The Challenge

In 2009, when I first arrived in Australia, I found the experience of buying a car to be lacking in several ways. I set about solving this problem from a UX perspective. There were buyers, sellers and the products out there, it was just the way the whole process happened that needed to be optimised.

The project failed

While Cargain provided a better experience dealing with multiple car dealers, it ultimately failed. The primary reason was that one of the key business propositions, i.e., the Customer Lifetime Value (CLV) was not taken into account. There was no repeat business, as customers only buy a car once every 3 - 5 years on the average. The cost of acquiring a customer was equal to or less than the revenue generated, making the business untenable.

Key Takeaways

  • When building a web based software - as - a - service, its crucial to take into account the CLV. If churn is too high, it would kill the business.
  • When making a large capital purchase, customers tend to get a physical feel of the product before they make a firm buying decision. While customers negotiated the price with several dealers, they mostly only purchased the car when they had physically seen and experienced the car.
  • Charging customers upfront for making a larger purchase easier does not always work. Many customers feel like its unreasonable to ask them to pay upfront.