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Moral marketing: Startups offer free services to the unemployed

What began for many of the companies as a sense of moral duty has turned out to be smart marketing.

About 13% of Americans have been left unemployed amid the COVID-19 crisis.
(Joe Raedle/Getty Images)

In just three months, the pandemic has left roughly 13% of Americans unemployed. Most are now without steady income and health insurance, and compounding their worries is the threat of a spreading virus.

With these factors in mind, meditation app Headspace began offering in mid-May a free yearlong subscription to its mindfulness content—which usually costs about $70—to unemployed people.

A handful of other startups have extended similar offers to those without work. Although the leaders of these companies say the actions were prompted by a sense of moral duty, experts say it’s also a smart long-term marketing decision.

The companies can help maintain brand loyalty as the economy recovers and people find new work, said Sharmila Chatterjee, a professor at the MIT Sloan School of Management, who researches brand trust and relationship marketing.

“There is the possibility of a very nice business outcome,” she said. “And so building trust, building up the relationship, and good experience would lead to word of mouth. Word of mouth is the strongest form of marketing, so there’s a very nice cascade effect that can come out of this.”

For Los Angeles-based Headspace, offering free subscriptions is nothing new. In March, it made its annual package free to all healthcare workers.

The charitable move has sparked pride among paying subscribers and generated interest from corporate customers, said Megan Jones Bell, Headspace’s chief science officer. But the company also put ethical parameters in place when the crisis began.

“We didn’t want to market to people who were struggling,” Bell said. “We wanted to maintain our brand, maintain the messaging that has been relevant and really focus on authentic, genuinely intended actions that we hoped would … bring something that is proven to be effective into the hands of as many people as possible.”

Headspace’s move also helps push its digital mental health treatment model to be more relevant, said Stanford Graduate School of Business professor Jonathan Levav, who studies consumer behavior and behavioral decision theory.

“It gives authenticity to the message of, ‘Hey, we’re here to help people with their mental health.’ And actually, it gives it credibility,” Levav said.

Coursera, an online education company with about 60 million global users, launched a free COVID-19 contact-tracing course May 11 with John Hopkins University. It’s now the Mountain View-based startup’s most popular course of 2020, with over 330,000 enrollments and 112,000 completions, the company said.

The education startup has also teamed with universities and local and state governments across the US to offer free classes as an unemployment benefit.

Dubbed the Workforce Recovery Initiative, some of its most popular courses are aimed at building work skills for an evolving job market, such as “Programming for Everybody,” offered by the University of Michigan, and “Introduction to Data Analysis Using Excel” from Rice University.

“Our mission is to allow anyone anywhere to transform their lives with learning, to enable access to education for as many people as possible,” said Leah Belsky, Coursera’s chief enterprise officer. “And as long as we extend our reach and extend the number of learners on our platform, our business also does better and better over time.”

Some recruiting and job search startups have also pivoted to offer their services for free.

Career advising startup Teal made its $400 four-week job coaching course available at no cost for the first 1,000 people to sign up.

And Arena, a Baltimore-based startup, has made its job search platform available for free through September. The company has pivoted its strategy a bit since the platform launched April 7. It began linking people to healthcare roles, but now it routes laid off workers to in-demand sectors.

Before long, the company began realizing the free service was also good business, said Mike Rosenbaum, Arena’s founder and CEO. “Particularly as some of the folks who signed up started saying, ‘Wow, this is really great. I’m going to keep this after Oct. 1.’ ”

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    Written by Eliza Haverstock
    Eliza Haverstock was a PitchBook writer covering venture capital, startups, and private equity.

    A graduate of the University of Virginia where she majored in history and economics, she’s also a native of the Washington, DC, area. Previously, Eliza worked as a news editor for her college paper, The Cavalier Daily, and interned as an industrials reporter for Bloomberg in New York.
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