How Selling “Free” Can Drive Revenue (Really.)

This post was first published on Medium.com.

When you’re building a new business, it’s always best to kick off your venture with a solid client or two that’s signed, sealed, and engaged. Not only does it help you cover your nut right out of the gate, as you prospect for new clients, you’ll be able to answer the questions I’ve been asked most often when building startups over the past couple of decades:

  • What brands are you working with right now?
  • Take me through a couple of case studies of successful engagements (and please share some examples of your work related to those cases)
  • How do I know what you’re pitching me actually works in the real world?
  • Can you provide a couple of current references for me to speak with?
  • But what if you started your business without an anchor client? What if you started your business without any clients at all?

Sure, you might be able to leverage work product from a previous employer, or maybe even get a buddy you worked with at another company to take a reference call for you. You could also pull together a nice portfolio with artifacts developed by others culled from Google searches. Truth is, while none of these tactics set the foundation for a sustainable business model, I know plenty of people who’ve used them. Some even won some business. Once or twice.

I’m sure you’ll agree there’s got to be a better way.

The RFP Path to New Business

RFP’s can be a great path to new business, if you’ve got plenty of time and money to burn for RFP solicitations, responses, and subsequent post-RFP pitch meetings. Let’s do the math.

If you and your team spend 150 man-hours reviewing and putting together a response to an RFP (and that’s a conservative estimate) at a blended hourly rate of $100/hour, that’d be about $15,000 per RFP. If you worked on 10 of those a year, you’re looking at $150,000.

If half of those turn into pitches, your post-RFP follow-up would include time for more meetings (internal and at the client location), content development (pitch deck, creds video, creative, leave-behinds, etc.), and T&E, you’re probably looking at another $30–40,000 for a yearly total of $200,000. We’re up to $350,000 for the year and that’s not even including budget for acquisition and day-to-day business development.

Truth be told, I’ve worked on RFPs and post-RFP pitches that totaled some $300,000 when all was said and done. And in many cases, we didn’t win the business. As good as you think you might be, you’re simply not going to win ‘em all.

Oh, and let’s not forget that most organizations underestimate the cost of pitching, often missing the mark by a factor of 2–3X, which can easily push a RFP response into the $100,000 range.

If this all sounds kind of crazy to you, stick with me, because I have another approach for your consideration.

Selling “Free”

As a new business with no real answers to the questions I listed above, you need a quick way to validate your offering and get a few qualified clients in the boat. The fastest, most effective, and cost-efficient way is to seek out a few banner brands and offer to do some work at no charge in exchange for them becoming a reference for your business. You can also get some nice case study materials and a press release out of the deal.

While RFPs are pure speculation, taking this approach virtually guarantees a win. Since you’re already paying your team to sit around and do a bunch of nothing (because you have no clients), why not put them to work building artifacts of success you can use to answer the questions above and kick-start your business?

See, I told you it’d make sense.

But be warned — selling “free” ain’t easy, despite what you might think. Your best path to success is to start with people in your network who trust you. Make them an offer they can lift, complete with decent upside and little or no risk. And then, relentlessly deliver the goods.

Once you’ve delivered results on a few projects, you’ll have solid answers to the questions every prospective client you’ll ever have the pleasure of meeting will ask:

  • What brands are you working with right now?
  • Take me through a couple of case studies of successful engagements (and please share some examples of your work related to those cases)
  • How do I know what you’re pitching me actually works in the real world?
  • Can you provide a couple of current references for me to speak with?
  • Check, check, check, check, and check.

Work Smart and You’ll Get Results

I’m not saying this approach is going to make a dyed-in-the-wool CEO with a steadfast traditional business mindset jump for joy. But it’ll be much cheaper than playing RFP Roulette if you wisely pick and choose brands to partner with and manage the projects carefully. What’s more, it’ll provide you with tangible results you can take out into the marketplace and leverage for real revenue.

Sounds highly unconventional, you say? Maybe, but it actually does work in the real world. I’ve been using the model for years. Let me know what youthink. Is selling “free” something you’d be willing to try in your business? Why or why not?