to have him leave the store to purchase online, Robin has fallen victim to the Free Ride. Even though Robin convinced Barry of the product, he's not guaranteed the sale.

Ten minutes may not sound like much however when a store has multiple salespeople and each one attends to six Free Riders per day, that could be as much as $1,000 per day in unrecovered expenses. (Imagine how much of a problem Free Riding could be for a company like Harvey Norman. It would literally run into the millions of dollars per year.)

The Free Ride is an Information Marketer's best friend though and acting on the opportunities that exist in specific markets has the potential to create quite profitable businesses as we shall see.

Finding Highly Profitable Markets

The key is to identify a market that is both highly profitable and has high consumer appeal. This involves picking a market that is also heavily dependent on physical location (ie. on specific suburbs, regions or even states). For example, air-conditioners could be considered a highly profitable market in the Sahara.

How do we know this?

As you scan through your local Yellow Pages, you will notice a variety of advertisements in a variety of styles, colours and sizes. Advertising in the Yellow Pages can cost money and the larger and more colourful the ad is, the more it costs. The highly profitable markets are those that have the highest number of large
advertisements when compared to the smaller non-descript free ads. (If you looked through the "Air Conditioners" section of the Yellow Pages, you're likely to notice that it ranks quite highly as a profitable market.)

Meanwhile, Maurice, an Information Marketer who is "on the ball" and recognises opportunities are abound in this particular marketplace, decides to get in on the action by establishing an online air conditioning business (Werribee Air Conditioning). He chooses this because Werribee is particularly known for its long, hot summers and searing heat. Maurice also recognises that as Summer approaches, the desire for
airconditioning will skyrocket.

As part of his online air conditioning business, Maurice also offers a complimentary Greenhouse Emissions Assessment to the value of $397. All that a visitor to the website needs to do is submit their details to the website and someone will contact them to arrange a mutually convenient time.

Meanwhile, Maurice approaches the leading air-conditioner supplier in the Werribee area and negotiates a $55 "spotter's fee" for every qualified lead sent through to them. This basically means that each visitor to Maurice's website who leaves their details earns Maurice $55.

Maurice gets his $55 for the lead - he telephones the client and conducts the Greenhouse Emissions Assessment, then he sends the details for the lead to the air conditioning business and gets paid by them for the lead.

Everyone Can Benefit

While Maurice earns $55, everyone else is better off also.

The visitor to the website is guaranteed to get a call from the local market leader in air-conditioners and the supplier is guaranteed to only get qualified leads.

What's more, the supplier is also happy to have the opportunity to benefit from Free Riding when their (and others') prospects jump online and buy or source a deal on a website.

And Maurice? Maurice gets the contact details of someone with whom he can continue to develop a long-term relationship.

Comments are closed.