Ten Basics of Consumer Behavior That Will Help You Make Money, Part Two
December 28, 2009
In Part One of this article, we covered five of the basic tenets of consumer behavior. Understanding how and why people buy helps business owners craft their sales offers in more successful ways. Part Two talks about the second set of five tenets.
Tenet Six: Buyers are loss adverse. They want to shield themselves against loss as much as possible. So, you want to make offers that take into account the buyer’s fear that they will lose. It’s a fact of how humans think that we fear loss more than we are happy by gain. You can offer money-back guarantees as one way to make buyers feel safe against loss. The fact is, few buyers will actually ask for their money back, but buyers like to know they can if they really want to. They like the reassurance even if they rarely act on it.
Another way to combat fear of loss is to offer a small trail period. Cable companies often do this by offering a few free months of a premium channel. The strategy works because when the trail months are over, a buyer will continue the channels because – guess what? – she doesn’t want to experience the loss of the channel! Maximizing potential gains and minimizing potential losses will always help you to sell more, because buyers constantly worry about this.
If you are going to give something away for free, be sure to value it by listing it as a part of the purchase agreement and stating its worth. Otherwise, you are giving it away and gaining no perceived value with your buyer.
Tenet Seven: In your sales copy, write to the product or service’s benefits , not the features. This is so basic, yet I see people miss the mark on this all the time. Tell a buyer what problem will be solved if she uses your service, not how the service works. What will a buyer have or get rid of after they purchase from you?
Tenet Eight: The frame you use to make your offer has a big role in success. By frame, I mean how you say something. If I say to you, “You can make more money by coaching with me” it doesn’t paint a very succinct picture. The phrase “more money” is relative, isn’t it? But if I say “You can take your business past the six figure mark this year” the frame is specific and much more powerful. Research shows that if a bank says “you’ll make 5% on your savings” the reaction is favorable. If a bank says “you’ll make 5% on your account” the reaction is much less favorable. “Account” is less tangible and less emotion-laden than the word “savings.”
A subset of framing is something called priming. Priming is a fancy way to say that the environment you make your offer in will affect the results of the offer. Here are some examples:
- Back of the room sales at a big event are primed by the upbeat, motivational conversation and the excitement generated by the speakers.
- A wine shop will sell more French wine if it plays French music in the store, or more German wine by playing German music.
- At a live event, making an offer for a high-level coaching program that costs five figures will go better if it’s made in a Ritz-Carlton than in a Motel Six.
- Brokers and insurance agents usually have very nice offices, their environment helps to reassure you that they are successful and their products are successful, too.
Tenet Nine: Know your connectors. Connectors are people who have a great deal of social influence. You can get a great education about connectors and how important they are to businesses in Malcolm Gladwell’s book The Tipping Point. Connectors are influential not just because they know a lot of people, but they also naturally link people together. They connect people, ideas, and things across broad lines.
A sub-tenet of knowing your connectors is understanding peer pressure and how it influences buying decisions. Buyers will conform to what others purchase so as not to stand out. We also believe that if we purchase what others buy we are reducing our risk. If your product or service becomes the “in” thing, your sales will come to you more easily over time. If buyers see several people rush to your booth to purchase a product, chances are they will also come by to have a look. Have you ever peered into the door of a restaurant that is new to you, to see how many people are in there eating? If it’s not reasonably crowded, you probably walked away. This is an example of peer pressure buying.
Tenet Ten: Social exchange breeds more loyalty and a stronger bond than economic exchange. How does this translate into your business? Offering a service to buyers without regard to getting paid for it will help to build a bond, which in turn will eventually lead to sales. For instance, you might offer to make an introduction to someone. You might offer a morning coffee meeting for 3 or 4 business owners who are potential buyers and would benefit from knowing each other, too. You might offer to come by and water the plants for someone who is on vacation.
Companies use social exchange to build loyalty. Saturn had big reunions for all Saturn owners back in time. Hyundai’s Assurance program will pay your car payment for six months if you lose your income. These social exchanges built strong bonds to both brands. Years ago, McDonald’s would fill your coffee cup for free if you bought one of their special ceramic McDonald’s cups. At the time, I worked in an office next door to a McDonald’s. We all walked over there twice a day for coffee for years, never thinking to go anywhere else. And, of course, we bought other food to go along with the coffee more often than not.
Tracking consumer behavior is fascinating, but more to the point it helps you know how to make your offers and become more profitable in your business. Sit down with all the products and services you offer in a list, and see how many of these ten tenets you can put to use to sharpen your offers. It will impact your bottom line in a good way!
(c) Sue Painter
Ten Basics of Consumer Behavior That Will Help You Make Money, Part One
December 28, 2009
A good way to start the business year is to remind ourselves of how unpredictable consumer behavior is. The more we understand about why people purchase what they do, the better we can design our marketing messages. There are 10 basics of buying behavior that can help you make money, in today’s post I’ll cover five of them, and in Part Two I’ll talk about the second set of five.
Understanding why people purchase when they do is no easy task, however. The field of behavioral economics indulges in marketing research and can give us some insight. Here are ten things we know about consumer behavior, and how you can put them to use as a small biz owner.
Tenet One: The need to express one’s individuality is a critical factor influencing the choice of brand that someone will buy. What does this mean? Well, if you’ve got this type of consumer on your hands, you want to offer a product or service that seems unique and very individualized to the person. If you are selling braided leather bracelets, for instance, this person is going to want a leather bracelet that isn’t braided, or a colored leather, or a braided bracelet with a customized charm at the end. If you are selling your cleaning services, offering a menu of tasks you do and asking this person to personalize it to their own home will make them feel they are getting a unique “brand.”
Tenet Two: Keep it simple. Too many choices confuse a buyer, and as I’ve preached for years now, a confused mind does not buy. If you offer 17 different products and services, simplify it down to no more than three. Group your products and services by broad category and let the buyer choose what she most needs. A few weeks ago, I met a concierge service owner and asked about her business. To my horror, she enthusiastically told me “we can do anything you need.” That doesn’t help most buyers, who will quickly glaze over and not be able to think about what they need at that particular moment in time. A better answer would be, “We handle shopping for gifts, office organization, and party planning.” The buyer’s mind will then sort and land on something she recently needed that falls into one of these large categories. Give a buyer a place to land and you’ll do a better job of selling.
Tenet Three: Use decoys when you package your options. Let’s say you are offering three different options for house cleaning. Make the middle option the package that you really most want to sell. Most people will select the middle option, not wanting to go with the absolute lowest cost option but then not being willing to spring for the very highest, either. So make the middle option the one you really want to sell, the one that is the most profitable for you. The others are, in essence, decoys.
Another way to use a decoy is to actually use a competitor’s product or service up against your own. Point out the added value or benefit that you have, and that your competitor doesn’t have. For instance, you may sell a face care product not that different from another product – but yours may offer 20% more product for the money. Or, it may have an added benefit that the “decoy” competition doesn’t have.
Tenet Four: You set the anchor for your price. In retail operations, the suggested retail price is the anchor, the price at which you want a buyer to compare your goods with others they may buy. In nonprofit organizations, you set an anchor by suggesting levels of giving in a campaign. It’s also possible to re-anchor prices and change a buyer’s expectation. One of the most familiar and successful examples of re-anchoring is when Starbucks began. Starbucks re-anchored the price of a cup of coffee much higher than it was in any other coffee establishment by convincing buyers that the coffee and the experience was of much higher value than in a McDonald’s or a Dunkin’ Donuts.
Tenet Five: How you package what you offer makes a big difference. In marketing research, this phenomena is called sensation transference. It means that buyers will transfer the sensations they have about the packaging of a product or service to the actual item itself. For instance, people will report that the food served on a paper plate doesn’t taste as good as the very same food served on a china plate. The “packaging” of the china plate transfers a better sensation. Brandy and perfume manufacturers heavily depend on sensation transference. You’ve probably heard before that the design of a bottle of perfume is often more expensive than the actual design of the perfume itself. The packaging makes all the difference in the success or failure of that particular scent.
There are many ways you can use packaging to help your sales. If you are a residential developer, packaging may include a fancy entrance to your neighborhood. If you are a coach, packaging might mean the extra little bonuses you offer people to work with you – things like a personalized planner, a private forum, a special event offered at no charge as part of the “package” of the coaching offer.
Think about how you can put these basic tenets to work for you, and in Part Two you’ll discover the last five tenets.
(c) Sue Painter
Is It Time To Tear Your Business Apart?
December 17, 2009
Change is uncomfortable and scary for most of us. Although we have varying levels of tolerance to change and risk, all of us have 
some point where we avoid these things. I’ve been a risk taker most of my life – I love exploration and adventure, and I know that my willingness to try new things, or do old things in a new way, has brought me much delight and success.
Still, like everyone else, I have my limits. So it was with a great deal of fear, dread, trepidation and tears that I let Bill drive me to a hospital early Monday morning, where in a few short hours my left knee would be amputated out of my leg, and if things went well a new knee would be put in. There was a chance that my knee was so injured that a new knee would not work. So I had to let the haze of anesthesia settled over me, not knowing what I would wake up to. Honestly, this was one of the hardest things I’ve had to do in my life.
Both in business and personal life, there comes time when we need to tear things apart, blow things up, be destructive. And the truth is that we do not know what the outcome will be at these times. What we do know is that the current situation and the road we are on is not working. Plain and simple, we need to stop.
I’ve put together a road map that will help you to know when it’s time to tear things apart, and how best to prepare for it. Here are some of the rules of the road we are on that simply won’t take us where we want to go.
- We tend to fear completely deconstructing things so much that we stay on the wrong road far too long.
- The longer we stay on the wrong road, the more we lessen our chances of a good outcome once we’ve finally torn things up.
- We spend too much time, energy, and resources trying to make the road we’ve been on work. We make ridiculous accommodations that do not serve us, and we engage in more wishful and magical thinking. Denial gains super-sized strength from our fears.
- We assign fear to those around us, assuming they will dislike what will happen when things are torn completely apart, and using that as an excuse for keeping ourselves on the wrong road.
In both our personal and business worlds, however, we can ruin ourselves and our opportunities to have what we desire by refusing the “blow it up, tear it up, deconstruct it” path. Our secret ambitions or dreams for ourselves languish. The outward signs of “living wrong” can include anger, bitterness, depression, constant excuses, wishful thinking (if only), blame, totally buying in to beliefs and stories we tell ourselves about why we can’t do something, being cynical, jealousy, and dishonesty with ourselves and others. Ugh!
No matter what “it” is, force yourself to have the curiosity and honesty to consider what might happen after deconstructing what you have right now. Don’t just list the “bad” things you immediately think about. List all the possibilities you can think of, too. Energy follows thought, so keep yourself on the possibility side of the list as much as you can. Rule number one? You don’t have enough foresight and knowledge to deconstruct something alone. Get help, give it time and attention, and move through the steps without continuing to tell yourself how scary or wrong it is once you’ve made up your mind.
- Consider the alternatives with at least three people.
- Find the very best people to help you.
- Make sure you like the way they approach things and their energy.
- Enroll your significant others – friends, business partners, family members, support staff.
- Ask these people to tell you their own fears about the deconstruction. This helps clear the air and prevent sabotage.
- Set up a timetable for when you will end the old and what all the steps are for the new.
- Make it as easy as you can on yourself. Clear the calendar of other demands. Whatever else you do, hire it done or stop it for a few days. Maybe you get someone to shop, cook, and clean for a few weeks so that’s totally off your mind.
- Gather up your courage, quit listening to the “backtalk” from yourself and others, and take one step.
- Keep going through your steps with determination, even when you begin to doubt or run into an unexpected hurdle.
- Remind yourself that what you have been doing DOES NOT WORK and that you are now creating a new order of things. You are not reaching for perfection, you’re reaching toward a solution that will actually get you what you want.
- Be honest to yourself and others when you have “doubt days” – get it out of yourself to prevent self-sabotage.
- Once a day, look at the big picture. Remind yourself that the road you have been on DOES NOT WORK. Give yourself credit for each step along the way.
- Work diligently on the new road. Don’t go back and wonder if you’ve done the right thing. Whatever you are doing, it’s probably more right than the wrong thing you were doing.
As I write this, I’m in a rehab hospital learning how to use my new knee. Yes, I did get one! It’s been painful and hard, and it’s easy to fall into doubt that I’ll ever get the pain to stop or that I will be able to bend my knee very well. Like everyone else who goes through this, I’ve had my few days of “hitting the wall” and wondering why in the world I ever did this to myself. But my surgeon is expert at his craft and at reminding me where this can take me. My teachers and friends remind me of the truth about how things were just a short week ago. My new “knee friends” share every setback and success with me over meals and in the hallways. And the hospital staff support me completely, from helping me get a shower to making sure my pain medications are delivered right on time. I’m off the road that was getting me nowhere, and would have never gotten me where I want to go. This road is “more right” than the road I was on.
No matter how big it is in your business or personal life, have the courage to say aloud “this road is over.” You might find out that tearing something up is actually the way to create what you’ve always wanted.
(c) Sue Painter
How To Craft Sales Offers That Work Easily and Often
December 4, 2009
You might recall the old saying “It’s not what you say, it’s how you say it.” I’m not sure that holds true for everything, but I do know that it’s the truth when it comes to crafting your sales offer. Many different studies using split testing have proven that changing the marketing message changes the number of sales. So what’s the secret to crafting sales offers that work easily and often?
The biggest mistake that I see business owners make is trying to sell on logic rather than emotion. Logic tells but emotion sells. When people say they buy on logic they are almost always mistaken. We buy based on our emotions, and then we proceed to justify what we’ve just bought based on logic.
I saw a great example of this just recently when I was in Mexico with some friends. They have long held negative feelings about the many timeshare offers proffered along Mexico’s beaches, stating over and over again that they would absolutely never do a timeshare deal. For at least 4 years now they have visited Mexico’s beautiful beaches and attended numerous timeshare presentations, taking the free gifts offered but never biting on the presentation. But this time around, they bought! I was shocked at first, but then I began to apply what I know about sales offers to what happened with them. Why they bought then became crystal clear.
The couple attended a presentation and were asked a question they’d never been asked before. “How do you feel about the hotel you normally stay in when you are here?” That simple question unleashed a torrent of frustrations and complaints from the couple, who had seen their favorite hotel at the beach change from a great resort to an ill-maintained and understaffed property. The crowning blow was the outdoor hot tub, which had been broken the entire two weeks of their stay.
What did the sales agent’s question do? It brought up the couple’s emotions. All he did was sit and listen – and then he led the couple to a five-star, brand-new timeshare unit. Talking to them about the property’s seven-year maintenance program while he showed them brand-new pools, and gorgeous two-bedroom units with big closets and full kitchens, he only had to structure a price and payment schedule that met their financial circumstances to do the deal.
What I noticed, though, was that once our friends came back to the hotel to join us, they didn’t quite know how to explain what they’d done. After all, they’d adamantly told us for many years that no one in their right mind would purchase a timeshare. So, they started telling us all the logical reasons they bought, which to me was comical. This couple did not buy based on logic. They bought on emotion and then tried to justify with logic what they had done. Of course, there’s nothing wrong with buying a timeshare (or anything else) if that’s what one wants and what one can afford. The point is, this was an emotional purchase – and almost all purchases are exactly that.
A second mistake I see business owners make is related to the first. I so often see business owners talk about what they have to offer from a logical standpoint, trying to be professional and without emotion. It just won’t work! You want to make an offer that does one of two things. It either helps the person get what he is passionate about, or it solves what the person is in pain over. Simply, your offer must do one or the other. The most compelling offers do both. An example? Think of a parent whose child is sick. The parent is passionate in their love for their child, and is in a great deal of emotional pain that the child is hurting. Whatever that parent is offered that will feed their passion and cure their pain will be a winning offer!
Often, a business owner can talk about passion or pain from their own perspective, telling their own story and how they came to be offering what they do. “I once had an Internet business that made no money at all, and I was determined to figure out what I was not doing right. I’ve studied, gone to workshops, and spent hours changing things around. I can quickly and easily tell you what you need to know so that your website makes money, too.” That’s an example of a story that evokes pain.
A third mistake I see business owners make is creating vastly different copy (or script) for their offers depending on how the offer is made. But if you stop to think about it, you want to make your offers fit what the prospect wants or needs (their passion or pain) more than you want to change it around based on how you make your offer. If your sales copy “bones” are good, they will work no matter if you are selling one-on-one, from the platform, in a teleclass or teleseminar, or from an Internet sales page. You might change the length of the offer, but the sales copy can remain much the same. If you make the mistake of writing completely different copy for each type of sell, you run the risk of making the simple hard and losing sight of what your prospect’s passion or pain is. It’s important for all your sales methods to showcase a consistent message.
Here’s an easy way to get started writing (or speaking) sales copy. I owe this to John Carlton, who taught me this in a sales copy workshop. Begin by filling in the blanks of this sentence:
I help _____________ to do _________________ even though _______________________.
For example, I help solo professionals build six-figure businesses, even though they have been in business a while and not been profitable yet. Or, I help bald men grow more hair, even if they have been bald for a long time. Or, I help overweight women get fit, even though they may never have exercised before in their lives. The beauty of this sentence is that you already highlight what a prospect may have in his head as an objection, and take it away. Additionally, you begin to evoke emotion! Emotion sells, remember?
Sometimes I work with clients who insist they cannot find any emotional triggers that apply to the product or service they are offering. This tells me one of three things:
1) You don’t have something that is saleable.
2) You are looking at what you have to offer from the wrong angle, and need to change your perspective completely to come at it from the prospect’s point of view.
3) You need help in understanding what you offer and the problem it solves, quickly!
If you are using the right emotional triggers for what you have to offer, sales will move right along. You can check this by thinking about why your most recent customers bought. If they’ve done testimonials for you, review them and make a list of the underlying emotions . Change your sales copy to reflect these emotions and test it out – you will probably increase your sales! Remember to talk about the problem you solve in terms of passion or pain relief, and you are on your way to frequent and easy sales.
(c) Sue Painter
Why Retreats For Entrepreneurs Help To Build Business Success
December 2, 2009
Entrepreneurs are “on” just about all the time. We’re the business owners who juggle more than one role in the business. We often wake up with new ideas swimming in our heads. We see possibilities where others don’t. In fact, we often have too many ideas for our own good! It’s widely known that solo professionals and entrepreneurs suffer from what is called “bright shiny object syndrome” – that is, we have so many ideas that it it sometimes hard to keep our focus on the one we’re working on right now.
Most of us are busy not only within our business, but also have roles in family and community, as well. As our business begins to take off, we have less of the quiet time we need to work “on” the business rather than “in” the business. And, because we expend a high degree of energy, we need respite. In fact, where we get our new ideas and renew our energy is often while we are on retreat.
My formula for fantastic business success is to regularly pull myself away from my business. This stretches me in several ways.
- It forces me to train employees and trust them to run day-to-day operations while I am away.
- It forces me to clear my calendar and budget for personal business retreat time.
- It helps me keep my own ego out of the business and put my attention on the present and future possibilities.
- It forces me to change my daily environment, literally getting a fresh perspective for myself and my business.
In fact, one mark of an entrepreneur who thinks too small is one who insists he cannot get away from his own business. This a sure sign of overwhelm, fatigue, and over-control. Here are five tips for how to do quarterly business retreats that will refuel you and your business.
- Decide what is really nurturing for you, and select accordingly. Your body and spirit may need anything from physical exertion to sunshine.
- Stay within your budget. Retreat centers range from free (monasteries) to the ultimate luxurious destination. Don’t stress yourself more by going into debt.
- Plan far ahead. Clear your calendar 3 to 4 months ahead of time. This gives you plenty of time to make travel arrangements and a bit of time put away some money. It also gives you something to look forward to, a time you know you’ll rest.
- Put away the guilty feelings. It is a gift to model self-care and nurturing to those you care for.
- Enter and come back lightly. Schedule a lighter day before you go and when you come back. You’ll reap more benefits if you are not pressed to the last minute before you leave, and have a day to acclimate when you return.
Think about your work style and take what you need with you. A few pads of paper, pencils or pens, a computer, a list of ideas you’ve had and need to assess, a list of problem areas you need to think clearly about should all be in your briefcase. Because I work on computer, I will only go places where I can get Internet access. Which, these days, is just about anywhere!
Make your retreat a combination of rest, daydreaming, good food, activity, and work time. Your mind will clear and you will gain instant focus on things that have been bugging you as your mind, body, emotions, and spirit relax and renew. Things that seem truly frustrating and unending will suddenly become clear. You’ll find yourself making decisions you’ve wallowed on about and wondering why you thought it was so hard!
I recommend quarterly retreats, a week at a time. At the least, get away for 4 days. Stay away from e-mail and the phone as much as you can, and at the most check it only once a day. Take a break from social media, too. Your business issues will lessen and juicy new possibilities will flow. You’ll get back home enthused and renewed, and that alone boosts your business success.
(c) Sue Painter