Would you like fries with that?
When it comes to structuring your car subscription plans for maximum revenue, it's important to understand the underlying behavioural aspects of your customers and how they may perceive the value not just of each individual plan, but also how the value of each plan is perceived in the context of one another.
Your plans shouldn't merely represent 'small, medium and large' but rather offer compounding perceived value to promote upsell opportunities and maximise your revenue opportunity.
Leveraging cognitive bias to structure car subscription plans for maximum revenue
Structuring car subscription plans for maximum revenue involves more than just setting prices and features. By understanding customers' underlying motivations and behavioural biases, businesses can create subscription plans that appeal to those biases and increase the likelihood of customer adoption. By leveraging principles such as price anchoring, default bias and loss aversion, businesses can create subscription plans that not only meet customer needs but also maximize revenue.
1. Social Proof
This bias occurs when people rely on the actions or opinions of others to guide their own behaviour. By showcasing positive reviews, testimonials, or other forms of social proof, businesses can increase the perceived value of their subscription plans and encourage customers to adopt them.
2. Framing effect
Similar to default bias, the principle of framing effect is the idea that people's choices are influenced by the way information is presented to them. By framing the higher-priced subscription plan as the "premium" or "elite" option and emphasizing the added benefits and exclusivity of that plan, businesses can encourage customers to upgrade to that plan.
3. Price Anchoring
Price anchoring is the principle of establishing a lower-priced option to make the product seem more attractive, and vice-versa. By creating multiple subscription tiers with different features and pricing, businesses can anchor their pricing to a lower-priced option, making their service appear more affordable and attractive. This can encourage customers to select a subscription plan that fits their needs while also maximizing revenue for the business.
4. Decoy effect
This bias occurs when people's preferences between two options change when a third, less attractive option is introduced. By introducing a third subscription plan option that is priced higher than the other two but offers additional features or benefits, businesses can make the other two plans seem more attractive and encourage customers to choose the higher-priced plan.
5. Loss Aversion
Loss aversion is the principle that people are more motivated by the fear of loss than the possibility of gain. By creating subscription plans that include features or services that customers may perceive as valuable, businesses can leverage loss aversion to encourage customers to select those plans. For example, moving to a plan that offers complimentary vehicle swaps.
6. Instant Gratification
This bias occurs when people prioritize immediate pleasure or reward over long-term benefits or goals. To leverage instant gratification as a strategy for upselling, car subscription businesses can offer add-ons or upgrades that provide immediate benefits or satisfy customers' desires for instant gratification. For example, businesses can waive the upfront establishment fee on higher plans.
7. Default Bias
The principle of default bias is the tendency for people to choose the default option when presented with a choice. By setting a default subscription plan and presenting it as the recommended option, businesses can increase the likelihood that customers will select that plan.