Punishment vs. Reward

Tuesday, August 07, 2012

Articles about how two major companies treat potential and existing customers produce good examples of the free market promoting good will.

First, to get the negative example out of the way, here's how one Visa customer reacted to the company, as an Olympic sponsor, securing the right to be the only credit provider to attendees of the games. (This made it impossible for him to use another card that offered him better terms in Europe, and it leaves cash as the only option for non-customers.)

... If you've never been to such an event it's hard to imagine how huge the venues are, and once you entered a stadium in the morning, you're not allowed to exit and return with your ticket. Which practically means that once you're inside, you can either use Visa or cash, that's it. ...

... Getting a credit card is not something you do in a minute, certainly not in a foreign country. So Visa couldn't really expect international visitors holding other cards to actually switch to Visa on the spot, right?

[W]hat could Visa do? Again I'm not an expert on credit card marketing, but ... Visa could just appeal to Visa owners by giving them something. A discount for using Visa. A special gift for buying with Visa above some amount. Whatever. As long as you're giving something to your customers, and not taking away something from those who aren't.
Roee Adler's take-home is this: "If you want people to like you, give them something. If you want people to hate you, take something away from them."

Moving to the positive example. we see how cloud storage pioneer Dropbox used small freebies to both educate and expand its customer base:
The real magic happens once the user has already installed Dropbox and signed up for an account. In order to better explain the service and provide the user with authentic, personal use cases, the Get Started page includes a list of tasks essential to the Dropbox experience. The tasks include items like "Install Dropbox on other computers you use" and "Share a folder with friends and colleagues" -- fundamental activities which might not be obvious when explained in a video or tour. To incentivize completion of the list, Dropbox offers users an additional 250 MB of storage for finishing the tasks.

This solution is much more elegant than simply forcing users to sit through instructions. For one thing, it offers them a choice; nobody is forced to go through the steps, but most people will anyway in order to gain the reward. Furthermore, the reward is intrinsically linked to the product -- it isn't a tangential incentive like a badge, but rather more of the product itself. Rewarding appropriate use of a product with more of the same product is simple and elegant.
What a stark contrast: Visa annoys potential and existing customers by making an obstacle of itself, while Dropbox uses a few well-placed inducements to get customers to overcome a learning curve. Each company has competitors. Which will approach will attract more business?

-- CAV

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