Free riding for fun and profit
April 29th, 2010 | by mbhunter |AOL and I will never, ever be BFF. EVER. They even told me so. Here’s my story:
Let’s go waaaaaaay back to 2000. Back to a time when every American’s mailbox was absolutely stuffed to the gills with AOL discs. One fine mid-Atlantic day I wanted some World Wide Web on my computer. I knew Netzero still had some free numbers around, but the only place I knew to find them was on … the World Wide Web. Which I couldn’t access since I had just moved to a completely new mid-Atlantic area and didn’t have a local number. (Remember dialup?)
But, thankfully, I still had seven AOL free trial CDs. Once the light bulb went on it was only a matter of about 23 seconds before I could lay my hands on one. So I started my free trial, got on the WWW, found my local Netzero number, and once I verified that I could hook up with Netzero, I got on the horn to AOL to cancel my free trial.
Now, I do suppose it was rubbing it in their face a bit (a) calling them up to cancel only twenty minutes after signing up, and (b) telling them with complete honesty that I used their free trial to download the software for a free access plan. But I don’t think I’ve ever experienced ruder treatment from any customer service representative than what happened in the 45 seconds that followed that. The guy wasn’t just short with me. He was ticked. He didn’t even try to keep me as an AOL customer. He just ripped up one side of me and down the other, told me in no uncertain terms that I’d never get a free trial with AOL again, threw the cancellation confirmation at me, and ended the call.
Nonetheless, his assessment of my intentions was right on the money. He was spot on in cutting me off, and doing it quickly, because free riders kill profits. I pegged myself as an obvious free rider, and they treated me accordingly. They dangled a carrot in front of my face, and I grabbed it before getting whacked with the stick, but they made sure that I never got another chance at a carrot.
AOL, of course, was in its heyday then, and it went downhill from there, but it was wise in its dealings with me. Many other companies aren’t so wise in dealing with free riders, and they pay for it. But if they pay for it, it means that the free riders aren’t, which is good for free riders! I maintain that free riding is completely ethical. If someone plays by a company’s rules and gets goods or services for below cost or even free, then it’s no one’s fault but the company’s for tolerating it. It means that the company isn’t paying close enough attention to capping the cost of acquiring a customer. It’s not a bad idea to bait potential customers with a freebie, but once it becomes clear that the potential customer has no potential any more, the company should show them the door. Some companies need more clarity than others.
Here are a few ways to take advantage of free riding, and what the companies may do to stop it:
- Reward credit cards. I love my rewards credit card. I get free use of the issuer’s money for a few weeks, the convenience of not carrying a wad of cash around, fraud protection, and a rebate! They’re paying me to use their card, as long as I use it only for convenience and I pay my bill in full each month! How can they stop it? In light of new regulations, they can start charging me for the privilege of not carrying a balance. If I don’t like it, I can cancel, of course, but that’s what they’d want me to do.
- Coupon your groceries to almost nothing. Kathy Spencer is one of the biggest free riders out there with grocery shopping. A few hours a week nets her essentially free groceries, week after week. She pays with her time, but it’s not a bad rate per hour! How can the grocery stores stop it? By not doubling coupons, by not allowing combined coupons, by instituting minimum purchases, etc. They don’t have to make it so easy for her!
- Free trials of just about anything. If a free trial of whatever is offered, why not use it? It’s purely a business decision to offer a free trial. Some will pay after the trial, and some won’t, but I don’t see an ethical dilemma brewing for deciding not to continue paying for the service. How can they stop it? They can stop offering the trial, or reduce the appeal of the trial. Or, at least, not offer it twice to the same person.
Free riding may end up being short-lived, but why not use it for fun and profit? If you don’t, someone else will!
Like someone else with an AOL disc.
3 Responses to “Free riding for fun and profit”
By Daniel on Apr 29, 2010 | Reply
2000? I vaguely remember it, so it must have been around 1995.
At CVS they constantly have deals where you can buy something for $4 and get ExtraCare bucks that can be used on anything. Most people see that and think ok, but what if I lose it, forget about it, etc.
Smart people look at it and say, I’m in CVS because I need milk, shampoo, etc., why don’t I just split this up into 2 transaction? Buy the “free” item, get the receipt, and then buy the milk with that money. Sound like free toothpaste to me.
Hilarious that he got mad at you. Was there a time when customer service representatives cared about the company?? Sounds strange.
By Amber on Apr 29, 2010 | Reply
But using a rewards credit card is *not* freeriding. It may seem that way to the consumer, but you are actually making the credit issuer a tidy profit every time you charge something to the card – it’s just the store that pays, not you. I demand brilliant customer service from my credit card companies, even though I pay in full every month and love getting my rebate checks in the mail.
At CVS however, where I routinely scoop up freebies with coupons and their store money ECBs, I take what comes. They’re not making any money off of me.
Unfortunately, I have experienced far better customer service at the CVS than I have with the credit cards, though everyone eventually pays what they owe me.
By Grace on May 3, 2010 | Reply
Your take is an interesting one. But not one that the advertising industry nor research shares. The truth is, folks sign up for free trials because they have some sort of interest in the product. [Which is why I sign up for free trial subscriptions to “Oprah” and “Women’s Day” but NOT for “Popular Mechanics.” If the advertiser has not oversold the value of the product, and if the advertiser has reached their target audience, some small fraction of those freeriders will stay on board even when there’s a charge. That fraction doesn’t have to be large for the advertising campaign to be a success. Ask anyone in Direct Advertising.
Personally, I wait to be “sold” on the product which is the product’s job, after all. Sometimes it works, which is why I’m still subscribed to “Oprah.” Sometimes it doesn’t.