Tuesday, August 16, 2011

Don't Discourage Your Customers

These are some ideas that have been floating around in my head for a while, but I was finally inspired to write them down after reading the following tweet from Adam Jury: "Pricing that punishes late adopters discourages late adopters. Hey, discouraging customers kinda sucks."

In case it's not obvious: discouraged customers are less likely to buy your product.

An example of this is the pre-order discount. This is a common tactic in the hobby games industry, particularly among wargame manufacturers where it's become a nearly universal practice. It obviously works for them on some level, but it does tend to discourage new customers in a market that already struggles a great deal to attract new customers. Sometimes the pre-order discount is so large that you have to wonder whether the final MSRP is being overly inflated to further encourage pre-ordering.

Pricing isn't the only way to discourage customers. Another way is the pre-order exclusive. If the only way for a customer to get a certain substantial thing is to pre-order, and they missed the pre-order, then they're even more likely to become discouraged than they would from missing a discount. By substantial I mean something related to game-play. An adventure, or scenario, or expansion that's exclusive to pre-orders and otherwise unavailable.

In the past I've even seen companies that only offer a legitimate PDF of the product to those who pre-order. This goes beyond discouraging sales to actively preventing them!

Substantial exclusives in general are a bad idea. Whether it's a pre-order exclusive, a con-exclusive, or a direct order exclusive, when customers find out that they've missed out on something, they become discouraged. That means while they may have already bought your core game, now they're less likely to buy anything else related to it.

A combination of the two is the pre-order bundle. Everything in the bundle is available after the pre-order, but at a higher combined price. This is most commonly found in situations where the PDF is offered free with a pre-order, but has to be paid for separately if you don't pre-order.

So, what's a company to do if they want to encourage pre-orders, but don't want to discourage late adopters? Offer bonuses that aren't involved with game play: signed copies, t-shirts, posters, anything that's "cool" but isn't actually used in the play of the game.

Many Kickstarter projects are using this kind of thing effectively. In many cases people are actually paying extra to be an early adopter (in some cases a LOT extra) if it gets them something cool, even though it's not related to the game play. Something as simple as getting your name in the product as a supporter can help encourage people to put money up front.

It's possible to get creative about offering incentives while avoiding dis-incentives.


rayipsa said...

My guess is the wargames market went to the pre-order pricing because the market is already so small, almost every game becomes a bet the company gamble if you don't know how many you will sell. The former 800 lb gorilla - Avalon Hill is no more and the little companies just don't have the capital base to gamble.

Having the P-500 lists lets the company recover its costs for the first run of the product. Plus, only those games most in demand actually get produced. Makes 'betting the company' much safer, particularly when dealing in such a small pond.

Fulminata said...

Oh, I'm sure that's the case, but in encouraging people to go with the P-500 they've made the discounts so steep that I'm equally sure it's discouraging sales past the pre-order period.

I think they realize this, as they usually extend the discount right up to the point they actually ship the finished products to customers, or sometimes even past that.

The benefits are probably worth the drawbacks, but the drawbacks are very real. I know that I've passed on games that I didn't find out about until after the pre-order period was over.

The thing is, now that the programs are generally established, I think they could probably pull back on the discounts some. Or, more probably, not do such big post-release markup. I do strongly suspect that the "discount" is largely made up of an inflated MSRP, which probably doesn't need to be as inflated as it is to keep people pre-ordering.

I should probably do another post on what I see going on in the RPG designer community where there appears to be a growing feeling that they know all their customers. That Gencon and online is the sum total.

Gencon attendees and those tied into the online community are maybe 1/10 of the local RPG community, and I suspect that ratio holds in other areas as well. While that's probably the 1/10 that spends the most, the other 9/10 still game and still spend at least some money on games.

If RPGs end up going completely down the same path that wargames have gone, then I think they risk losing that other 9/10s of their customers that they don't seem fully aware of.

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