I know this software developer who's been trying all kinds of things to sell monthly subscriptions to a membership site.
The site teaches other developers how to do complex calculations in an obscure programming language that's uniquely suited to these sorts of intense computational tasks.
Not a lot of competition out there for him, so he's put a premium price on his product ($50 a month).
He's been frustrated with the small number of signups though.
At my urging, he ran a little experiment and offered a “buy it now” price in addition to the monthly membership option.
Shortly after, he sent me a note:
I got 2 course sales and 2 new membership purchases.
I was shocked that someone decided to buy $200 worth of courses when they could get the same content for $50 / month. There's no way it would take them 4 months to go through the courses.
On the face of it, these customers' decisions do seem completely irrational.
Rather than just shrugging it off, this entrepreneur did something smart, and reached out to the customers who paid the bigger upfront price:
I asked him what went into his decision. I think the big thing is that he said he's conflict-adverse, and cancelling felt like a form of confrontation.
Totally didn't expect that!
This is a *priceless* insight.
I can think of at least 2-3 instances in the past where I continued to pay a subscription fee even though I was no longer benefiting from a product simply because I knew the business owner and felt like I'd be “letting them down.”
It makes so much sense in hindsight—yet you'd never guess that “I'm afraid this will lead to conflict” is what's running through your buyer's mind as his cursor hovers over the Buy Now button.
One counterintuitive implication of this is that reducing the “friction” of the refund process in this case may actually increase sales.
(I've actually gone so far in copy as to say that I EXPECT—nay DEMAND refunds if the product doesn't live up to expectations.)
Good stuff, but don't miss the broader lesson here, which is:
My friend never would have learned any of this if he hadn't ASKED the question—listened to the answer, and thought hard about what the customer was really saying.
I never cease to be amazed at what you'll learn with this simple step.