Optimizing for Revenue isn't Always the Right Strategy! Growth Hacking Gone Bad

Optimizing for Revenue isn't Always the Right Strategy! Growth Hacking Gone Bad
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As an online marketer, I love to test ways to improve conversion rate and ROI for my customers. Good online marketers combine statistical analysis, psychology, and creative writing to tweak user experiences to maximize performance.

It's important, however, to make sure that you don't focus so much on optimization that you forget about whether your customer is actually satisfied with your company. My recent experience as a customer of Love Home Swap serves as a great case study of how you can win the "growth hacker" battle, but lose the customer service war.

My Love Home Swap Story

I had been planning a family trip to Europe for a few months when I saw an article in TechCrunch about two home swapping services joining forces under the Love Home Swap brand. I own my house in Silicon Valley (which is a pretty desirable place in which to vacation) so I figured that I might be able to find a cool house in Europe to swap with mine. I signed up for a two week free trial on Love Home Swap. Click this link to see a screenshot of the landing page (note that I drew the yellow box, it is not part of the site).

I then added my home to the site and started to search for interesting houses in Europe with which I might want to make a swap. The search functionality wasn't great -- it was impossible to search for people specifically looking for the San Francisco Bay Area, or even California, for that matter. And most houses did not specify dates for a swap but rather just left the time open-ended.

In other words, to find a match, I would need to a) find a house I liked; b) see if that house was open to a US-based swap; c) write them to see if they would even consider California and the dates I had in mind. It felt like it was going to take a lot of work to find the right match. But, as you can see from the landing page, the site offered a free trial and then it was only $23 a month after that, so I felt like this was a relatively low-risk proposition. Perhaps someone would proactively write me with a good swapping offer.

About 10 days into my trial, I received a call from Love Home Swap customer support team member, Dalton. I was impressed by this gesture, at least initially. Dalton asked me what I thought of the service and whether I had any questions. I told him that I was pretty disappointed in the search functionality and that the system seemed to put the burden of finding a match on the subscriber, rather than building tools that created efficiency.

It was at this point that my experience with Love Home Swap started to take a turn for the worse. Rather than acknowledging my comments and trying to come up with a solution (or perhaps submitting my concerns to the product team), Dalton was insistent that "I probably didn't fully understand how their search engine worked" (given that I've written my own search algorithm, this struck me as sort of funny, but hey, whatever). His solution was simple: you have to send out a lot of emails to other houses and eventually you'll get a match. Just keep trying over the next couple of weeks and you'll eventually find something. Indeed, in a follow up email, he wrote: "Put yourself out there. Aim to message at least 20 members per swap."

At the time, I didn't understand why a customer support rep would call me, ignore my concerns, and instead focus entirely on getting me to use their broken system. I soon found out! About a month after that conversation, I had pretty much forgotten about Love Home Swap entirely and was working on getting a vacation rental from VRBO, which I have used numerous times and with which I have always had a great experience. While on VRBO, I remembered that I was still subscribed to Love Home Swap, so I went to the site to cancel my subscription. Here's where I discovered Growth Hacker trick #1: there was no way to cancel the subscription online -- instead, you have to send an email to customer support. I then noticed Growth Hacker trick #2: the site said I had signed up for an annual subscription. If you look at the landing page screen shot above, the prices are clearly described as a monthly fee. Of course, look closer and you'll see an asterisks next to each price. At the very bottom of the page (way below the fold), the asterisks is explained: "Monthly price indicative only. Membership fee billed annually in advance following trial period."

I wrote Love Home Swap an email: "I signed up for a free trial and planned to cancel this month as I am not using the service and do not think I will use it in the future. I see that my membership expires in a year -- I do no recall signing up for an annual subscription. Please cancel and send me a pro-rated refund."

A few days later, I received an email from Kathryn at Love Home Swap. She wrote, in part: "The terms and conditions which you accepted when you joined us clearly state that you will be charged your membership fee on your date of renewal, unless we hear from you beforehand."

After a series of fruitless emails back and forth (including one where I sent her screenshots of the misleading landing page with monthly pricing), it was clear that no refund was forthcoming.

Growth Hacking 101

So let's review the tricks Love Home Swap used to get an annual subscription fee out of me. I count three:
  1. A landing page that discusses monthly billing but signs up customers to an annual subscription in the small print;
  2. A call from a customer service rep right before the free trial ends with the sole objective of getting the customer to use the site past the end of the free trial;
  3. The ability to sign up online but no ability to cancel online. Adding an extra step reduces the chances that the customer will actually go through with the cancellation.

As I started to think about the other listings on Love Home Swap -- the ones that didn't specify a particular date for travel and seemed to be open to the entire world for their swap -- it occurred to me that I was probably not the only person who had fallen victim to Love Home Swap's clever growth hacking. The site was an online Potemkin Village -- hundreds of listings from people like me who were stuck with a Love Home Swap subscription they would never use.

Growth Hacking Your Way to the Bottom

And the sad thing here is that some Growth Hacker at the company thinks he is really crushing his metrics! He's figured out the right combination of landing page copy, terms and conditions, and customer interaction to lock in the maximum number of suckers. What he doesn't realize though, is that every sucker who ends up as an inactive user on Love Home Swap is actually killing the company in two ways. First, that sucker is likely to get pissed off and tell as many people as he can about his negative experience with Love Home Swap. And second, any new users to the site are going to see a lot of listings that are just empty shells, thus reducing the utility of the site. An army of unhappy customers and a site filled with useless listings -- great strategy!

Lots of great companies engage in growth hacking. The items you see when you visit the homepage of Amazon.com aren't there by accident; Amazon is doing ongoing testing to figure out which products you will most likely buy. Facebook tests its News Feed all the time (even doing controversial psychology studies) to ensure stickiness. Growth hacking works, and -- done in the right context -- there is nothing wrong with it.

Where things go astray, however, is when a company applies growth hacking without regard to customer satisfaction. Amazon has a no-hassle return policy, so even if their growth hacking 'tricked' you into buying something you didn't need, you can easily return it, no questions asked. Facebook doesn't just optimize their site for revenue, they optimization it for consumer satisfaction.

Every decision I make at my company must satisfy three criteria: client satisfaction, employee satisfaction, and shareholder value. In other words, a highly profitable scheme that would piss off customers or employees (or both) isn't something I'll do. To do otherwise is a bad long-term strategy for any business.

Disclaimer: I am an advisor to MyVR.com, a company in the vacation rental space that does not compete directly with Love Home Swap.

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