sales techniques

How Online Retailers Make It Easier to Spend Money

Emily Guy Birken — Tue, 17 Sep 2013 10:24:03 +0000

As pleasurable as shopping can be, the sensation you feel when it comes to actually paying for your new goods can seem more like pain. Whether you've felt a pang when handing over a $50 bill to a cashier, or you've flinched at the thought of how much a purchase is depleting your checking account, you have felt what psychologists refer to as the "pain of paying." (See also: Questions to Ask Before You Buy)

While not everyone feels such pain equally, retailers work hard to lessen that pain of paying for all their customers, in the hopes that tightwads and spendthrifts alike will spend more than they intend. In particular, online retailers are experts in decoupling the pain of paying from the joy of shopping.

Here are four ways that your favorite Internet shopping destinations have made it easier for you to spend money — whether you really want to or not:

1. Putting the Focus on Time

Pretty much any transaction you make will cost you in either time or money. Going to a free concert will cost you nothing financially, but you'll likely have to wait in an impossibly long line to get in. On the other hand, spending $350 to see a big-name act will cost a great deal less time, but your wallet will be much lighter.

What's interesting about the cost vs. time issue is that researchers have found that consumers tend to have more positive attitudes toward products that focus on time, rather than money. According to Cassie Mogilner and Jennifer Aaker, this is because time is less fungible (that is, less easily replaced) than money. This explains why many people are willing to spend more for convenience: they can never get back the time they spend doing things themselves or waiting for shipments, but they can always earn more money.

Online retailers are well aware that their customers don't want to wait. Look at the number of retailers that offer multiple shipping speeds at the end of your transaction. You don't have to wait the usual three to five business days if you just click on the "Want it Tomorrow?" button. For many, the financial cost is less important than the time cost.

You will also see many sites focus on the convenience of remembering your credit card information. It's sold as a time-saver, even though what it is doing is taking away an opportunity for you to rethink your purchase. (See also: How Retailers Manipulate You Into Spending More)

2. Bundling

Imagine you are purchasing a new camera. Would you rather pay $300 for the camera, which includes the lens, the flash, several memory cards, and a case, or $150 for the camera and have to purchase each accessory separately?

If you're like most people, you're more likely to choose the first option. That is because even though it is possible that you could spend less overall for your new camera if you buy each piece separately, you will have to evaluate each transaction separately, and feel a separate pain of paying. According to research by neuroeconomist (and yes, that's a thing) George Loewenstein, "individual purchases force us to make a specific decision for each transaction…by offering combined packages, ALL potential customers can reduce their buying pain to one transaction if they so choose."

If you've ever wondered why Amazon offers you information on what items are frequently bought together with the specific item you're researching, it is because the retailer is hoping to reduce your pain of paying. If you need all three "frequently bought together" items, then you are more likely to click the handy-dandy button that places all three in your shopping cart. Without that option, you may decide not to buy anything, since you would have to go through the cost/benefit analysis of each purchase separately — and who wants to do that? (See also: How to Make Better Decisions)

3. Offering Reviews

While the presence of reviews on online retail sites may seem like a simple and necessary part of shopping for something you cannot see in person, retailers also benefit from it in other ways. According to the New Economics Foundation, one of the seven principles of Behavioral Economics is the fact that other people's behavior and opinions matter:

"People do many things by observing others and copying; people are encouraged to continue to do things when they feel other people approve of their behavior."

Retailers get to take advantage of our social natures by offering reviews — both good and bad. By allowing us to see what our peers have to say about particular items, we are more likely to buy. Our thinking may follow these lines: "Everyone seems to feel pretty 'meh' about product X, but there are nothing but raves about Y, even though it's a little more expensive. I guess I'll buy Y."

Many shoppers who are swayed by reviews might have been perfectly happy with a product with only mediocre reviews, but taking into account what the crowd has to say is enough to make their decision easier (and less painful). By following the reviews, a customer has not just made a purchase — they have joined a community.

4. Giving You Default Options

When you get right down to it, we are all creatures of habit — which can be another way of saying that human beings are essentially lazy.

But making choices is difficult, and consumers can often be paralyzed by indecision when offered too many choices. Default options take away that choice paralysis, giving you an option that you simply do not have to think about.

In addition, having something given to us as a default often means that we value it more. Ned Welch of marketing firm McKinsey & Company, explains it this way:

"Defaults…work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we're 'given' something by default, it becomes more valued than it would have been otherwise — and we are more loath to part with it.

Savvy marketers can harness these principles. An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, 'We have already credited your account with 100 calls — how could you use those?' Many customers did not want to give up free talk time they felt they already owned."

Online retailers will often offer default settings that both allow you to avoid having to make a decision, and help you to feel as though you're owed a service or product.

For example, many retail sites will allow you to sign up for a premium service (such as Amazon Prime) for a free trial period. However, at the end of the free trial, the default option will be for you to be charged and signed up for the full-price version of the service or product.

In such cases, not only will you have to make a specific decision to cancel (and therefore go through the tough decision-making process of weighing the costs and benefits of losing the premium service), but you will now feel like you're losing something you feel entitled to. It's much easier to simply allow the default to take effect.

Remember That Retailers Hold the Cards

The field of Behavioral Economics is a fairly new one — but retailers have understood the principles of what makes people irrationally spend money for hundreds of years, if not longer. Online retailers have unique opportunities to use technology to relieve you of the burden of your extra cash — and even the savviest of Internet shoppers has fallen victim to some of the methods used by retailers to reduce the pain of paying.

The best way to keep your money where you want it is to avoid surfing retail sites unless you are looking for something specific, and to take the time to make thoughtful decisions about your purchases.

Because you can count on the fact that your favorite online retailers have your number.

Have you ever succumbed to one of these online retail techniques? How do you resist them?

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Lessons from Sociology: 5 Tips to Help You Sell More

Scott Allen — Sat, 19 Feb 2011 20:55:01 +0000

Link:

http://www.openforum.com/idea-hub/topics/money/article/lessons-from-sociology-5-...

A few years ago, when I was active in the field of knowledge management, a friend of mine turned me on to the book "Diffusion of Innovations" by Everett Rogers. It’s not generally known as a business book, but as a sociology and communications textbook. You may, however, be familiar with some of the concepts within it, which were popularized by books including Geoffrey Moore’s "Crossing the Chasm" and Malcolm Gladwell’s "The Tipping Point."

Much of the book is focused on how innovations — or more simply, new ideas — are spread within social groups, whether it be an aboriginal village, a national culture, a large business, or a demographic segment. If you take the time to read the whole thing, you’ll find it offers significant business insights in the areas of marketing, change management, and even sales.

In "Diffusion of Innovations," Rogers defines five characteristics of an innovation that influence an individual’s decision to adopt or reject it. Think of an innovation as a new solution to a problem that person is facing, and it’s easy to see the parallel to the buying decision process. While it’s true that all buyers have their own unique sets of circumstances and decision criteria, these five characteristics offer an excellent checklist for both your overall marketing strategy and the individual sale:

Relative Advantage

Relative advantage is defined as the relative benefit of your solution compared to all other alternatives, including that of doing nothing. This is where most marketers focus their efforts — it’s the familiar territory of features and benefits lists, ROI analysis and competitive comparisons. Price also falls under this category. However, as anyone who’s spent any time in sales will tell you, relative advantage simply doesn’t always make the sale. You can show a clear return on the investment, look better “on paper” than your competitors, and still not get the sale. That’s because there are several other psychological factors at play that aren’t purely rational.

Compatibility

Compatibility is a measure of how easily the new idea can be assimilated into an individual’s life. This can be a simple matter of logistics, such as not having enough room for a larger appliance; taste factors, such as the customer not liking black, and your product only comes in black; religious factors, such as your product being kosher or not; psychological factors, such as whether your product fits the customer's self-image; or cultural factors, such as the name of your product having an unusual translation or the primary value proposition not being as relevant in another culture. Defining your ideal customer will help you address this. Make sure you consider psychographic characteristics as well as demographics: What’s important to them? How do they see themselves? Will your product support or conflict with customers' sense of identity? Will it help them satisfy a fundamental human need that for them is currently unmet?

Simplicity

Simplicity is a measure of how easy the product is to use and understand. Rogers refers to it as complexity in the book, but you’ll find it more useful to think of it as simplicity, so that, as with the other four factors, a high score is better. There’s an old saying in business that a confused mind says “no.” Complexity equals doubt, period. Even if something is “understandable,” the matter of having too many choices can cause potential customers anxiety over whether or not they’re making the right choice. Be prepared that the more complex your product, the longer the sales cycle will be, the more skilled and trained your sales staff will need to be, and the more in-depth your marketing materials will have to be in order to explain it.

Trialability

Trialability is how easily your product or service can be experimented with on a limited basis before purchasing it. A car can be taken for a test drive. Software applications can offer free trial periods. Food manufacturers offer free trial sizes or in-store tasting samples. Gyms offer a free visit or a heavily discounted first month. Lawyers offer a free initial consultation. Thousands of products offer a money-back guarantee. There’s a reason for all of this — it works. How can you apply it to your business? What can you do to give people a free sample or no-risk trial? If you’re not currently offering one, I can practically guarantee you that doing so will increase your sales.

Observability

Observability is the degree to which the results of an innovation are observable to others (or to you during the trial). For example, it’s very difficult to directly observe the results of taking vitamins. Even if you see healthy people who attribute their health to vitamins, it’s not an independent variable, i.e., they’re probably also eating healthy and exercising regularly. On the other hand, I’m sitting here watching a late night infomercial for P90X (a popular home exercise system), and the before-and-after photos and customer home videos and testimonials are highly compelling. It’s no surprise that their infomercials have won both Telly and Moxie awards — they nailed it in the observability factor.

So how do you apply these five factors as a marketer?

First off, use it as a checklist at every level of your marketing and sales process: product strategy, sales process, campaign, and individual sale. Even if your overall strategy incorporates all five factors, you still have to check it at each level. Do your website and other marketing collateral sufficiently address the complexity of your product? Is some sort of free trial a part of your standard sales process? Is the language of a given campaign compatible with its intended audience? Has this particular prospect been able to observe the advantage which is most important to him during their trial of your product?

Ideally you address all five factors at every level. However, it’s possible that your product may be intrinsically weak in one of these areas. If so, you have a couple of options. The first is to target your marketing to ideal customers for whom that factor is not as important. For example, early adopters generally do not require high observability or even trialability — they are sold on the relative advantage and the benefit of being seen as an early adopter (compatibility). The other option is to focus on making your offering strong in the other four factors — compelling enough to overcome the weakness in one area.

So, will you adopt this method?

It will help you sell more. (Relative Advantage)
It sits easily on top of any other sales and marketing methodologies. (Compatibility)
It’s simple — five concepts easily communicated in one short article. (Simplicity)
It’s easily tried on your very next sale or next marketing campaign. (Trialability)
The results may be difficult to attribute to this one change, but if your results are any better than “normal,” why wouldn’t you keep using it? (Observability)

This article is from Scott Allen of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Sales Has Changed in the Information Age

Julie Rains — Mon, 31 Jan 2011 00:29:03 +0000

Link:

http://www.openforum.com/idea-hub/topics/technology/article/how-sales-has-change...

The Internet and search providers such as Google have revolutionized the way we access and interact with information. Nowhere is this more evident than in our purchasing decisions, whether as consumers considering major appliances for our homes, or as businesspeople considering goods and services for our firms. Our desire for information, the time required to deliberate, and the potential for post-purchase dissatisfaction all seem to have grown exponentially.

Marketing expert Jon Miller agrees that the availability of online content has altered the B2B buying landscape. The growth of social media and the belt tightening of the recession have accelerated those changes. During a recent discussion, Jon, a co-founder of Marketo, a B2B marketing automation firm, shared his thoughts on the nature of those changes — and on effective marketing and sales techniques in light of them.

Changes in the Marketing-Sales Cycle

So how, exactly, has the Internet changed the B2B marketplace?

Sales representatives are no longer the gatekeepers of information. The days when customers had to meet with sales reps to get information on company products and services are gone. Today, buyers can study industry-specific best practices, identify recommended approaches to problem solving, and begin evaluating possible solutions months before sitting down with a salesperson.

Demand for information (specifically online) is high. Among all demographics and across generations, interest in content is strong. Format preferences may vary between digital natives and boomers; for example: One may follow a Twitter stream or watch a YouTube video whereas another may read a whitepaper or attend a webinar to gather information. Everybody, however, wants access to it online.

Buyers initiate dialogue when they are ready to talk. Push-through techniques, such as traditional cold calls and broadcast messages, are becoming less and less effective. Overwhelmed with the abundance of information, prospects tune out attempts to get their attention. When they find the need to begin investigating solutions to a problem, they use pull-through methods of accessing information, typically searching for relevant online content.

Contacts by sales reps or offers made too early scare prospects. In the early or awareness stage of the marketing-sales cycle, buyers gather general information and become aware of potential sources; in the middle or consideration stage, they explore possibilities, identify key players, and begin to structure an evaluation method; in the late or decision stage, they conduct a rigorous evaluation.

The sales spiel is largely irrelevant. Customers want to control the flow of information rather than receive a sales pitch. They are becoming wary of content published by companies, and seek recommendations and feedback via social media and third-party sites.

Online body language can be observed to detect stages of the decision-making process. Just as in real life, body language can convey receptivity to sales presentations in face-to-face meetings. For example, someone searching for a “digital camera” is most likely in the early stage whereas someone searching for a “Canon PowerShot SD1400IS” is likely in the late stage of the marketing-sales cycle. Similarly, customers may signal their stages of decision-making based on social media activity, such as following a key influencer on Twitter.

The sale is never final. Buyers may have second thoughts after the sale is made. Unwavering belief in the purchased product or service, along with buy-in among all company employees, is often needed to assure proper implementation and integration of solutions offered by your company.

Enduring Aspects of Sales

What remains the same despite the information revolution?

Professionalism is crucial. Sales representatives have long been the face of the company. Today they should offer well-informed solutions and have much greater expertise than customers possess, given the accessibility and abundance of information.

Relationships still matter. The abilities to quickly build rapport and productively manage communications are still important. Though the marketing-sales cycle is often longer and more complex, the sales phase (and window for decision-making) is shorter; consequently, the ability to form seller-buyer bonds nearly instantaneously can be critical to sales success.

There is a prominent emotional component to B2B buying. Buyers are fearful of making a bad decision. Jon references "asymmetry" in describing the potential for negative consequences: The upside of making the perfect choice is just slightly better than making an acceptable decision (perhaps yielding 5% more profit), but the downside of being wrong could be devastating to the business. As a result, buyers often opt for the least-risky rather than the best selection, especially in a recessionary environment where potential job loss is a strong possibility.

Recommendations matter. Buyers still seek advice from trusted sources, such as industry colleagues, board members, and bosses.

All sales leads aren’t equal. Certain leads are more qualified and hotter than others.

Successful Sales Techniques in the Information Age

Given the landscape, what can businesses do better to better reach buyers and then make the sale?

Create and publish search-engine friendly online content. Reach prospects in the early, investigative, information-gathering stage by establishing your company as a thought leader in its niche, educating prospects on best practices and giving actionable ideas. Guide decision-making processes throughout the middle and late stages of the marketing-sales cycle. Provide detailed information on your product lines and applications.

Deliver content in various formats through multiple channels to reach diverse audiences. For example, use whitepapers, webinars, e-books, press releases, information guides, YouTube videos, podcasts, SlideShare presentations, Twitter tweets, and Facebook updates.

Nurture leads. Require visitor registration to access certain content so that you can begin lead nurturing based on buyers’ interests. Show restraint in contacting prospects and making offers too early. Understand that buyers often engage and then become inactive. Use web analytics to detect patterns typical for your company to get a sense of when prospects are ready to make a decision. Online leads can be scored in terms of customer readiness and urgency requiring immediate action on the part of sales representatives.

Simplify in order to facilitate decisions. Information abundance and relentless presence of social media have led to attention scarcity. Offer information that is relevant, well-understood, and easy to access. Provide expert guidance in facilitating decisions.

Reduce buyers’ perceptions of risk and increase their comfort levels after the sale. Affirm the validity of purchase decisions through techniques that include:

Continually reinforcing your company’s position as a thought leader
Engaging with third-party sites
Providing easy-to-use solutions
Making sure there are no surprises after the sale relating to extra fees and per-transaction costs

Marketing and sales have never been easy, and while the tools have changed, the fundamentals remain the same. Cultivate trust, deliver on promises, and give your customers a reason to come back to you for more.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: