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Kevin McCarthy
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Since you have info product, to gain 100 paying members at $37/month in the next year you have to understand the Psychology of Consumption. Higher consumption means higher sales. One of the first steps in building long-term relationships with customers, we believe, is to get them to consume products they have already purchased. Research has repeatedly shown that the extent to which customers use paid-for products in, say, one year determines whether they will repeat the purchase the next year. One field study, for instance, found that health club members who worked out four times a week were much more likely to renew their memberships than those who worked out just once a week.
According to another study, customers who extensively used an enhanced cable television service in one year were more likely to renew their subscriptions in the next year than those who used the service only occasionally. The extent to which customers use the products they have paid for determines whether they will repeat the purchase. Consumption is important to the bottom line in many ways. As competitive pressures intensify and the cost of customer acquisition rises, a key to long-term profitability is making sure that customers use the products and services they buy.
Consumption also helps establish switching costs. In the software business, for example, companies often make more money selling upgrades than selling the initial application. Once customers start using an application, they must either buy upgrades or make the painful transition to another system. Consumption is no less important for businesses that rely on a two-part revenue stream.
Clearly, if ticket holders do not attend events, these high-margin secondary sales are lost. Still other organizations believe that their core mission includes encouraging certain kinds of consumption. Indeed, it is difficult to think of any business in which consumption does not make a difference. Costs drive consumption.
People are more likely to consume a product if they are aware of its cost. In one example made famous by Richard Thaler, a behavioural economist at the University of Chicago, a man joins a tennis club and pays a $300 membership fee for the year. This perception is influenced greatly by the way the product is priced. Some pricing policies highlight the perceived cost of a paid-for product while other pricing policies mask the cost.
Consider something as simple as the method of payment. A $10 cash transaction feels different than a $100 cash transaction. Counting out currency and receiving change make a buyer very aware of the magnitude of a transaction. Pricing tactics that mask rather than highlight prices reduce pressure on buyers to use the product in order to get their money’s worth.
Not surprisingly, people are better able to remember the cost of products if they pay with cash than if they pay with credit cards. In addition, they feel more pressure to consume products if they paid with cash than if they paid with a credit card. In one theatre company we studied, the no-show rate for credit card customers was ten times higher than the no-show rate for cash customers.
Higher consumption means higher sales. One of the first steps in building long-term relationships with customers, we believe, is to get them to consume products they have already purchased. Research has repeatedly shown that the extent to which customers use paid-for products in, say, one year determines whether they will repeat the purchase the next year. One field study, for instance, found that health club members who worked out four times a week were much more likely to renew their memberships than those who worked out just once a week.
According to another study, customers who extensively used an enhanced cable television service in one year were more likely to renew their subscriptions in the next year than those who used the service only occasionally. The extent to which customers use the products they have paid for determines whether they will repeat the purchase. Consumption is important to the bottom line in many ways. As competitive pressures intensify and the cost of customer acquisition rises, a key to long-term profitability is making sure that customers use the products and services they buy.
Consumption also helps establish switching costs. In the software business, for example, companies often make more money selling upgrades than selling the initial application. Once customers start using an application, they must either buy upgrades or make the painful transition to another system. Consumption is no less important for businesses that rely on a two-part revenue stream.
Clearly, if ticket holders do not attend events, these high-margin secondary sales are lost. Still other organizations believe that their core mission includes encouraging certain kinds of consumption. Indeed, it is difficult to think of any business in which consumption does not make a difference. Costs drive consumption.
People are more likely to consume a product if they are aware of its cost. In one example made famous by Richard Thaler, a behavioural economist at the University of Chicago, a man joins a tennis club and pays a $300 membership fee for the year. This perception is influenced greatly by the way the product is priced. Some pricing policies highlight the perceived cost of a paid-for product while other pricing policies mask the cost.
Consider something as simple as the method of payment. A $10 cash transaction feels different than a $100 cash transaction. Counting out currency and receiving change make a buyer very aware of the magnitude of a transaction. Pricing tactics that mask rather than highlight prices reduce pressure on buyers to use the product to get their money’s worth.
Not surprisingly, people are better able to remember the cost of products if they pay with cash than if they pay with credit cards. In addition, they feel more pressure to consume products if they paid with cash than if they paid with a credit card. In one theatre company we studied, the no-show rate for credit card customers was ten times higher than the no-show rate for cash customers.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
