Dear Billion Dollar Startups,
Are you disrupting the right thing in a right way?
Situation 1: I got a feedback mail from freecharge.com to rate them on a scale from (1–10) on the basis of their services. As I was about to rate them a 9 a friend recommended— ‘Rate them bad to get good discounts.’
Situation 2: On NYE, I received over 30 promotional mails from various Indian companies (still calling themselves startups) giving over 50% discounts. Here’re a few snapshots:
Startups have become synonym to Discounting and Cheap Products. They are flushing money in name of disrupting the business and outperforming the competition.
If you want to buy a phone, go to flipkart. They sell cheapest. Want to take a ride? Go to Ola and apply this code. Food? FoodPanda is always ready with 30% discount.
Did they make me buy products? Yes!
Did they make sure awesome service after purchase? No!
Am I a loyal customer? No!
Here’s what Nikesh Arora has to say on discounting:
“Part of my message to every Indian company (e-commerce) is don’t go out there and burn your money. They should focus on us as customers and not look at us for just giving Rs. 50 or so. I hope it (heavy discounting) is not sustainable,”
Dear Startups, Don’t pay users to your product.
- You cannot engage user by giving discounts and cashbacks if your product sucks (like SnapDeal’s earlier website or FoodPanda’s customer care). If your users are not engaged and happy, take all that money and spend it on identifying why users are not engaged and fixing your product.
- Users will now expect discounts by default to continue using your product. Read Daniel Pink in his book — Drive talks about this from the perspective of employees, the same principles apply to users. Do you want your users to be motivated by money or by the value your product provides?
You can burn all your cash yet have not a single loyal and happy customer. Half of people rate your services as bad because they know they’ll get discounts.
Imagine if Google started off by saying I will pay each user to use my search engine. Or Facebook paying for each post. Or Twitter, LinkedIn, Microsoft.
Everyone in the country is saying — use this product buddy and you will get Rs 700 cash back, instead of saying — use this product and it will give you an amazing experience.
Oh! By the way I am looking to buy a new phone. Let me know if there are some discounts. I’ll wait otherwise.
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