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The worst users come from referral programs, free trials, coupons

andrewchen.com

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Re: The worst users come from referral programs, free trials, coupons

#151

Post by bombcar »

ghaff wrote: post #123
bombcar wrote: post #122

Earlier quoted context omitted.

Cost of processing vs most customers ignoring them, based on my experience with the biggest one left that I know of (Menards 11% and the Home Depot equivalent).

I suspect it's some combination of the human processing cost increasing and the idea of finding a stamp and an envelope to get a check (maybe) mailed to them making more and more people roll their eyes and just discount rebates out of hand.

Lots of the manufacturer’s rebates have become instant rebates because of pressure from places like Walmart (who really, really dislikes having to advertise a higher price than possible).

Re: The worst users come from referral programs, free trials, coupons

#153

Post by properbrew »

eightysixfour wrote: post #128
graemep wrote: post #90

Earlier quoted context omitted.

Could you elaborate? Easy to signup for or initially easy to use? Would it actually lose customers long term or just give you early extra customers you fail to retain?

Sure - an example for me is RunwayML. It is a neat product that is very accessible to anyone, so I signed up and played with it a bit. Every once in a while I hop on and show someone a little demo of it as a cool GenAI/ML thing, but video isn’t a medium I work with or intend to work with. I am never going to become a paying customer. The low barrier to entry (both in sign-up and usage) helps amp up user counts and us…

> The startups I worked with that experienced explosive growth were ones where their initial UX was mediocre or even hostile, but the demand for the thing was so high they had customers anyways. Improving the UX unlocked more growth.

Thank you for this comment. I've been stressing over UI elements a bit and this was the kick I needed to just go and get it out there.

Re: The worst users come from referral programs, free trials, coupons

#154

Post by spiffytech »

I agree that low cost attracts "pathological users", but I was surprised to see this part presented as a negative:

> But if these ideal users encounter the product via an incentive program, you often “pull forward” these users, thus costing you money, when you would have gotten them anyway.

The premise of annual discounts is that having $0.80 today is worth more than $1.00 a year from now.

Doesn't the same logic apply here? That if you can get someone in the door sooner, that's worth some cost?

Re: The worst users come from referral programs, free trials, coupons

#155

Post by remram »

RicoElectrico wrote: post #44
IG_Semmelweiss wrote: post #37

Earlier quoted context omitted.

Actually , the one answer you gave, is a common myth[1] https://www.investmentzen.com/news/the-surprising-identity-o...

Polish HN readers laughing at the domain ATM ;)

Why?

Re: The worst users come from referral programs, free trials, coupons

#156

Post by mewpmewp2 »

zakki wrote: post #127
fireflash38 wrote: post #95

Earlier quoted context omitted.

But would you continue to buy it afterwards, or just chase the discounts? Aka:are you truly a "conversion" or just a single discount sale?

Not continuing to buy doesn't make someone worst customer. What about turn out it is a worst product so they need to offer a discount?

I never buy anything discounted, because if it is such a good item, why did you have tk discount it.

Re: The worst users come from referral programs, free trials, coupons

#157

Post by medstrom »

AnthonyMouse wrote: post #150
bombcar wrote: post #119

Earlier quoted context omitted.

It’s the other way around. Not all coupon users are worse customers (who would refuse a 5$ discount offered during checkout?) - but the worst customers will also go out of their way to find coupons.

But even that isn't so simple, because there are at least three types of people who use coupons. The first are the ones coupons nominally target -- not people who go out of their way to find coupons. Just ordinary new customers who need an incentive to try the product once and then might become repeat customers. These are actually great when you can get them, but they're not that big a percentage of coupon users. The…

Some of your "analysts" seem like they can be net loss. I'm thinking someone who only ever buys the groceries that are at least 50% off, having no particular recipe in mind so no need to combine with regular-price items. Grabs them by the truckload when the sale comes, then lives off their freezer for months.

I don't know if it's common to do it so perfectly though.

Re: The worst users come from referral programs, free trials, coupons

#158

Post by anonimo37 »

Another problem with these incentives to attract new users is how do you think existing users feel when they see discounts offered to new users? Their loyalty is rewarded by paying full price.

I may be the outlier but I have almost no interest in new user incentives. I know the discount will only last a short while before I am paying full price so I never factor the discount into the total cost of using the service.

Even free trials don't interest me as there is still the hassle of signing up and remembering to cancel before the trial ends. Why bother signing up for something that I intend to cancel a month later? If I intend to keep using the service then as I said above, the discount is meaningless in the long term.

Re: The worst users come from referral programs, free trials, coupons

#159

Post by [deleted] »

mewpmewp2 wrote: post #156
zakki wrote: post #127

Earlier quoted context omitted.

Not continuing to buy doesn't make someone worst customer. What about turn out it is a worst product so they need to offer a discount?

I never buy anything discounted, because if it is such a good item, why did you have tk discount it.

[deleted]

Re: The worst users come from referral programs, free trials, coupons

#160

Post by carbine »

A lot of comments here from people who think this is "obvious" but have probably never been personally responsible for monetizing and scaling a product. If you run referral programs you will often drive meaningful incremental revenue, and founders/investors etc. will push for more.

Actually scaling a product successfully requires a lot of testing/pricing/segmentation. Crucially, advertising is the most expensive way to acquire a new user. If every high quality user refers >1 other net new high quality user, you cut your CAC in half. Well-run referral programs for the right type of product can be lucrative, but countering the narrative that every product needs to have one is probably a good thing.

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