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How You Can Exploit The Tolerance Level of Users To Increase RoI – Some Examples

by Naman on 04/01/2016

When pricing a new product, understanding the tolerance level of the user is important. Knowing what is the maximum you can charge for a product without turning down your customers helps you maximize your revenue. This tolerance level theory applies to every feature optimization. The idea of exploiting tolerance level in product design is to move away from being a purist and keeping interactions clean to finding the right balance between clean product and clean product that makes money.

To be able exploit tolerance you need to understand what your true product is. Example – For most of India, a flight booking OTA’s true product may be booking the cheapest flight easily. Cheapest is the real product, easily might be exploitable for tolerance. A food delivery companies real product is food quality and delivery time, interface of app might be exploitable for tolerance.

Here are some examples that will help you understand what negotiables can be exploited for tolerance. Some product managers might want to call it a Growth Hack.

  1. Way2SMS – A free SMS sending website. From the time of landing on homepage to sending the SMS, a user is shown about 15 ads. You might call it too much but if you understand the users’ profile you will be less worried about interface and more worried about delivery time of SMS. Way2SMS’s delivery time is under 2Seconds, even in peak hours.
  2. Akosha –  A freemium dispute resolution system for consumers. Akosha has pivoted to being Helpchat. Akosha used to send a notice to the disputing service provider on behalf of the consumer for free. If the dispute isn’t resolved, they charge the consumer Rs.500 to follow it up. I and friends have used Akosha thrice to solve disputes worth Rs.13K, Rs.30K, Rs.1K successfully. In all 3 cases Akosha did not charge, because the free service was good enough. Was there room to charge a fee/tip after the service? Absolutely.
  3. GoZoomo: A friend used Gozoomo recently to buy a second hand car. They are doing a lot of offline work with the RTO for him, all for free. Charging for actual expenses borne on behalf of the consumer wouldn’t hurt.
  4. Pinterest – If you land on Pinterest from Google, the first 2 folds are visible without login but when you scroll down further, you are asked to signup. Good balance of freemium.
  5. Quora– Like Pinterest, Quora only allows you to read the answer that you directly landed on, everything else requires you to log in. Sometimes the user has no problem signing in, it’s just that you haven’t asked him well enough or you have given him a “Skip for now” button.
  6. FindYogi – At FindYogi, we ask the user to login to see coupons applicable on a product. Most of our signups come from that 1 feature.
  7. Coupon sites – They open the destination site before showing the actual coupon code. Does the user have a problem with that? Well, their growth doesn’t suggest that.
  8. Insurance sites – Most of the sites ask you for contact details before showing a quote. If you are really serious about buying  insurance, you may not mind it. Afterall, what’s the use of spending so much marketing money to bring the user on the site and not even creating a hook to contact them again.
  9. GoDaddy – From the time of selecting the domain to buy to actually finalizing your order, they try to upsell you 3-4 products viz. SSL, Hosting, email, related domains. Does it hurt? Well what are the chances that he will bounce from step 2 and go to a competitor to buy a commodity product like a domain? Low revenues hurt more.
  10. BigBasket – Untill recently, the earliest delivery slot that you would on BigBasket would be atleast 36hrs away. What really worked for them is the fullfillment rate. They were so good at getting what you ordered that they were ready bet on it with a 50% premium on refunds made for non-delivery. And when they promised a time-slot they really delivered then. Delivery slot is a negotiable, partial fulfillment or delay is not.

Not exploiting tolerance is like leaving money on the table. And once you know what the negotiables are, you will work harder to improve the non-negotiables. A lot of times maximizing the negotiable tolerance actually helps you discover a sustainable business model.

The important thing with tolerance level is that your margin in the tolerance exploitation is the opportunity for a new player to get it. BigBasket vs. Grofers is a good case here.

Naman

Hi! I am the founder of FindYogi. I love studying consumer focused web apps and discovering those little features that makes each product unique. Here, I share best practices from other businesses that everyone could learn from and occasionally about how we are building FindYogi.

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One thought on “How You Can Exploit The Tolerance Level of Users To Increase RoI – Some Examples

  1. Sravan says:

    Adding to the above examples.. http://www.cartrade.com/ reveals on-road price of a new car only when we share contact details. Actual on-road price matters to those who are seriously interested in buying a car.

    “conversions that matter”

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