Sunday, July 15, 2007

Behaving Stupidly in Groups

I was only going to post the once concerning the MacUpdate promotion, but I just can't resist. The current state of the promotion provides such a beautiful illustration of how making good individual choices can lead to perverse large-scale behavior. Thinking it through also leads to such an interesting optimal strategy for purchasing and whether or not to recommend that others purchase the bundle. Keep in mind, this is coming from someone that has already described the bundle as a great deal.

Right now, the promotion can fairly be described as not going well. There are fewer than two days left of a nine-day promotion, and the number of sales is at about 3300. It looks like sales are going to limp along and just fail to reach the unlock point of 4000 sales for Intaglio. There was clearly an expectation of at least 10,000 sales, which is where the final application, TechTool Pro, would have been unlocked. I argued in the previous post that the entire system of unlocks is ill conceived, putting a strong disincentive on buying early, even though early sales are needed. As well, there originally was a system of invitations that benefitted not the sender of the invitation, but the recipient, providing further encouragement to wait before purchasing; the invites have since been fixed to reward the sender and recipient both.

To provide an example of where the problem comes in, consider Intaglio. People have already posted comments on the promotion site to the effect that they will buy once Intaglio is unlocked. How many people are waiting for that? The bundle could be viewed as getting Intaglio, a well-regarded program that costs $89, for $50 with a bunch of other applications thrown in for free. It must be tempting, but, really, why should they buy it without knowing for sure that Intaglio will be unlocked? If enough people make that decision, none of them get the program, even though together they could have provided the needed number of sales. The group behavior seems stupid, but the individual behavior is completely sensible.

Given the state of the sales, I think it worth considering the optimal strategy for those who have already bought the bundle, and for those who are thinking about buying the bundle. The optimal strategy for MacUpdate is indifferent to me; I see no reason to care, except in how it influences the benefits I will get from the promotion.

Let's focus first on those who, like me, have already bought the bundle. We'd like to get as much more added to the bundle as possible, since it's all just free for us at this point. At first, it looks like we should encourage people to buy the bundle, so as to unlock Intaglio, at least. However, Joel Mueller, one of the organizers of the promotion, posted (as MUeller) a comment on 13/7 at 4:04 pm:

We still haven't pulled out our big guns yet. We wanted the community to pull through first. Do not loose [sic] hope. We have every intent to unlock every app in this bundle.

Interesting claim! Those "big guns" must be really something, right? Let's assume that they are enough to cause enough sales to at least unlock Intaglio.

However, it does mean that there are some nice additions to the bundle which they're holding back. This in turn means that encouraging people to buy before those "big guns" are made available is pretty much a fool's game. We should encourage people to wait, hopefully getting both the "big guns" and unlocking Intaglio and TechTool Pro. In passing, I think Intaglio is quite possible, but doubt TechTool Pro will be unlocked.

The same thinking applies to those who have already decided to buy, but haven't yet: they should wait to be sure that MacUpdate makes the "big guns" available. The same goes for those who are waiting to buy until, e.g., Intaglio is unlocked: they should wait, both to be sure that Intagio does unlock and so as to get the "big guns".

I can see no reason for prospective buyers not to wait, at this point. There isn't a sufficient rate of sales to be at all sure that Intaglio will unlock; TechTool Pro is a pipe dream. There are some extras that haven't been offered yet. What appears to be the best case right now would be for sales to tank completely, pretty much forcing MacUpdate to offer some serious incentives with enough time left for Intaglio to unlock.

The combination of supposed incentives in the promotion are pretty tragic. Each one has actually been a disincentive to early purchasing, basically killing any chance of enough sales to unlock the "crown jewel" of TTP. I must admit that I'm puzzled how MacUpdate could have gotten all of this so wrong. Could they actually have believed all the marketing dross about "the Mac community" on the promotion web site? There really isn't a relevant community there, just potential customers who'll make decisions that are right for them, not for some mythical community. It is not exactly a secret that people make choices for individual benefit can lead to perversely contrary results in the large.

I will offer up a thought on what MacUpdate's strategy should be, although I won't put much effort into it. You want to sell as many as possible, so offer those "big guns," do it fast, and make clear that there's nothing else. So long as there is reason to think you're holding back, you're providing incentives to wait, killing sales to those who would buy if Intaglio were unlocked.

As a closing note, do remember this is from someone who's already bought the bundle and thus has every reason to hope for a successful promotion. If I'm concluding that it would really be best for sales to die off, and fast, then there's something quite wrong with the incentive structure.


ericthemagnificent said...

Interesting analysis. I'm curious what you predict will happen in the event that the end of the promotion approaches and Intaglio is close (within 1-200 sales) of being unlocked. Based on recent sales rates, this seems to be an increasingly likely scenario. Will some of the people who are currently sitting on their hands decide to buy when the goal is much closer, or will they still wait until after the 4,000 mark is reached?

Michael said...

Sadly, I'd say there's a good chance that getting close will just encourage people to wait it out. Really, if there's only a few left, why should you risk it at all? Wait and see doesn't become any worse of a strategy, and maybe even better.

donnacha said...

It has certainly been interesting to watch and, although it's no longer "politically correct" to point it out on the MUpromo thread itself, the guys behind it could not have messed it up more badly if they had been trying.

Making mistakes is one thing, but the complete unwillingness to accept, once it became obvious, that there was a problem and to adapt is astonishing.

The long, rambling self-justification in the FAQ (and which they have know headlined above the discussion area in order to scare off any waivering customers) reveals an extremely deluded perception. I guess these guys must be pretty young.

Michael said...

I tend to agree that they couldn't have done it any worse. The whole thing seemed to be based on ideas that they were convinced to be good, rather than taking a look at standard practices.

The MacHeist group were also involved, and they were definitely pretty young. Could be that they persuaded some peers that the unlocks were brilliant, without really understanding the problems inherent therein. Most of the explanations that Joel Mueller has given have been theoretical, rather than empirically grounded.

Well, let's hope they do manage to pull it out of the fire. I certainly wouldn't mind getting Intaglio!

Free said...

First of all, while you're waiting for the counter to update, click on the names of the most prolific posters to the promo forum. That'll open their profile where you'll see that probably two thirds of them have not bought the bundle. I ask myself why they haven't put their money where their mouths are. Hmmm. Secondly, it's true that what someone over there wrote about, shall we say, careless remarks. I posted that I was spammed at a temporary address I'd set up the night before specifically for requesting an invite for this promo. I posted a reminder to the group to take care and included the email address of the Federal Trade Commission's spam busters. Joel deleted the post and fired off a nasty email to me. I responded that I was stunned that he interpreted my message as an accusation that MU was spamming and suggested he needed a nap. He replied that people usually blamed MU for spamming. (Do tell!) My MUG was holding a special meeting that night to review and demo apps in the bundle for members who hadn't bought. Part of the MUG mission is to share our sales, tech, and customer support experiences, which I did, showing copies of the original post and exchange of emails. The bottom line is the members there decided to pass on the promo unless Joel "wipes the dollar signs from his eyes". My guess is there were around a dozen sales lost. Yeah, it hurt my chances of getting more free apps since I bought early but I feel better remembering that, as arrrghsmythe says, this is no more than a flea on the arse of the ship's monkey in the real world. IMO Michael's got it right, puts it in proper perspective, when he steps back and observes the interesting psychology of group think. I'm going to go enjoy a sunny Sunday. Que sera, sera.

Michael said...

Thanks for your comments, Free. I actually saw your rapidly deleted comment with the details about being spammed, and found it a bit inappropriate that it was removed, rather than being addressed. Companies that address problems rather than denying them are much nicer to deal with.

Michael said...

Oops, posted that comment too soon. I wanted to also add that I think you're totally right about making the matter known to your MUG. Far better to be honest about these things, and not become some shill for MacUpdate in the hopes of overcoming their poor sale plan.