Bargain for Good Value via Price Primacy

The standard advice to salespeople is to present the price late in the pitch. First describe the benefits the shopper will gain if purchasing the item and only afterwards, mention the tariff necessary to realize those benefits. Also, you might do best to say the price slowly. Researchers at HEC School of Management- Paris and at University of Pennsylvania find that this makes the shopper less sensitive to the price. So if the price is $148.29, instead of saying "one forty-eight twenty nine," say, "The price of this item is one hundred forty eight dollars and twenty nine cents." Maybe this tactic works because you don't notice the sour taste of the medicine when it goes down slowly.
     But another group of researchers, these at Stanford University and Harvard University, say that if you’re offering a bargain price on an item whose value is apparent to the shopper, you’ll do best to use what they call “price primacy.” You will make more sales when you lead with the cost.
     Their argument for price primacy is distinctive because it’s based on neuropsychological evidence. Data were gathered using functional magnetic resonance imaging of brain activity, much more often a tool for diagnosis of medical pathology than for advice to retailers. Among the study participants, the researchers saw signals in the medial prefrontal cortex showing how early rather than late presentation of the bargain price increased recognition of the justification in spending money on a quality product.
     Price primacy is an exception to that rule of leaving the pricing until the end. This exception can be especially important when the apparent value is in the quantity offered. For instance, consider which of these two is more attractive to shoppers:

• $29.99 for 70 rolls 
• 70 rolls for $29.99 

     Researchers at Virginia Tech give the traditional advice to put the quantity before the odd price. The second phrasing of the two above is more likely to draw buyers. But if what you’re offering is a great bargain, the first phrasing could do better.
     The Virginia Tech studies also provide an example of when the order doesn’t make much difference. Say the two options are:

• $29.99 for 30 rolls 
• 30 rolls for $29.99 

     Here the appeal of the two is about the same. Shoppers can easily calculate the unit cost. But when the per unit calculation is difficult, shoppers attend more to whatever is the first number given

For your profitability: Sell Well: What Really Moves Your Shoppers

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Ease Customer Pain About Item Prices
Put Large Quantity Before Odd Price
Interpret Brain Science Advice Cautiously

Discount Lighthouse Items for Low Price Image

Store Price Image (SPI) is the general belief your target markets hold about the level of prices your store charges compared to what other stores charge for similar items. Some stores have a set of product line SPIs. “They’re high if you’re looking for meat or fish, but I find unusual bargains in the bakery in the early afternoon.”
     Some consumers seek the exclusivity of stores with an image of premium prices. But people generally shop more often, buy a larger range of items, and buy larger quantities of each item at retailers with lower price images.
     The price points of certain items in the store assortment play a larger part than others in determining the SPI. Consumer behavior researchers have referred to these as Known Value Items or as Signpost Items. In a set of studies at Erasmus University Rotterdam and Tilburg University, the researchers narrowed the classification further to what they named “Lighthouse Items.” These are ones that signal a low SPI but constitute a relatively small portion of customers’ purchase totals. Therefore, keeping the everyday prices of these items low or, better yet for most small to midsize retailers, regularly discounting them will have a minimal impact on your store profitability.
     Analyze purchase and revenue patterns in your store to spot the Lighthouse Items. The Erasmus study results suggest retailers are most likely to find them in two places:

• High-priced categories in which the store carries a narrow assortment or there is a narrow price range 
• Items that are usually bought in large quantities and then stored, and for which consumers believe higher product or service quality requires a higher regular price 

     Research at Emory University and Northwestern University indicates Lighthouse Items operate in the context of other SPI signals:

• Range of prices. The frequency with which the shopper sees low prices influences price image more than does the amounts by which prices are lower 
• Price-match guarantees. These cause an image of lower prices, even though few customers ever make use of the guarantees. 
• Claims about price image. These claims could be in advertising or word-of-mouth. WOM claims by friends, family, and acknowledged experts do have greater influence than advertising 
• Store location and décor. Many consumers are happy to pay somewhat higher prices to guarantee a pleasant physical environment. 
• Customer service quality. This includes factors such as the degree of promptness, courtesy, and accuracy in receiving assistance with purchases. 

For your profitability: Sell Well: What Really Moves Your Shoppers

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Sharpen Your Price Image
Set Price Anchors with Price Adjacencies
Bundle Expensive & Cheap Synergistically

Loosen Strict Categories

When a shopper feels happy, two things happen that lead to them buying more than they would otherwise. First, because they’re enjoying the positive feelings, they are more willing to persevere. They’ll stay with you, the salesperson, for a more extended selling pitch—as long as they feel you’re bringing them closer to satisfying their needs and wants.
     Second, happiness opens up the shopper to new ideas, and that means they’re more receptive to considering products they haven’t tried before. If you want to change brand preferences or introduce the shopper to an innovative service your store or website offers, begin by developing a positive mood and then present the new idea.
     Happy shoppers are also more receptive to looser flexibility in categorizing expenditures. It has to do with what economists call “fungibility” and the rest of us would call “substitutability.” A dollar spent on one item might have brought equal pleasure being spent on another item. At the extreme, this means the person maintains one overall budget for expenditures instead of placing expenditures into strict categories.
     Researchers at Fordham University and Vanderbilt University say that consumers who perceive themselves as busy and are feeling happy are comfortable taking from one category to put into another. They’d justify using some of the their budget allocated to home maintenance to spend on a vacation or the other way around.
     Research at University of Chicago finds that when shoppers compartmentalize their expenditures, they become more like tightwads. They end up consuming less than they wish they had. This is especially true if an expenditure is unexpected and large.
     Stimulate pleasant moods with shoppers who compartmentalize expenditures excessively. Researchers at Yale University, Arizona State University, and Singapore Management University saw little use in saying to tightwads, “By getting a good deal on this item, you’ll have more money available to buy other items.” It’s not that the tightwads aren’t influenced by this reasoning. Rather, it’s that they’ve almost surely thought of it already. They’d consider a salesperson telling them this to be a waste of time.
     Instead, catch things at the point where the customer is deciding into what category to place the expenditure. Encourage the customer to assign it to a category called “exceptional purchases.” The meaning of “exceptional” here could be understood as “unusual,” but the word works better because it also implies “superiority.” It keeps the shopper’s spirits positive.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Profit from Shoppers’ Positive Moods
Add Shopper Fun with Fungibility

Unwrap Purchase Alternatives Seductively

When a set of purchase alternatives would all satisfy the shopper’s basic specifications, the shopper prefers those alternatives they discover for themselves over those initially presented by the salesperson.
     Researchers based at Miami University, the University of Northern British Columbia, and the University of Alberta gave consumers hints as to suitable items, but kept those items out of sight until specifically asked by the consumer to see them or try them out. The tease ended up making those items favored over suitable items initially presented in full view to the consumer.
     But the way in which this effect works is important for you to understand, retailer. It was not that the consumer’s assessments of the discovered items were higher than that of the previously revealed items. Instead, it was that the revelation of the previously unknown items led the consumer to devalue the items shown openly by the salesperson.
     This is another example of the contribution of high-quality consumer behavior research to guiding your actions at retail. We want you to go beyond knowing what works to a point where you understand why it works. Such understanding enables you to apply the conclusions properly.
     In this case, recognize that the tease won’t make the discovered items highly attractive on their own. It will make them more attractive in relation to the other items. Therefore, when you know of an item that is close to ideal for meeting a shopper’s consumption objectives and your profitability objectives, allow the shopper to discover the item for themselves. Unwrap these purchase alternatives seductively. It’s a form of consumer coproduction, in which the shopper participates in shaping the transaction.
     Something else about the Miami/Northern British Columbia/Alberta research findings: Once the shopper realized the payoff from asking about half-hidden alternatives, they kept asking whether there were more choices when they came to other items on their shopping list. And although the research didn’t look at this, it may be that persistent probing during purchasing became a long-term habit for these consumers.
     A bit of mystery gets shoppers involved, and involved shoppers are more likely to buy. Research findings from Indiana University and University of Colorado-Boulder indicate the value of a mystery ad format, in which you wait until the end to announce the retailer’s name. Start off with an unusual story or absurd humor that hooks the ad’s viewer or listener into asking “Who’s this commercial for, anyway?”

For your profitability: Sell Well: What Really Moves Your Shoppers

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Cojoin the Stages of Coproduction
Sustain Mystery, But Not for Too Long
Tease with Incongruities

Thread Success with Three Claims

Those experts at “The Phrase Finder” considered whether the origin of the proverb “Third time’s a charm” has to do with hanging. More specifically, a belief that under English law, anyone who survives three attempts at hanging for a crime is set free.
     The conclusion from the inquiry was the belief about English law and about this origin of the proverb were inaccurate. However, there is some consumer behavior research which indicates how going beyond three is likely to hang up your retail sale.
     A set of studies at UCLA and Georgetown University found that when a shopper perceives a salesperson has a persuasive intent, the optimal number of product claims by the salesperson is three. Up to three, the chance of convincing the shopper increases. But beyond three, the sales pitch quickly becomes less persuasive as consumer skepticism increases.
     Another factor is the limited memory processing capacity of our brains. We can do fairly well remembering up to three product claims made in quick succession. But beyond three, each additional claim tends to dilute one of the earlier ones. The excess also adds distracting irritation from the person’s recognition of the memory loss.
     Variants of the salesmanship “Third time’s a charm” come from other research. Studies at Hong Kong University of Science and Technology conclude that asking a reluctant shopper “What are good reasons for you to buy this product?” help make a sale. But findings from Universität Heidelberg and Universität Mannheim indicate that if you ask the consumer to generate loads of reasons to buy the particular product or to shop at your store, the task becomes more difficult for the customer, and this actually makes your preferred alternative less attractive.
     The Heidelberg/Mannheim researchers subsequently found that if you ask a highly reluctant shopper to generate loads of reasons not to buy, when she ends up having trouble coming up with further reasons, this causes the purchase to become more attractive. It’s as if she’s saying, “The fact that I can’t think of more reasons might mean that my reluctance is misplaced.”
     Go gently when exhausting resistances to avoid shopper embarrassment arising from an awareness any of the reasons are unreasonable. Say, “My guess is that there are reasons we’ve not discussed for your hesitation in buying.” This way of phrasing it unrolls those hidden resistances so they show themselves at a pace comfortable for the shopper.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Ask Shoppers for Reasons to Buy
Exhaust Shoppers’ Resistances

Enhance Variety in Nonprofit Donations

Like storefront retailers, nonprofits want to develop consumer loyalty. In the case of the storefront, the objective is long-term spending, while with the nonprofit, it’s long-term donations. As it happens, variety is key for both. A considerable body of research shows how shoppers are attracted by a perception that a store has a broad assortment. And researchers at University of North Carolina-Chapel Hill, Pennsylvania State University, and University of Virginia find that donors remain loyal when encouraged to sponsor a variety of initiatives.
     The data set covered twenty years of contributions to a nonprofit foundation. In those circumstances where the foundation’s outreach guided sponsors toward dedicating money to a different cause than with the last donation, the likelihood of subsequent donations and the donation amounts both increased. Also, compared to instances in which variety was not featured, the pattern of contributions maintained greater consistency in the face of changing economic circumstances over the years. Consistency—a behavioral indicator of consumer loyalty—can be as important to a nonprofit as the amount of donations.
     This research finds that winning the initial donation depends more on a cause fitting well with the donor’s personal preferences than on encouragement to spread the amount around a variety of programs. Still, even at this initial stage, the availability of a range is valuable. More options allow the nonprofit’s development officers to better customize the initial request to fit each individual’s preferences.
     Other research finds that a range in the dollar amount of the request helps, too. In a field study based at France's ESSEC Business School, a request for a small amount increased the willingness of the person to make a donation at all, and the larger the greatest amount in the same request, the higher the eventual donation. In a solicitation containing a scale of suggested contributions, a range of $5 to $1,000 would serve better than one of $20 to $500.
     A caution, though: With nonprofits as with storefronts, it’s not enough just to load on additional variety. Be sure to give your prospect a way to smoothly sort through the choices. Otherwise the abundance of alternatives will overwhelm and immobilize. As you expand options, give meaningful categories the shopper can use. The discrete dollar amounts listed on the contribution form are categories. With the nonprofit encouraging consideration of new programs to sponsor, place alternatives into categories. Categories give a sense of control.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Sell More by Adding Variety
Collapse to Soles When Asking for Money

Succeed over Sad with Elderly Shoppers

The emotional context in which you’re selling an item influences the consumer’s ratings of both the item and the sales presentation. Establishing a positive mood leads shoppers to be more flexible in their thinking and persistent in their actions. Those help you make the sale. People prefer to avoid sad thoughts when shopping. Researchers at University of Rennes and University of Paris-Est find that the attitude toward an advertisement is less favorable when it follows a sad television program rather than a happy one.
     However, there is an important exception to this overall finding. For the older study participants, witnessing sadness didn’t arouse as much sadness as it did in the younger participants, and the attitudes toward the ad weren’t much different between the conditions of happy and sad programming. The elderly consumers did not turn away. In fact, emotional appeals, including sadness-based ones, usually help senior shoppers remember details about sources of sales messages more accurately, according to researchers at Trinity College, College of Charleston, and University of Toronto.
     Talk to elderly consumers about achieving positive emotions, such as comfort, contentment, and joy. However, combining this with an arousal of sadness can be powerful if the target emotion is appropriate and the technique is not used always. Point out how what you’re selling helps avoid the negative. Then segue into talking about achieving the positive. All emotions—positive and negative—arouse interest among older consumers, and as people age, they get better at turning negatives into positives.
     A major reason for this is that elderly consumers realize their time on earth is limited. They don’t want to waste a portion of that being sad. You can turn this to advantage by supercharging the emotional appeal with reminders of time limits: “This offer is good for just the next three days.” “Why wait to start enjoying the benefits?”
     Other research indicates you can facilitate the sadness-to-happiness alchemy by giving elderly shoppers an opportunity to contribute to a charity to assist the less fortunate as part of making the purchase. Seniors generally prefer to give their business to retailers who are compassionate, and they like to view themselves as generous. One dynamic behind this is a desire to leave behind a legacy of love when they’ve passed on. Maybe behind this, in turn, is a calculation of what will be required on the lifetime résumé to be submitted at the Pearly Gates.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Profit from Shoppers’ Positive Moods
Emphasize Emotions with Older Consumers
Help Older Customers to Help Others

Shepherd Profit-Potential Defectors

According to the old saw, it’s much cheaper to keep and sell to a current customer than to win over a brand new customer. But what about wooing back former customers? Is it worth it?
     Researchers at Georgia State University found, as you might expect, that it depends on why those former customers left you. The research findings then went beyond this to indicate that the most effective recipe for shepherding defectors is to blend a short-term price discount with a bonus burst of enhanced service.
     Yet, “effective” is not necessarily the same as “profitable.” Service upgrades cost you resources, and discounted prices deprive you of some monetary return. Prioritize your efforts on the defectors who you believe left for service-related reasons rather than price. You’re less likely to again lose that first group when you raise prices, according to the research.
     Also give priority to former customers whose breakup with you had been gracious. Upon return, they’re the ones most often becoming profitable purchasers if they had expressed high satisfaction with you or even recommended you to others at some point during the business relationship last time.
     Other studies find that you increase the potential profitability of returning flocks if you dissolve any disgruntlement before a departure. Sometimes you’re no longer able to adequately satisfy a customer who’s been frequenting your store. It’s time for a breakup. When this happens, the emotions probably won’t be nearly as intense as in the breakup of a relationship with a lover or the termination of an employment relationship with one of your staff. Still, there will indeed be emotions, and unless you handle matters properly, those emotions might result in consequences harmful to your business.
     Those emotions often include shame and insecurity, according to researchers at University of Western Ontario and Queens University in Kingston, Ontario. The root of it all is the customer’s belief that the retailer has betrayed the customer’s trust in them.
     Keep the relationship alive. Make the last memory of your store one of gracious respect. After they get away long enough to relax their shame and insecurity and to correct their belief that you’ve betrayed their trust, they might come back.
     At the same time, place the lowest priority on shepherding any former customers who had cost more than they were worth. For them, keep chanting to yourself, “Whew, they’re gone,” instead of, “Woo them back.”

For your profitability: Sell Well: What Really Moves Your Shoppers

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Dissolve Disgruntlement Before Goodbye
Prune Out Cross-Buyers Who Aren’t Plums