Driving free leads versus getting even a dollar from someone are universes apart.

There is a concept called the “penny cliff”, where product companies who offer their stuff for free assume that they can get nearly the same number of subscribers at $1 a month or even $10/per month.

Turns out that the distance between free and a penny is greater than from a penny to $10/month– because the psychological cost to decide to buy (no matter the price) is nearly the same, whether a penny or $10.

Free is not a good proxy for sales unless you’ve tested small paid offerings against that same audience.

Since if you don’t have the right audience, no amount of testing will overcome this.

And that’s why we shouldn’t make big bets without testing via the Dollar-a-Day strategy or against lists that we own.

I saw a successful entrepreneur last week sign a $900,000 deal to buy traffic without having a product for sale nor making sure the audiences were even a fit.

It’s a massive bonfire of money– spectacular to watch, except for the poor guy who invested the money.

You can’t make chicken salad out of chicken shit-ake– so test first, then scale up.

Dennis Yu

Dennis Yu is co-author of the #1 best selling book on Amazon in social media, The Definitive Guide to TikTok Ads. He has spent a billion dollars on Facebook ads across his agencies and agencies he advises. Mr. Yu is the "million jobs" guy-- on a mission to create one million jobs via hands-on social media training, partnering with universities and professional organizations. You can find him quoted in major publications and on television such as CNN, the Wall Street Journal, Washington Post, NPR, and LA Times. Clients have included Nike, Red Bull, the Golden State Warriors, Ashley Furniture, Quiznos-- down to local service businesses like real estate agents and dentists. He's spoken at over 750 conferences in 20 countries, having flown over 6 million miles in the last 30 years to train up young adults and business owners. He speaks for free as long as the organization believes in the job-creation mission and covers business class travel. You can find him hiking tall mountains, eating chicken wings, and taking Kaqun oxygen baths-- likely in a city near you.

View all posts