Thursday, May 29, 2008

If I throw some money

If I throw some money at it maybe I will do it, is a popular self perpetuated belief.

It works well for those who hawk one year or lifetime gym memberships.
It works well for vacation and time share service providers.
It works well for those who sell correspondence courses.

It doesnt necessarily have the same ending for all customers though. The common thing is that the customers pay upfront with the hope that if they throw some money, things will happen. Once you take the membership though, people forget that it is a sunk cost

The best part is that this is the business model - the service providers hope that people dont turn up. 

Here is a perfect example of a customer. In each of these you will see a familiar pattern. The first two packets of the correspondence course get opened, the rest are nearly sold as junk. The first couple of months the gym sees regular attendance and then it slips. The first two years the timeshare is used well and then, well, it is too tough to take a vacation. In fact I know of people who have done all three and not learnt from their mistakes. 

1 comment:

Kavi said...

Corporate business plan based on individual fallacy !! Sounds sound !!