Information asymmetry exists when one party has more, or better, information than another in a given transaction. Generally, information asymmetry favours the party with the superior information (more and/or better).
For example, when a prospective new member wants to join your health club you have the power because you have all the information. If you can use that information to meet, or exceed, the prospects expectations you will get the sale.
Simple.
If the prospect is a beginner the information asymmetry is greater because the beginner is relying almost entirely on what you have to say.
If the prospect is an advanced health club member the information asymmetry is less (sometimes zero or even in the prospects favour) because the advanced health club member already knows what a reasonable price is, what equipment they require, what expertise they need…
However, many businesses fail to recognize that once the prospect has become a new member information asymmetry works against them.
If the new member doesn’t know the health club rules/etiquette/culture, doesn’t know how to spot (or ask for a spot), doesn’t know how to warm up properly, doesn’t know when to increase their weights, doesn’t know class sign in procedures, doesn’t know… all of a sudden their lack of information works against the business.
The goal of every business has to be to get new members highly informed as quickly as possible.
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