My guess is that happy customers will tell their friends and use the service again when they buy another car. Those are both powerful incentives.
What incentive do they have to do a good job for you when they're just turning your contact information over for lead generation money?
You pay up front for websites/apps, because you get access/product right away.
But any interaction where the human is involved(plumbers, tree service, mechanics, body shops etc)...you pay only after the job is finished.
The reason is that when you pay someone they have no real incentive to give you their best service...since they already got paid. And yes word of mouth might work, but I'm not seeing awesome deals on there. The venture beat article shows they got someone an Accord for $32K. Carsdirect has that same top of the line trim for $28K.
And carsdirect has the same incentive, give good service to get word of mouth so they can get more leads....the only difference is that you get to save a bunch of money too.
Carsdirect is a broker of used cars. They solve the problem of letting sellers find buyers and vice versa, not the same as making the process of buying a new car painless and shorter.
Most importantly though, their offer to refund your money for any reason makes this entire argument pointless. If they didn't think they could make you happier by saving you at least more than their fee, do you think they would make that promise?
and carsidrect is for new cars, I think you are confusing them with cars.com
actually your point that they have a refund policy led me to go look at that page...and my opinion is now even worse. Apparently that money only gets you one car. So you can't cross shop the best deal on a Civic and a Corolla to see which is the best option, without paying even more money.
I happen to be at that specific point right now and if their service works as described on the many testimonials on the site and one on HN, I think paying $39 for it would be a great deal.
I do think you have a point in that, folks often come down to more than one choice on a model and make their final decision based on price. I think it would make sense for them to have a plan that supports this use case.
Carwoo for a Civic. Woops, wasn't happy, refund me.
Carwoo for a Carolla. Compare prices, get Carolla if you want, or get a refund and repeat step 1.