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  1. #1
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    Name for this concept? If a user pays once they are less adverse to further payments.

    I've heard that if a user is converted from a free user of a service to paying that further payments are psychologically easier for them to accept. For example, it is easier to get a user to renew a subscription than to get her to buy the subscription in the first place.

    Does this concept have a name or any source? It seems intuitive, but I'd like to link to some 'proof'.

  2. #2
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    Quote Originally Posted by fortunette View Post
    I've heard that if a user is converted from a free user of a service to paying that further payments are psychologically easier for them to accept. For example, it is easier to get a user to renew a subscription than to get her to buy the subscription in the first place.

    Does this concept have a name or any source? It seems intuitive, but I'd like to link to some 'proof'.
    There are a number of factors at play when talking about continuation / renewal services with varying degrees of marketing community "acceptance" of each.

    First let's consider the need to be right. These days people do extensive research before a purchase and afterwards they want to establish that their decision was correct and thus they often become advocates to justify their decision. This same emotion impacts repeat purchases in that once they have bought into the brand they are acting to reinforce the idea that it's a superior company. The fanboy syndrome is perhaps the best example of this.

    On a completely different page you have laziness. This applies mostly obviously subscriptions where for example gyms sell memberships by the month knowing that only part of their active base will come in. Usage rates are so extreme that there are many companies who avoid sending communications out for fear of reminding people that they should stop paying for it as some literally go years without a visit, without use of their hosting account, activating a domain, etc. [note: gyms have a unique factor at play in signifying both action to remain and inaction to leave].

    This can also apply to goods that are a reoccurring need. For example someone who decides to buy a certain brand of toothpaste may become complacent with that particular line / make and repurchase it hundreds of times provided that there is no radical need to readdress. Given enough time this effect becomes so strong that people adjust to paying considerably more which is why you see brand name products still selling when placed next to cheaper private-label options. CPG household and personal care good companies have spent fortunes perfecting this to the point where they can afford to spend obscene amounts of money to bring in a new customer for what amounts to a $1 profit-per item because of the LTV associated with it.

    Changing gears again you have the perception of need. This is what companies play into when you call to cancel a recurring service or when they send out a small special on a common good. Essentially you've come in with the decision that you no longer need this or can buy another option yet with the introduction of the right offer, you stay. This would be logical if the service was being replaced [i.e. one gym for another] but in many cases the acceptance comes because the person has developed a sense that they need it... The spa sessions they seldom use but for 10% off can't pass up, the satellite radio because they might drive more next month, etc.

    Then there's my personal favorite at least as it pertains to bigger ticket or varied goods [think Apple, Amazon, etc]: experience. Today's consumer lives in an age of information so before someone buys it's all speculation... what were the reviews, how did that friend like his, did it seem solid in the store? After they have the product they no longer need to trust others as they now know... Even an accepted brand has to live up to a certain line because they know there are options. If it's good they're going to keep going back because it beats finding something new [where as if it's bad... hello online reviews].

    And these are just a few of the consumerism effects at play, there's some other great ones I'm already spinning around on.
    - Ted S


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