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