Recently, we discussed the fine art of pricing software, exploring the many factors to consider. When it comes to pricing, decision making can become swamped with ambitious goals, quantity vs quality arguments, long-term market positioning tactics and a plethora of surprise variables.
Ultimately, selling more and selling better is (almost) universally favored, as long as the business has the capacity to meet growing demand- and being out-of-stock or fully booked can create further hype and demand.
Marketing and Sales are often two different departments, although often muddled, yet today we'll outline a variety of clever marketing psychology that has been tried and tested to boost sales across various products and services.
However, remember that customers are increasingly valuing authenticity. Therefore your sales marketing shouldn't be seen as devious psychological manipulation, but instead consider the most intelligent structure to breathe life into your practices.
Whether you're a curious reader keen to understand marketing techniques, or an industry professional hoping to bolster your KPIs, there's a host of tactics below to add to your strategies.
The customer will always ask the question: "Is the product worth the price I'd pay for it?" The display price has huge sway on the decision to purchase or not, so it's invaluable to find smart ways to soften the blow of a seemingly large price-tag.
• Lower the left digit.
Although there's only a cent difference, $9.99 is more appealing than $10. Our brain processes information quickly, so that the first number has the most weight.
It's also worth considering practicality here, a cash payment for $9.99 leads to the act of being given change - and being handed back money makes something appear less expensive too.
By this thinking, consider whether a $100 product could indeed be $95, purely to give back meaningful, useful, change. Receiving back enough change for a coffee is much more positive than simply gaining a cent.
• Choose numbers with fewer syllables.
Interestingly, research found that people perceive phonetically shorter prices as being cheaper, even if they don't say the price out loud.
• Reduce unnecessary symbols and numbers.
Further Research shows that removing commas makes a price seem lower. The bigger a space taken up by the number, the bigger it'd be perceived - ensure that unnecessary decimals aren't added.
e.g. $4,699.00 versus $4699.
• Small daily equivalence.
A $350 fancy jacket might seem expensive, but renting it for $1 a day for a year doesn't seem as bad, even though the latter is more expensive. Comparing the lifetime value of a product to a small daily value is an excellent way to show that your product is a good investment. Imagine buying two less coffees a week, but getting a new laptop at the end of the year!
• Show pricing in installments to make it more palatable.
Large amounts can be daunting, but lots of little amounts is much more attractive to process. Make the spend easier by splitting it into manageable amounts, and the customer will focus on the smaller, recurring cost instead.
• Odd-even pricing.
Psychologists continue to analyze our decision-making processes, and it's been discovered that prices ending in odd numbers, that have began with even numbers, are more attractive. Don't ask us why, but turn $4.98 into $4.97!
• Visual contrast between sale prices.
Much like the 'Gee-Whizz' graph, visual distinction between the sale price and original price is powerful. Ensure that the pre-sale price is bolder, bigger, and even give it a contrasting color- this will make your sale price much more appealing.
• Arbitrary Coherence.A $500 Whisky makes the $120 Whisky seem much more reasonable in comparison, whereas without it customers would be savvy to $120 being overly expensive for what they get. This is a cunning trick for Menu Engineering experts to up-sell particular high-profit items.
• Expose consumers to higher prices, even if it is unrelated.
Similarly to arbitrary coherence, un-related higher prices still cause a positive impact. Boatwright and Nunes (2004), tested CD sales when displayed next to a sweatshirt that would alternate in price. When the sweatshirt was $80, much more CDs were sold than when the same piece of clothing was priced at $10. This is perhaps as the vendor can be perceived as higher value due to their range, making cheaper stock seem a bargain than simply the norm.
• Ditch the dollar sign.
Menu Engineering research discovered that menu items that include prices without currency signs get diners to spend more. This is partly as it makes the price more subtle, drawing more attention to the item itself. Turning the price from number to text is also particularly effective.
I.e. Ultimate Burger $5, compared to Ultimate Burger 5, or Ultimate Burger five'.
• Maximize the perceived size of the discount.
Retailers use the biggest number possible to label discounts. For example, 20% off a $50 vacuum seems better than $10 off, even though they’re both the same amount. Bigger prices are scary prices, and bigger discounts are better. If you can use bigger numbers for the same discount value, do. For example, $10 off of $50 could better display as a 20% discount.
• Decoy pricing.
Up-selling is made easy with decoy pricing. Imagine ordering popcorn and being presented with 3 sizes, small at $2.50, medium at $5 and large at $6. Whilst small to medium doubles in cost, the seemingly little upgrade to large makes it appear great value - yet the medium pricing only exists to boost sales of the large popcorn.
Interestingly, this also works by removing traditional 'small, medium, large' structures. Imagine the option was 'small, regular, deluxe', suddenly small seems additionally unappealing and deluxe implies a premium. This can be considered as 'Intentional Language'.
Semantics matter. Through carefully picked language, consumers can be influenced in desirable ways that establish your product as their newest essential purchase.
• Use 'positive smalls'.
Customers tend to gravitate towards towards descriptions involving 'positive smalls' such as "Low effort", "no hassle", "minimal maintenance", even though qualities such as "high value" and "Big savings" are typically valued. Clever copy serves a prompt to solve problems and cause action.
• Buy one get one free.
50% sales tend to sell one item, whereas keeping the price the same and offering BOGO sells two at the exact same price = double the impact. Whilst the customer spends double than they would with half price sales alone, BOGO also gives them perceived higher value since they feel like the 'free' item is a 100% bonus.
• Social proof.
Marketers and businesses are sneaky, you're only half way through a list of ways that effectively mold the customers into purchasing what you want them to - and how you want them to. Due to psychological marketing being everywhere, people lean on others for guidance more than ever. Reviews and testimonials encourage people to join the crowd, with the expectation that large numbers of people can't be wrong... however, reviews and testimonials are easily faked and aren't often verified as real by potential customers.
A unethical effective hack to be aware of is that great marketers will utilize SEO to ensure that the first page of results for their product reviews are the ones they want you to see. Be sure to dig deeper on big purchases!
• Time and emotion matters more than price.
People are emotional and want to enjoy life, so “you’ll love using our product” works better than “our product is inexpensive.”
Price alone doesn't make someone buy something. Try and sell a $5000 set of golf clubs to someone with no knowledge or interest in golf, and they'll probably still refuse the set at 75% off. However, if your focus is on how someone can enjoy something, they'll resonate more with the message and be more comfortable with the price.
"Enjoy an even happier life than before" outweighs "This product is cheaper than competitors".
• Make products seem expensive to manufacture.
No one wants taken advantage of, so customers seek fair pricing. Focusing on top of the line raw materials, or difficult procedures in the product creation process, will make people comfortable spending more on your products.
• Offer exclusivity.
Instagram millionaires flaunt premium lifestyles and perpetuate the idea that we're all failures. The constant competition with other people parading their successes on social media has huge mental health impacts on society, and the need for 'esteem' continues to be pursued. If you are able to offer a slice of privilege, you'll attract an audience looking for the better things in life.
Check out the 'grey poupon' success story for another angle on this.
Referring to physical locations, for example if you have a store or an office. Having a presence is a huge advantage for genuine interactions, and dynamic branding opportunities. Simply putting a product on a shelf won't guarantee it sells to it's best ability; Create an attractive customer experience to enhance the product desirability.
• The Gruen transfer.
Shop layouts are often designed to be confusing and maze-like, forcing people to wander and see more merchandise than they initially planned. This trick is named after shopping-mall architect Victor Gruen, who actually hated such manipulative techniques.
This is named after shopping-mall architect Victor Gruen, who hated this effective technique; Shop layouts often are created in bizarre, snaking layouts, that guide shoppers past much more items on their customer journey. If you're able to force people past particular items on their way to key points of the store, then you'll increase the likelihood of sales.
• Star items in the back.
Similarly to the Gruen transfer, if you have popular items that attract customers, place them at the back of the shop to ensure that more items are seen on the typical customer journey.
• Calming music.
Ambience has a subconscious effect on us. If music is too fast, our heart rates speed up and we're less likely to comfortably browse. With quieter, calmer, and slower music, shoppers tend to spend more time in stores and restaurants.
• A bright, colorful, fragrant entrance.
Stores often fill their entrances with colorful merchandise (such as fresh produce) to brighten moods and encourage more spending. Influence customers desirably at the beginning of their journey to heighten your chance of success.
• Touch and mimicry.
Research shows that a woman’s touch (like a brief touch to the shoulder) makes customers of either gender feel more secure in spending money (and also risk-taking behavior). Additionally, if a salesperson of either gender imitates your gestures, you may be more likely to buy due to elevated subconscious trust associated with mirroring.
As emotional creatures, humans constantly battle between heart and mind. Emotionally led decisions tend to be more impulsive and a sense of urgency creates a much higher likelihood of purchase to stop the customer feeling like they missed out on a great offer or a scarce product.
• False sense of urgency.
Having a choice puts the customer in control, but hinting that they'll lose the opportunity to purchase if they delay is a powerful incentive. People often rush to take advantage of an offer due to a false sense of urgency caused by timers or perceived low stock and high demand. Careful purchase planning gets derailed when it's a 'buy now or lose out' situation.
• Phase out discounts.
If you claimed a sale was a one-off, you'll look inauthentic to simply run it again a month later. However, you can still get a second wave of sales and keep trust by offering a phase out discount, whereby a lower discount is still offered. Customers may pounce on the sale spotting that they missed the best saving, and that they wouldn't want to potentially have to pay more in the future.
• Instant markdowns.
Some countries have made this tactic illegal, if the product hasn't previously sold at the advertised price. However, it's clear to see why it works: A product being massively lowered from the perceived normal retail price. Creating a $100 t-shirt yet selling it marked down for $10 could cause a flood of interest as such huge savings cause urgency.
Some tactics fall just outside of the above categories, but are powerful considerations to be aware of.
• Remove the pain of paying.
Grab introduced cash-less taxis across Phnom Penh, allowing customers to add their credit-card to their account and simply book as many journeys as they want without having to count cash or physically hand it over. The pricing is static and agreed before the journey even begins, so there are no nasty surprises at the end.
If you can prompt an upfront cashless payment prior to a service or product acquisition, this can create a favorable outcome for customers.
Think about staying at a hotel, if you pay in advance, they stay is pleasant. If you pay at check out, you have the deflation of leaving your relaxing stay and also parting with your cash all at once.
• The nostalgia factor.
Recent research shows that nostalgia makes people value money less and feel more willing to pay. It especially seems to emotionally appeal to stressed and overwhelmed millennials, who may crave simpler times - this in part could explain the wild success of Pokemon Go.
• Red prices for men.
Discount tags turn heads, and studies have shown that men in particular are particularly sensitive to color in their purchasing decision. Red tends to indicate 'discount', and therefore stands out and causes more excitement.
Alarm bells can ring if consumers feel tricked, so no matter what clever marketing is used, it's absolutely vital to approach your strategy in an ethical manner. Transparency has ramped up in importance thanks to Generation Z values and digital freedom reforms globally, so behind every decision needs to be logical and fair reasoning.
If you believe that your product adds value, solves a problem, or will genuinely help people in some manner, then equipping your sales strategy with some of our recommendations will help you market it to a larger audience with more efficiency.