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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

#161

Post by jyunwai »

hakfoo wrote: post #115
dahart wrote: post #61

Earlier quoted context omitted.

To be fair, gym memberships are often crappy rent-seeking contracts. They love it when people start memberships for their New Year’s resolutions and then stop coming in February but keep paying, and they often try to hike the prices on you, renew automatically, and make it difficult to cancel. I’m perfectly fine with paying for a gym but I absolutely hate signing up for memberships. Currently I’m going to a city-run…

I'm amazed at this point, given the "subscriptions are a nightmare to cancel" meme, that nobody's turned that into a marketing message. Some of the gym ads say "cancel anytime", but "sure, just bring in this blood-endorsed document countersigned by at least five Supreme Court justices" is still implied. Services that say "prepay up-front and we'll never bill you" is a viable selling premise. Gift subscriptions are an…

In 2016, a gym in Canada had a news article written about it in The Globe and Mail, a national newspaper [1], due to the notability of its policy at the time of only offering a pay-as-you-go plan. You would pay each time you visited, until you hit a cap at a maximum fee per month—this would make future visits free for this period. The marketing clearly worked, as the business earned a national news article solely due to this policy.

However, after some time, the gym changed the policy to offer discounts for people who signed a contract—effectively make it more expensive for people to pay-as-you-go without easier cancellation. As of now, I can no longer find pricing on their website (maybe it's there, but I've looked around a while), nor any mention of their once-notable pay-as-you-go model. Instead, the gym's website now focuses on encouraging members to sign up for a personal trainer.

At least in this case, the gym showed that the "prepay and we'll never bill you" policy was, as you predicted, a headline-grabbing policy. But it appears that the owners decided it was more profitable to either cancel or de-emphasize the policy and promote the usual payment model for gyms, even at the cost of standing out from other gyms.

[1] https://www.theglobeandmail.com/report-on-business/small-bus...

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

#162

Post by eightysixfour »

properbrew wrote: post #153
eightysixfour wrote: post #128

Earlier quoted context omitted.

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.

Glad it was helpful for you, good luck!

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

#163

Post by therockspush »

jncfhnb wrote: post #105
red_admiral wrote: post #29

The kind of people who ran coupon schemes in the pre-internet days could have told you this. Back in the day, coupon schemes were things like you had to physically cut out and mail in vouchers from newspapers or magazines, and you got a discount on something like groceries in return. The point of this was market segmentation: you want to get people who (1) otherwise wouldn't buy your product, or at least not as much…

My in laws side of the family still has plenty of grocery coupons active in their area. It’s definitely not a poor person thing. It’s a generational / cultural thing.

Mine are all online now.

So you can activate them before you go.

In the time it would take to pull the scissors out of the drawer, I can just .click() all of them.

I don't even pay attention to the ones I activate anymore, I just get a nice surprise on the receipt.

On a $100 grocery run it knocks off an average of $20.

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

#164

Post by pizzaknife »

medstrom wrote: post #157
AnthonyMouse wrote: post #150

Earlier quoted context omitted.

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.

Spiral cut ham is on intense markdown atm. make room in your deep freeze

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

#165

Post by AnthonyMouse »

medstrom wrote: post #157
AnthonyMouse wrote: post #150

Earlier quoted context omitted.

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.

That's only true if you issue coupons that exceed your gross margins.

Net margins in many industries are razor thin, a single digit percentage at best. Gross margins are much thicker, because the rest has to go to covering operating expenses like rent and utilities and salaries that don't really depend on how many sales you ring up. You can't allow your net margin to be below zero on average, but any sale that exceeds your gross margin still contributes to the bottom line.

Or to think about this a different way, suppose you have a million dollars in fixed costs you have to recover before you can turn a profit, and you're selling a million units at a gross margin of $0.80 and two million more at a gross margin of $0.20. You're making two hundred grand. But at 3 million total units your average gross margin has to be ~$0.33 just to break even. Does that mean you should abandon all the $0.20 margin sales and only keep the million "profitable" sales? What happens if you do that?

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

#166

Post by Spooky23 »

red_admiral wrote: post #29

The kind of people who ran coupon schemes in the pre-internet days could have told you this. Back in the day, coupon schemes were things like you had to physically cut out and mail in vouchers from newspapers or magazines, and you got a discount on something like groceries in return. The point of this was market segmentation: you want to get people who (1) otherwise wouldn't buy your product, or at least not as much…

Poor people is just one segment. Honestly, I’d say on average poor people are often not very frugal at all.

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

#168

Post by pflenker »

switch007 wrote: post #98
pflenker wrote: post #94

Only tangentially related - one big hardware store chain in Germany ran bankrupt because they started to frequently ran „20% on everything“ marketing activities. The idea was to attract customers who would return when one activity ended, but the result was the opposite: the extra customers only came for the 20% and didn’t return between the activities, and the loyal customers started avoiding the chain and waited for…

That's pretty tragic. Did nobody realise that hardware purchases are infrequent?

It’s even worse - those who frequently buy hardware are small one-person companies who drive from building to building gig. They are very cost conscious and very mobile , so they are the most likely candidates to buy bigger quantities whenever the price is right. They for sure are not loyal to any brand.

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

#170

Post by Ccecil »

My experience over the last couple decades working for myself (or running my own company) that the worst customers are the ones who want it cheapest. They start out by spending extra time negotiating lower prices...often with a story about how "getting your name out there will help your company" or "We plan on working with you a ton in the future so you should discount us now".

During the job they will have you do extra work to which you are supposed to "keep track of and we will pay you whatever it takes". I cannot think of one time where this did not end up where I end up eating even more of the already discounted profit.

After the job is done they tend to also be the ones who are hypercritical. Often requiring extra rework or doing the work over all together. Then they will use how they "paid you extra during the job" as a reason why you owe them.

All of that being said. The companies who are honest and understanding tend to make up for the trouble that the others cause. Throughout the years I have become able to spot the problem customers in the first meeting (sometimes phone calls are enough) to where I just say "no" before ever negotiating the job. In my case this has mostly led to me not working with the "local" people at all and mostly focusing on the remote customers.

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