The Disappearing Deal

The Bait and Switch of New Customer Offers

Many companies entice new customers with sign-up discounts, special offers, and welcome gifts, a practice dating back to the bank toaster giveaway.

These strategies are incentives to a company and appeal to people who see value in the gift. According to Gemini, Banks used to give away toasters (and other small appliances) to attract new customers in a few ways:

• Standing Out: Back then, there wasn't as much competition in the banking industry. A free toaster was a unique way to grab attention and convince people to choose their bank over another.

• Perceived Value: While not super expensive today, Toasters used to be a desirable household item. By offering them for free, banks created a sense of getting something valuable by opening an account.

• Building Relationships: The toaster (or other gift) was a little reminder of the bank. Every time someone used the toaster, it might trigger a positive association with the bank that gave it to them.

• Low Cost, High Impact: Compared to the potential value of a new customer's business, a toaster was a very affordable way to make a big impression.

Toasters, indeed, was clever marketing for the time!

Today, we live in a different world, where companies are desperate to gain new customers and resort to deceptive design. Every consumer needs to beware and protect their wallets because even the best-known companies are doing it.

Deceptive Design Examples of Your Favorite Companies.

One of the deceptive practices that businesses often employ, extending beyond dark web schemes, is using bait-and-switch tactics. Some examples:

• The Out-of-Stock Switch: This classic tactic involves advertising a popular item at a meager price to attract customers. Once they arrive at the store, they're told the item is out of stock, but a similar (and more expensive) product is conveniently available. Think Used Car Dealer.

• The Hidden Fee Switch: This deceptive tactic lures customers with a seemingly unbeatable price. However, upon reaching checkout, the advertised price balloons due to undisclosed fees, misleading the initial offer. This tactic is ethically questionable because it creates a false impression of the product's affordability. Think Gym Memberships, Cable TV and Cell phone packages.

• The "Limited Time Offer" Mirage: This tactic creates a sense of urgency by advertising a product with a heavily discounted price for a "limited time only." However, the "limited time" offer perpetually repeats, revealing it as a manipulative tactic rather than a genuine sale. Think:

  • Fake countdown timers

  • Inflated original prices

  • Perpetual "limited-time" offers

  • Limited quantities that aren't that limited

1. The "Free Trial" Trap: This tactic uses the allure of a free trial to get your foot in the door. However, the fine print hides that the free trial automatically converts to a paid subscription unless canceled before a specific deadline, often catching customers unaware. Think: Free trials with hidden auto-renewal

2. The Membership Trap: A store advertises a discount for becoming a "member," but the membership fee negates most of the savings. This tactic is designed to get customer information and lock them into a program with minimal benefit. Think: Warehouse club memberships and Gym memberships

Mint Mobile: The Phone Bill Revolution... with a (Not-So-Tiny) Asterisk

Let's face it: traditional cell phone plans can be expensive. However, there are now many lower-cost alternatives available. Gone are the days of $100/month bills. As a consumer, seeking lower-priced options by calling your provider or shopping around is essential. One affordable phone plan market standout is Mint Mobile, owned by Ryan Reynolds. The company has injected humor and logic into the mix to appeal to consumers and was recently acquired by T-Mobile. Competitors in this space include Visible from Verizon, Boost Mobile, and several other low-cost offerings from T-Mobile.

Mobile is a saturated market, and Mint Mobile should be applauded for its intelligent and savvy approach to standing out.

Mint Mobile's prices and service are great. While their advertising includes many brilliant and attention-worthy moments, especially with the brand and humor of Ryan Reynolds, it is teetering on the edge with ethics and bait-and-switch tactics, just like all the competitors in the industry.

HOWEVER!!!

Check out this recent offer from Fall/Winter 2023 from Mint and Ryan Reynolds, delivered from Ryan Reynold’s YouTube account: “All plans have gone to $15/month,” which is listed as a limited-time offer, but that limit is not defined because nine months later, the deal is still being advertised!

Below is today's Mint Mobile website. Though the claim isn’t as deceptively worded as above and is full of disclaimers, it still makes you think through font emphasis that this is the price you pay for a plan, but it is only for three months and new customers.

Wouldn't it be cool if they just proactively made all customers pay a flat $15 per month? They didn't!

Then, they go further by showing the page below. If you are slightly distracted when signing up, and most of us are, you will learn quickly that you are essentially getting a discount to sign up, but the days are numbered, and eventually, you will pay the full price. You see this a lot in software as well.

This brings up another thing: the naming of the plans. As you can see below, there is an “unlimited plan that is not unlimited per this definition.

If it were truly unlimited, then the other month, I would not have run out of data and had to “top off.” The one that might be closer to unlimited is called unnecessary. What does unnecessary even mean?

Here is the disclaimer language in big print: Unlimited plan incl. 40GB high-speed data w/10GB hotspot. Unnecessary plan incl. 60GB high-speed data w/20GB hotspot. Video @ 480p. Data speeds reduced after monthly allotment. Taxes & fees extra.

I am Sticking with Mint Mobile (Despite the Little Annoyances)

I can deal with those inconveniences for the price I'm paying. At the end of the day, Mint Mobile saves me a ton of money compared to what I was paying before. So yeah, I'm sticking with Mint Mobile, even with a few minor bumps in the road, and the tactics they use are used by all their competitors!

Building Loyalty: Strategies for Service Businesses

To avoid the pitfalls of neglecting existing customers, service businesses should focus on the following strategies:

1. Value Loyalty Programs: Implement programs that reward long-term clients with exclusive discounts, early access to new services, or priority scheduling.

2. Proactive Communication: Regularly update customers on new developments, whether in tax laws for accountants or new features for a software service.

3. Gather Feedback: Actively solicit feedback to understand customer needs and address any concerns promptly.

4. Exceed Expectations: Go above and beyond by offering personalized services, such as tailored advice sessions or proactive tips that could benefit the client.

The Power of Choice in a Competitive Market

In today's free market, customers have options. If businesses fail to prioritize them, they'll take their business elsewhere. Businesses that consistently exceed expectations and build strong relationships with existing customers will thrive.