The Problem: Even though people can save hundreds of pounds by signing up to bill-saving websites, many still do not sign up.
The Solution: Offer people gifts instead of money.
An advert on TV at the moment encourages people to sign up to a website that automatically changes their energy provider each year, creating an average saving of over two hundred pounds a year. Quite a lot of money, but I still couldn’t be bothered to go through the process to sign up.
I’ve also been looking at booking a trip in the UK post-lockdown recently, and I realised that if they offered a free UK holiday (worth £200) I would have signed up in an instant.
Saving money on an energy bill is sunk costs and in a multi-thousand bill, £200 doesn’t sound like that much money, so it’s not that big an incentive to sign up.
However, I really want a holiday (lockdown has been a long old process!) so the chance to get one for free would be brilliant and well worth putting the effort in to sign up (after all, I’d have to book a hotel/Air BnB online anyway).
The holiday is just one example, but there are plenty of other things people would like, but maybe don’t feel they can justify buying. However, if they’re offered as gifts it makes people much happier to have them; indeed the best gifts are things someone wants, but doesn’t feel they can justify buying themselves.
There is a good example of this in practise: British Gas used to offer a penguin bedside light as a gift to customers. It was only worth about £20, but many customers phoned up saying they wanted it, even when they were offered over a hundred pounds in cash instead. Compare the market also seems to have realised this, offering soft toys as well as savings.
The benefit to the bill-saving company is that they can actually make more money; by offering gifts close to the value of the money saved, but not exact, they can make extra profit, and if they buy gifts in bulk, they can make even bigger savings. That, combined with the increased subscriptions, could lead to a big increase in profits.
Indeed, there is a big opportunity here beyond just bill-saving websites. What if lots of money back websites offered gifts instead, they could have selections of products many people would like and give them the choice of what they wanted.
A company like Argos could even create a Wishlist option, where customers could choose products they would like, and then a money saving website would work out the saving, choose the product closest in price to the saving, and order it.
Argos wins with extra purchases, the customer is over-joyed, and the cashback website makes more money (to make an even bigger impact, they could donate the difference between the saving and the product to charity).
So a multi-win option for everyone involved!
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