John A. List

“In this sense, there are two types of consumers who consistently buy into membership programs. For the first type—let’s call them JoGoods—the better deals incentivize them to purchase even more products (or more rides, in Lyft’s case). Psychologically, the more they take advantage of the discount, the more the initial tariff feels worthwhile, even if they are actually spending more than they would have otherwise. This behavioral pattern explains why “buy one, get the second half off” supermarket deals work so well: consumers want to take advantage of the discount, so they end up buying two of a product they actually only need one of. This is the sweet spot for companies, and it’s what Logan was banking on happening with Lyft—consumers would get a good deal, enjoy the service even more, and take more trips. A true win-win all the way to the bottom line. However, there is also a second type of customer, whom we’ll call NoGoods. They buy the membership because it is a good deal, but unlike JoGoods, they don’t increase their number of trips. In their case, the membership is valuable because they ride a lot, and the discount applies to all of the purchases they would have made anyway. This is the unsweet spot for Lyft: people who are taking the same number of trips but paying less for each of them, and the membership fee Lyft collects from the NoGoods doesn’t make up for it.”
― John A. List, The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale