I got to go whale watching while on vacation. At the end of the cruise, the proprietor handed out these cards. It is not explicit but it implies that the discount on a second cruise is conditional upon you reviewing the first cruise. Which customers have an incentive to review the cruise? Most likely, those who want to go again. And they probably want to go again because they enjoyed the first cruise. So, those who will review the cruise are those will tend to write positive reviews. The cruise line is essentially using future discounts to screen potential reviewers.
For the company this is a great way to screen for customers that will help boost their business. But this is only targeting the customers that enjoyed the experience, not the ones that have something to complain about. Although no one likes to hear something negative about themselves or their business, it is a necessity so you can improve about what was wrong. This is known as adverse selection, in which you only target the customers that will increase your business, the low risk customers, that enjoyed the cruise and do not have anything bad to say. By offering an incentive to return, the cruise gains more customers due to the good reviews and also retains customers by offering a discount.
ReplyDeleteI think that this is a great idea. Why not try to screen potential repeat customers. I would take it a step further and offer them an additional discount, if they bring a friend back with them. Then I would offer them all another discount, for more good reviews. Again why not do this? You are finding happy repeat customers, who will help you even further with their happy reviews. Like I said, this is a great idea. According to the readings (Froeb ET all, 2014) adverse selection represents a potentially profitable, but unconsummated, wealth creating transaction; seems like this crafty idea fits the bill!
ReplyDeleteJG
Froeb, L.M., McCann, B.T., Ward, M.R. & Shor, M. (2014). Managerial Economics: A Problem Solving Approach. Mason, Ohio: Southwestern Cengage Learning.