At times, we discussed how we could charge for Fast Company readers' network events to cover venue costs and possibly snacks, yet the path of least resistance ended up being finding a sponsor to provide the physical meeting place or pay for the snacks. Our work was simply donated to the network.
Piers Fawkes [hat tip to Greg Verdino] revisits the concept in the 50/50 corporation. My experience is consistent with his - if you build a network as a free resource to get people to sign in, you will be hard pressed to charge once they are in. You've created a certain set of expectations.
Not only that, you may also have provided incentive for a certain dynamic that may end up muddling the real value with low involvement. How? The perception is that free or cheap equals less value, especially when the value resides in what you need to do to get results. In our case, part of it was showing up.
The Case for Charging
Once I was very close to starting a non competitive network for high level referrals and business deals. One people would need to pay for to join. The idea was to make it part career support group, part business referral place - a mix of people working on the client side and providers.
Then I talked to a couple of people who were part of such a network created for that purpose. It would be easy for me to think mine would work. Yet I'd like to evaluate the feedback from the other group with you here.
- While the network was created expressly to provide a way to pass on warm leads and referrals to others, no leads had exchanged hands. Why? From talking to various members I can infer that each was playing their cards very closely.
- The events ended up being unproductive sessions where people talked more about misadventures than about ways to help each other build their business.
- The fees were perceived as too high, which leads me to think that indeed nobody saw value in the membership.
It seems to me that a couple of forces may have been at play. They are the same reason why I seldom go to events organized by the professional associations I subscribe to. I tend to go to events with my blog and personal identity lest I get pitches upon pitches. Which is what happens when people learn I work on the corporate side. The dynamics are:
- Everyone ends up being a seller and nobody is buying.
- Everyone is talking and nobody is listening.
Charging makes sense when the group and face to face opportunities (or online support) have real and perceived value embedded in them. From the start, as Piers validates. Would this be a 50/50? Probably, but not in the sense he means. I'm thinking more about managing to hold overhead costs low and making the events also social.
The Case for Free
At the other end of the spectrum, I am seeing more and more companies giving away what they used to charge good money for. That's because they've learned that now the game changing piece is making friends. In other words, touching those people (note I did not say influentials) in networks and communities who are seeking that information and may likely spread it.
Is a company a network? Yes and no. The network is how you get things done inside a company, yet a company defines itself with an organization chart. There are some new generation companies that operate differently - that difference is built in the product and service itself. Piers cites a great example of that with Google.
Google - 80% Profit - The first day you came to Google.com you knew it wasn’t just there for fun. Still, the most profitable revenue generation is ambient - from advertising that’s contextually designed to be more ‘helpful’.
I'm now wondering if SEO and SEM are the two percentages for other companies. You give away thought leadership material to generate SEO and then sponsor key word searches through SEM to inform people of all the other solutions your company offers. They complement each other and can be calibrated to be meaningful in affecting traffic to your online presence.
To Profit or Not to Profit
This is the question. Given a choice, I think we'd all rather profit in some form. Yes, I know there are plenty of ways to gain referrals and business through blogging, sharing information, and building relationships. My take is that it is not inherently bad to want to make some money in the equation.
Many authors, for example, make little money from the book. The money is in the speaking gigs they can get as a result of having a book. Or in consulting based upon the book. The Power of Full Engagement is a book, and a training and organizational assessment methodology. I mention it because I evaluated it a couple of years ago for a company-wide meeting.
Whether you intend to make a profit or not, one thing is ringing as true today as it has always been - you need to make friends as you plan to make money. I suspect that the answer will be calibrated more and more within individual business models rather than being one solution fits all. Yet, I have not heard of a business that did not have as its first goal to stay in business. And that requires funds.
What are you seeing?