9:32am
Saint Paul
Last week we discussed a few ways money isn’t real.
It was prompted by a quote I heard at a marketing conference:
“People don’t respond to discounts any more.
“Especially if Corporate is paying the bill.
“And remember: money isn’t real anyway.”
Today we’re going to look at the first part of the quote.
And a few ways YOU can overcome price resistance.
This gets a bit long so let’s go.
First:
Do people respond to discounts?
Or are we all jaded and tired and just want something now, or not, and that’s the end of it?
In my experience, YES people respond to discounts…
And YES we’re all jaded, too.
(Being exposed to 4,000 ads a day will do that to you.)
There’s a few problems with discounts:
1. Constant discounts mean the price isn’t really ever what the seller says.
If there’s a discount every week, buyers are trained to never buy at full price. They just wait for the discount.
And for some brands, this might be part of their strategy.
A few years ago, retailer JC Penny stopped offering discounts, and just lowered prices.
They lost sales.
That’s because of Problem #2:
Their customers were trained to look for discounts.
And to them, it was a game, a bit of fun to see if they could save another buck or two.
Those coupons and discounts were also an involvement device, making shoppers interact with the JC Penny ads and mailers and catalog, keeping JC Penny top of mind.
(Side note: I signed up for their mail catalog… and the one issue I received said it was their last ever. Disappointing.)
So while constant discounts may keep customers coming in, it’s a race to the bottom.
Better to offer occasional deals.
Or no deals.
But not constant deals.
And then stick to your word when the deal ends. No deadline extensions.
(I know a few ways to continue making sales after a deal ends, but we’re not getting into that.)
Ok so…
What about the “Corporate Pays” thing?
If you’re not footing the bill, the urgency to respond to a discount is greatly reduced.
Which is where premiums do the lifting.
Offer an item that your market wants, but is only available until a deadline.
No need to offer a 10% discount. Charge full price, and funnel that 10% into a great premium.
Maybe the first week’s premium is a nice, personalized water bottle.
Second week, offer a signed book.
Third week, a t-shirt with their name on it.
Fourth week, an Amazon gift card.
I don’t know what your market wants. But if you can personalize an item, it’s immediately “better.”
Or bundle these premiums, and each week there’s one fewer in the bundle.
But the biggest takeaway from all this, IMHO:
People don’t really know what anything is worth.
Other than the cost of raw goods, what makes one solution more expensive than another?
Story:
We got a new garage this summer, and a new driveway, and a new fence (they fixed the posts this past weekend BTW, tho there’s still a hole).
One driveway company offered 5″ of compact gravel and 3″ of asphalt. Another offered 7″ of gravel and 4″ of asphalt… at a much lower cost.
Both companies were experienced and well-rated.
Why the vast price difference?
No one knows.
But people will pay more just because they expect better service or the reassurance that comes with a higher price.
Doesn’t mean the solution is better.
Certainly, sometimes it is.
I’d rather hire a good copywriter who has trained and studied and continues to hone their craft… than a writer who doesn’t strive to improve their persuasion.
But unless you buy both and compare, you’ll never know.
(Another aside: I mentioned I’m in the Breakthrough Advertising Bootcamp with Brian Kurtz and Chris Mason. Last Thursday, one of the fellow Bootcampers said she was at Hormozi’s event in Vegas. And from the stage, Hormozi explained the ideas in Breakthrough Advertising… and almost no one knew the concepts he was talking about.)
This is longer than planned so I’ll end here.
But if you’re interested in the psychology of pricing I suggest you check out this fascinating read.
Have an amazing Monday,
Jeffrey
PS. If we don’t know what something is worth… why do we chose one over another?
EMOTION.
Sales taps into emotions.
Good copywriting does, too.
And guess what’s coming out soon?
PPS. Am I way off in today’s post?
Is money real?
How do you feel about discounts and premiums?
Which work best for your sales?
And which do you tend to buy into yourself?