The idea
Information gaps can make quality difficult to assess before purchase. Trials and credible guarantees can help buyers evaluate an offer. Adverse selection means the customers choosing an offer may have different costs or risks from the average customer; moral hazard concerns how behaviour changes after protection is provided. Price and limit credit, unlimited or protection products using relevant segment evidence.
Use it thoughtfully
- Offer signals only a good provider can afford.
- Price unlimited and credit offers on who will take them.
- Build excess fees or limits into protection plans.
An example
ILLUSTRATIVE EXAMPLE: An airtime-loan team estimates repayment risk for eligible segments and uses observed repayment data to set fees and limits.
A question to try
Which of your offers attracts the customers who cost the most to serve?
A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.