The kind folk at Money Marketing gave me the following brief when discussing writing this, my first ‘At the Coal Face’ column: “You’ll have a chance to praise, rant, share ideas, start discussions or debates. Whatever you fancy really.” It made me think this could be a fun gig.
When thinking about what topic to start with, I decided to use the opportunity to share a proposal I am toying with for 2018. The idea is whether to offer clients a ‘freemium’ service and, if so, how best to do it.
A Google search of ‘freemium business model’ explains the premise much better than I could: “Freemium is a pricing strategy by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for additional features, services, or virtual goods.”
Freemium is a current American buzzword, and the business model is being used by numerous tech firms and start-ups in many different industries.
Think of Dropbox, Wetransfer or Evernote – they all offer a scaled back version of their service which is free for consumers. Should a client need more than just the basic operational aspects of the process, they will have to then pay a premium for the service.
This got me thinking about whether it is feasible in the financial services profession. Or is anyone actually already doing this?
I asked via Twitter what people in the industry thought of using this model. The results were mixed and I did not really have enough responses to make any meaningful conclusions.
That said, the answer is never going to be black or white because there are so many different aspects to financial services. With this in mind, I am going to concentrate solely on where my business sits: financial planning.
When looking closer at the freemium offering, there are lots of questions to ask around the idea. Is this going to be useful from a business perspective? Is it going to generate more enquiries or clients for the premium model? Are enough people looking for financial help? Is there a viable market for this?
Then we need to think about how to execute/automate the process. Can I build an online offering where prospective clients or the general public can get information, helpful tips and ideas for free in a non-advised way? Is there anyone in the UK doing anything like this?
We are looking into the possibility of creating a viable, sustainable and helpful freemium service for both clients and non-clients. My view is that the more people we can help the better. I recognise not everyone will use us for our billable services but if we can be seen as providing value through our free services then, hopefully, should a need arise for full financial advice in the future, we would be front of mind. And if we are not, well, that is ok as well.
I would be really interested to hear from other firms in the profession about their thoughts on this subject.
Sam Sloma is managing director of Engage Financial Services