Last night in the pub I heard from someone, who overheard someone else saying:
1: Ferrit offered discounts to Telecom staff in the pre-Christmas period
2: Ferrit is now asking retailers to discount certain products and are picking up the tab
In the style of Wonkette I’m just passing on these scurrilous rumours… but would love it if someone could prove or disprove these.
The first is important because that first rumour would put a big dent in Ferrit’s perceived performance over the Christmas period (performance which has suffered since). I’d love to know what percentage of Ferrits’ business in that period was ex-Telecom.
The second is interesting. It sounds crazy, but it is actually not so stupid if Ferrit is actually redirecting money away from costly and ineffective offline advertising campaigns.
If Ferrit believes people that try the site will come back, then making people try the site by offering compelling bargains is a good way to go. They are following in the footsteps of Amazon (discounts, free shipping), Paypal (free cash) and others that did this in the heady years
It’s the ‘cost per customer acquisition’ approach – which was the idea that whoever got the customers kept them for a long time – but was pretty much proven flawed by 2001. Sure PayPal (in particular) and Amazon made it work, but it was very expensive.
It could work, and is certainly worth a shot.
It is obviously better to slowly build based on word of mouth and minimal advertising – like Trade Me, or Plan HQ (congrats on the launch chaps). Of course word of mouth only works if your site and business model is actually half decent.