Monday, 27 August 2007

The cost of entry dilemma

This appeared on the Zootok site recently:

We have decided to change our free calls. New users will now get 2 free calls when they credit your account for the first time.
Otu tells us a little more on his site:
We had lots of people registering with bogus emails simply for the
purpose of using our free calls without any intent to ever top up their
balance.

The point of the free calls is to allow people who would like to try
ZooTok to do so and not for scam artists to make calls at our expense.

As a result, we have decided to stop giving away free calls on registration
and instead give them to customers on their first topup. Since we offer
purchases as low as £1, we feel it is a low enough barrier that anyone
with genuine intents wishing to try us won't mind paying £1 to do so.

There seems to be a genuine problem here. The net wants things to be free, in order to bring the cost of entry down to zero. But small outfits cannot really afford that much largesse.

When the dodgy Russian mp3 download service gomusic.ru started, they gave accounts that paid up some dough in advance a healthy amount of extra credits. 37 signals always tries to give free service for entry level offerings.

I think giving away some free credits, thereby reducing the risk for any users who want to try things out was the right decision for Zootok. Along with that goes the risk of simply giving free calls away to those with no intention of using the service in the future. But the message still gets out.

The response to give extra credits once joined is also a good idea in the circumstances, even though a few genuine prospects will now no longer experiment. This is where sponsorship - "your free Pepsi credits" - is probably the right solution, if you can get it.

Paying up front is fine when the product has little risk, or the rep of the company is good enough. For everyone else, the barrier needs to be as low as it can go.