When the carrot doesn’t work it’s time to start using the stick

Have you ever attempted to change customers' habits? It's a bit like a social science experiment… trying to see what incentive you can use to entice them towards the choices you're offering but by and large finding that people simply don't like to budge from where they are! It's human nature to resist change.

When things come down to the wire though, the enticement ‘carrots' stop working and it's time to break out the stick – that is, to start imposing deterrents and/or penalties for non-compliance. A few obstinate customers may be all it takes to derail a well-planned and choreographed release, offering or change. It may end up costing you a lot more to have your entire business plan thwarted than the threat of losing revenue from a few inflexible customers.

Of course common sense would have us believe that the carrot is the first choice and the stick should only be used as a last resort. I think this is probably thanks to another popular pearl of wisdom that "you catch more flies with honey than vinegar.” I suppose there's a certain amount of logic in this but in terms of getting to the endgame quickly the saying that springs to mind is, "nice guys finish last.”

An Example from Helios

Here's an example that I think helps contrast the carrot versus the stick approach. Helios 12 users who've ever setup an EFT enrollment sales code may have noticed several options associated with the EFT Monthly Fee field on the EFT Open option. There is a field entitled Minimum Number of Drafts and then two related fields, entitled New Monthly Fee and Early Termination Fee. Both of these fee fields are triggered by a draft counter field which is initiated by the Minimum Number of Drafts option. The carrot approach is the New Monthly Fee option while the stick is the Early Termination Fee.

In the carrot approach, what we're doing is setting up a reward for member loyalty by automatically changing the membership rate after a specified number of drafts have been met. In the stick approach, an early termination will apply if the member attempts to cancel BEFORE the specified number of drafts has been met. We can entice the desired action or we can penalize the undesired action. In the consumer's perspective though the penalty of an early termination fee can give pause and may deter them from enrolling with the specter of a penalty clearly established from the outset.

How to use it

Regardless of which approach you prefer to use, if you want to use these features you can create a new membership or modify the policy of an existing membership. Go to Settings > Sales Code and look up an EFT Enrollment sales code. Click on the Pkg/Mem Intelligence tab and look for the Open option in the EFT Plan area. Click on the Open option and then click on the Fees tab. The Monthly Fee should already be indicated. Simply enter the number of months in the Minimum Number of Drafts and then either enter the New Monthly Fee (the carrot) or the Early Termination Fee (the stick). After saving these changes to the EFT Enrollment sales code, the new policy will apply to new membership enrollments going forward; it is not retroactive to existing EFT memberships.