Wednesday, November 23, 2011
Unblocking the sale
What's blocking the sale?
A recurring theme in my posts has been how loss aversion shapes a lot of our behaviour. It's where the fear of what we may lose is stronger than our motivation to gain. In this case, it's our fear that we buy the product today and it goes on sale tomorrow. I know this sounds fairly innocuous, but we are psychologically tormented if we realise we have missed out on a better price. The extent of torment is of course commensurate with the value of the product - buying apples today when they will be cheaper tomorrow won't keep me up at night. But buying a new computer and seeing the same model for $500 less the next week will hurt.
Intensifying the sense of loss aversion is the availability of pricing information. Thanks to the digital age, consumers have more pricing data available than ever before to ingest before transacting. Whilst in general terms this is a good thing for the consumer, it can also mean they are so trapped by the search phase that they don't get around to making the purchase.
Unblocking the sale
As a result of information overload, search intermediaries like getprice.com.au, dealsdirect.com.au and myshopping.com.au have popped up to aggregate product pricing and feature information for consumers. But that is just the start. To move customers into the decision making phase, US based e-commerce startup Decide uses a pricing prediction model to power its "Buy" or "Wait" app that helps consumers know when the product they want is worth acting on. This is a perfect example of how to overcome loss aversion.
However, whilst Decide might be great for them as an intermediary and great for the customer, as a business you want to overcome "wait" and get them to buy today. Knowing that your customers are armed with lots of pricing data but still prone to inertia, you need to employ tactics to unblock the sale. Here are three options to consider;
Price guarantees - providing the customer a guarantee that you will match or beat the price of a competitor even after the sale has been made is a very effective way of unblocking the sale. The customer has nothing to fear and everything to gain by dealing with you because they get the goods today and can enjoy them without continuing to price hunt after the purchase.
Don't ever discount - this depends on your competitive situation, but if you have a product or service that is clearly differentiated you should consider a policy of no discount, ever! Why? Your customers will never have to worry about which day they shop with you because there is no risk they will miss out on a better deal. I can buy a product from Apple today knowing that it won't be on special tomorrow.
Assurance Trade-in Value Guarantee has been launched to overcome customer fear of what they 'lose' on car depreciation. According to the press release;
"Purchasing a new vehicle is one of life’s big events. You want to know everything you can about the true value of your options. But at the time of purchase, how can you know the future trade-in value of the vehicle you are considering?
Introducing the Hyundai Assurance Trade-In Value Guarantee. A program that future-proofs the value of your new Hyundai by guaranteeing today exactly how much it will be worth, two, three, or four years from now.
Hyundai: Impressive value today. Guaranteed value down the road."
Hopefully you are now looking at your business a little differently. Whilst a lot of our time and thinking as businesses is on how the customer will benefit from our products and services, a big part of our sales process actually needs to be dedicated to overcoming our customer's fear of what they may lose. Tackle that and the sale will follow.
Image from http://www.hsptravel.com.au/uploads/pics/price_guarantee.jpg