Yesterday I was chuckling over Wells Fargo’s stupid misestimate of human behavior. They signed a 10 year contract with a credit card company that was offering discounts on rent, provided the landlords would agree to the deal. Wells itself would bear the cost of the discounts, so the landlords wouldn’t lose. Wells figured that very few people would take the trouble to activate the discount; most would just use the card for purchases and run up lots of nice juicy interest for Wells.
Maybe they weren’t so dumb. In rereading Duane Jones’s book on advertising I reached the chapter on ‘Let Us Buy You’ plans. In 1947 the soap companies were making the opposite assumption. They hated the plan because the redemptions would cost them more than they would gain. Jones believed that inertia would basically eliminate redemptions. Very few housewives would take the trouble to send in three wrappers in order to get the price of the three bars. Jones was right, and the plans were highly profitable.
Wells Fargo was rationally operating on the principle that Jones had proved in 1947. Why didn’t it work here? Best guess: Rent isn’t soap. Most people will work to save $100 on a $2000 rent bill. Most people won’t work to save 75 cents on soap.
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