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Sophisticated Consumers with Inertia: Field Experiment

1 pointsby sheefrex7 months ago

1 comment

sheefrex7 months ago
Key extract:<p>At the same time, consumers preempt their future inertia; 24%-36% of potential subscribers avoid subscribing when offered an auto-renewal promo. Further, offering an auto-renewal contract decreases the share of subscribers over the two years after the promo by 10%. Even though auto-renewal generates higher revenue in the medium-run due to payments from inert subscribers, auto-renewal and auto-cancel are revenue equivalent after one year, but with fewer subscribers in auto-renewal.