there is no free lunch: You pay for wi-fi at Starbucks, trust me

by Urs E. Gattiker on 2008/02/29 1 views

in e marketing 101 serving a need

In a market where free wi-fi is becoming the norm, Starbucks card-holders (everybody can get one, just fork over some cash and get it as credit on your Starbucks card so you can pay for your coffee) have now the opportunity to get wi-fi in many stores for free for the first two hours per day. Beyond that, the cost is $3.99 for two more hours.

For Starbucks aficionados this is welcome news. They no longer have to purchase coffee at Starbucks and then drive somewhere else to use free wi-fi! Now, with SBUX selling breakfast sandwiches and free wi-fi, these customers can be that much more loyal.

Of course, some people prefer using Caribou Coffee, where wi-fi is free all the time without one having to have a loyalty card.

AT&T replaces T-Mobile as the provider of wi-fi at Starbucks. The deal means that there will be 17,000 U.S. hot spots for AT&T’s wi-fi network and more than 70,000 globally. Wayport Inc. on behalf of AT&T manages all of those hot spots.

why things are not free or why there is no free lunch

We all love to have things free. Starbucks is changing its wi-fi model due to a competitive market. The latter forces it to offer wi-fi for some time free to its customers. Starbucks can afford to give away a small gift in the form of free wi-fi. The reason is that the profit on breakfast sandwiches and its various coffee and tea offerings is large enough to do so.

However, none of this seems to bother us. The term free remains to be attractive to most consumers. Nevertheless, is the concept of free not taking us down a dangerous path? No, we disagree as we explain below.

free does not apply to everything

Microsoft Office is not going to go away because Google is offering a service free online. While Google’s service might benefit some people, for others it is not suitable because they need more and are, therefore, willing to pay for it.

In addition, yes, some basic version of software or services such as free Basic service will give you something free. However, it could also just be a way to get you to try a tool. It is similar like yesterday’s money-back guarantee, whereby you buy black high heels only to have to discover at home that they do not fit the cloths you intended to wear with those shoes. Therefore, you brought them back to the store you bought them from and got store credit for the price of the shoes.

In the digital age, we can offer people something to try for free first. Free services will surely attract people that are happy to get the basic service. It also avoids having users to pay first, try and then wanting their money back because they changed their mind. So first you try. If you like it and want more options, you go and subscribe to the pro version and pay a fee. That simple.

Just in case we forgot, markets develop. For instance, free wi-fi is no longer a competitive advantage but actually a pre-requisite to get people to spend time at the coffee shop. In turn, they might come every day and spend money for two coffees each day instead of coming once a week.

Free is not an enemy. Nevertheless, it can be an effective marketing tool to attract people to your website, blog and/or services. Once they are in your store, of course, you can begin to sell those coffees, sandwiches and much more such as tax advice and consulting. The trick is to get them into the door. Of course, we know that you know but sometimes others just need a reminder :-)


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Also of interest:

the mission of ComMetrics

global MBA rankings from the Financial Times – but do we need them?

c – top corporate blogs

  • coffee lover

    Well the cost of the wifi is already included in the stuff we order there, so technically we paid for it.

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