In business, the term "Lobster Trap" refers to a marketing strategy used to lure customers in with an attractive offer or product and then lock them into a long-term commitment. The term "Lobster Trap" is derived from the idea that lobsters are attracted to bait in a trap, but once they enter the trap, they are unable to escape.
The key components of a Lobster Trap strategy include the use of attractive offers or incentives to lure customers in, and the use of long-term commitments or contracts to lock them in. The strategy is often used in industries where customers are less likely to switch providers once they have made a commitment, such as cable TV, internet service, and phone service.
The importance of the Lobster Trap strategy lies in its potential to generate long-term revenue and customer loyalty. By locking customers into long-term contracts, companies can reduce churn rates and increase revenue stability, while also incentivizing customers to remain loyal and engaged with their products or services.
The history of the Lobster Trap strategy can be traced back to the early days of subscription-based services, such as cable TV and magazine subscriptions. Since then, the strategy has been widely adopted in a variety of industries, including telecommunications, software as a service (SaaS), and e-commerce.
Examples of situations where a Lobster Trap strategy could be used include the promotion of a discounted introductory rate for a subscription service, with the requirement of a long-term contract or commitment. Another example could be the use of a "freemium" model, where customers are offered a basic version of a service for free, but are required to pay for additional features or functionality.
Overall, the Lobster Trap strategy is a potentially effective marketing approach for industries where long-term commitments are common, but it can also be seen as manipulative or unethical if customers are not fully aware of the terms and conditions of their commitment. Companies should be transparent and upfront about the terms of their contracts and ensure that customers have the flexibility to opt out or cancel if they choose to do so.