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, written by Jeremy. Read the commentary.

Found this beautiful application of economic thought:

A company I know works through an application process to build a long-term service relationship with its clients. The process involves an initial meeting, a written application, an internal review, a period of revision (done by the client) and then a final submission. Lots of back and forth. The company struggled to get its clients to take the final steps.

In particular that last bit of revision done by the client takes way too long which is frustrating. Clients get distracted, lose heart, whatever – that last bit of work takes months to finish even though its just a fraction of the work that preceded it.

The innovation, which is wonderful, was to take away the perceived freedom to procrastinate. The company now tells every revising client that they have 48 days to complete the revision. If the revision isn’t done in 48 days, the file is closed and the client must start again.

48 days is tonnes of time, way more than needed. Actually, its even more than the average wait time which is around 30 days. But the response is dramatically different. Now most clients come back within a week.

The threat of loss, even though it’s perceived rather than real, is just the right incentive to incite action.

By suggesting that something will be taken away, the company gives its clients everything they need to get a deal done.

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