I’m pretty sure that you are like me – you think that based on your product development definition your product is the best one out there. If only your potential customers would buy it, they would be amazed at how well it solves their problems. It’s just finding a way to get them to make that initial purchase that can be such a challenge for product managers. The idea of offering our customers some sort of reward for buying our product has probably crossed your mind more than once. Is this a good idea or a big mistake?
How AT&T Product Managers Are Using Bait
All product managers want their product to be popular. However, pity the poor telecom product managers who are responsible for getting more people to subscribe to their mobile phone service – everyone already has a mobile phone! These product managers are discovering that they can’t sell their service based solely on the mobile phones that they offer, they need to be able to offer their potential customers something more if they want to have a success story to add to their product manager resume.
This is where tablets come in. In the U.S.A., the large telecom provider AT&T has quietly started to bundle tablets with the cell phones that they are selling. AT&T is offering to provide its customers with a US$200 discount on an iPad if they are willing to sign up for a 2-year contract and purchase a new iPhone at full price.
There are many different reasons that the AT&T product managers are starting to use tablets as bait to get new customers. One of these reasons is because with a tablet a mobile customer now has a much larger screen. AT&T which has just completed a very expensive US$49B purchase of the video provider DirectTV is highly motivated to get their customers to consume more video content. Providing their customers with low-cost tablets just might make this happen.
Challenges Presented By Using Bait To Get Customers
So I get it – offering your customers bait, like AT&T is currently doing with tablets, can be an effective way to get potential customers who had not made up their minds about buying your product to commit. However, clearly this is not the same as allowing your customers to make up their minds by themselves. The big question that we product managers now face is if we are harming ourselves in the long run by offering bait.
One of the things that we need to realize about what AT&T is doing is that not only are they trying to incentivize potential customers to sign up, but they’d also like those customers who do sign up to use their new tablets to use mobile data because they’ll charge their new customers for using that data. How customers are going to feel about these new fees is up in the air. T-Mobile is trying to find a way to not make their new customers angry by offering them a free chunk of data that can be used by their tablet.
One final note is that even in AT&T’s case, not all customers are created equal. Studies have shown that tablet custoemrs bring in much less revenue than new smartphone customers. What this means for AT&T is that even though their subscriber ranks are increasing, their bottom line revenue may not be increasing as much as they would like it to because of how they went about getting their new customers.
What All Of This Means For You
More customers is always better for a product manager, this is a part of our product manager job description right? Well, it turns out how we actually went about getting those customers can sometimes have a big impact on how valuable those customers are to us. Using bait to get more customers can get the customers that we want, but can also have unintended consequences.
AT&T is in the process of using tablets as bait to get more customers to sign up for their mobile services. They are offering potential customers a discount on a popular iPad tablet if they sign up for a 2-year contract and purchase an iPhone at full price. AT&T hopes that this will boost the consumption of video services and will drive an increase in data fees. However, studies show that tablet users are less valuable to telecom providers than mobile phone customers.
We’d all like to have more customers who were very happy and satisfied with our product. Using bait to get customers who have not yet made up their minds to select our product can work in the short term, but may not create the customers that we really want. Our time would probably be better spent finding ways to make our products do a better job of meeting our customer’s needs.
Question For You: Is there any situation in which using bait to get additional customers would be a bad idea for a product manager?
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What We’ll Be Talking About Next Time
As product managers we generally spend our time trying to find ways to update our product development definition in order to make our product be more appealing to potential customers. Our goal is to convince them that we make a good product that will solve whatever their problems happen to be. The one thing that we never seem to spend any time worrying about is what to do if there is a marketing disaster. Do you even know what one of those looks like?