What makes us buy? Part one.
Part one: Sales psychology techniques we’ve probably all succumbed to at some point.
Let’s start at the top:
The Instant Markdown
You’ve all seen this one, it’s pretty straightforward - the price used to be X now it’s X - Y%
Examples: Debenhams have Blue Tag days where things are marked down. Black Friday is another phenomenon where consumers are primed to expect knockdown sale prices.
Imagine you’re at the cinema. The small tub of popcorn is £2.00 and the large tub of popcorn is £6.00. So most consumers will stick with the small size. But if they introduce a medium size at £5.00, then the large looks like more of a bargain, so we’ll opt for the large one - which is the one they wanted us to choose all along. This technique is also called the ‘supersize principle.'
The expensive item no one buys
This is often seen in restaurants. When you get the wine list, the most expensive bottle of red wine, that’s say £600.00 will be at the top of the page. In a panic, you rapidly scan the rest of the red wine section looking for something affordable. Eventually, you spot a ‘House Red’ at £29.99 - which essentially is really only one step up from vinegar - but by comparison to the £600.00 wine, it looks like a bargain. The restaurant may never sell a single bottle of that £600 wine. It’s possible that they don’t even have it. But it’s there to make other wines seem relatively good value.
A false sense of urgency
You know the kind of thing - limited stock, limited low price, limited editions …yadda, yadda, yadda.
I think this is grossly overused these days. Every time I see it now, I’m thinking, yeah, whatever - I’ll just wait till the next time you offer it to me.
The loss leader
This is the DFS technique. They seem to have a perpetual sale. In fact, they only ever have about 5 or 6 sofas on sale at any one time and they are advertised at an artificially low price (sometimes at a loss) to drive people into the shops. People go to see the sale sofas, but may not like the ones available at a special deal, so while there the shoppers will browse and may see something else.
The Gruen Transfer
This technique is named after the award-winning architect Victor Gruen, who invented the technique of designing shopping malls to be deliberately disorientating. You know the kind of thing, artificial lighting so you lose the sense of the time of day, exits are often difficult to find, etc. Think about IKEA - all you want is a bag of the Dime bars, but you can’t get to them without first being herded around the lovely room sets before getting to the chaotic warehouse bit with the stuff you want. It’s deliberate. Las Vegas casinos are designed to have no natural light so you lose a sense of time and stay gambling longer. There’ often no or very limited mini-bars in the hotel rooms, so you are forced to go downstairs, past all the gambling tables and fruit machines.
I know you’ll hate this one. I checked the research on this three times before I believed it. Every statistic out there shows that something priced at £499 or £495 will outsell £500 by a ratio of about 10-1. The theory is that people will only register the first number.
A little story on this: Just to be clear, I’ve not seen any data on this story - it’s just an anecdote. In one of my workshops, someone told the story of Clarks shoes to decided to change its pricing policy to ‘round numbers.' The idea was to show the consumer that they treated them with respect. Apparently the experiment lasted just a couple of months because of the downturn in revenue. They went back to the odd-even pricing model.
Gift cards have been described as “the biggest scam in retail.” In essence, retail gift cards don’t exist to make life easier for the consumer, they exist because on average, they yield a 35% return. So if you give someone a £10.00 gift card, they can’t get change on it when they try to use it, so on average people will purchase something more expensive than the gift card value. There’s also a high percentage of people who never redeem the gift cards at all, which means the retailer in effect gets paid twice.
BOGOF (Buy one, get one free)
This is another one you'll hate, and it’s another one I had to check the data for. When faced with the choice of either a 50% discount, or two for the price of one, most consumers will choose the two for the price of one deal. It’s annoying to think we’re that easily manipulated, but there it is.
Breaking through ‘action paralysis.'
This is a technique often used by big charities. By asking for a specific, small amount of money, e.g. £3.00 per month, the charities sector has seen up to a 76% increase in donations. This works like the ‘call to action’ idea. The more specific you are in what you’re asking people to do, the better the results.
The objective is to scare you into action. These techniques are used by political campaigns, insurance companies, banks & financial organisations and public health campaigns - think of the anti-smoking campaigns.
It will be interesting to see if you look at these things differently, now they’re in the front of your mind.
That’s it for part one. Next week I’ll tell you a bit about how marketing psychologists operate and they kind of things they tap into to help them find new ways to manipulate us to spend our money.