Have you ever been so wound up in a sale that you regretted the purchase when you got home? That’s not uncommon with a large purchase. In fact, it’s almost human nature to regret the decision. Our emotions get the best of us sometimes and can practically take over and cause us to act irrationally.
I recall a marketing guru who once told a story about his brother who bought and sold cars through the newspaper. He’d buy a cheap car and try and resell it for a profit the next weekend. While most people were struggling to sell their cars, he’d sell them effortlessly because he’d tell prospective buyers to all show up at his house at the same time. People would be clamoring for the car, ignoring all common sense. The competitive nature caused people to practically fight for the car. Talk about a buy button. That’s crazy!
I recall when we were buying our house, the real estate market was hot. Every house we wanted was snatched up within hours of hitting the market. Many were selling for more than the asking price. Often, people would run into a house with their real estate agent, look over the house quickly and scribble out a contract on the spot on the hood of the agent’s car. I had always assumed that we’d learn a little about the neighbors and ask about the schools and surrounding amenities. Not so. We found ourselves in the same frantic situation, rushing to get our contract in first. It wasn’t that the home owners had done anything to push our buy buttons but the market conditions proved that scarcity is a very powerful motivator. That’s why all of your marketing efforts should use some element of scarcity in the offer. It can be an expiration date or an offer that’s only good for the next 5 people. Either way, scarcity is powerful and shouldn’t be overlooked nor should it be abused.
The next buy button is one that’s no secret. It’s the word, “free.” It’s been called the most powerful word in the English language. Studies have confirmed that people react favorably to things that they normally wouldn’t when it’s offered for free. Risk is perhaps the biggest deterrent to any sale and by offering something for free, the financial risk is completely eliminated. Sure, there are still other risks, like the risk of making a bad decision or the risk of looking foolish, but financial risks tend to be the greatest.
On the other hand, higher prices can often encourage people to buy. I know, we just flipped from one extreme to the other but hear me out. When things are free, their perceived value drops. When things are priced higher, their perceived value goes up. Pricing is often a determining factor in the perceived value of an object. Think about it. Does a Rolex watch work any better than a Timex? Probably not. One costs a lot more so it’s coveted but both keep time equally well.
There’s a story where a gift shop owner in a small tourist town, couldn’t sell any jewelry at the regular price. The end of the season was approaching so she marked all of her turquoise jewelry down. Still no sales. Then one of her employees misunderstood the owner when asked to mark it down again and she accidentally re-priced all of it at twice the original value. Within days it sold out producing a handsome profit. So how do you explain that? It’s all about perceived value. When it was discounted people assumed that it wasn’t worth much and probably was low quality. When it was priced higher, it was coveted and people assumed it was higher quality.
I recently heard another story about a wine taste test. Wine connoisseurs were given a taste of a very expensive wine disguised in a cheap wine bottle. Unanimously, they all criticized the wine. Then, when served the cheap wine, disguised in the expensive bottle, they all sang the praises for the wonderful bouquet. The perception of value tainted their experience, clouding their vision to the reality of the actual wine.
We all know the power of placebos. Another study offered plain aspirin to patients needing to eliminate pain. Some patients were offered aspirin and were told that it cost $.01 each. Others were offered aspirin that was supposedly $.50 each. Overwhelmingly, the patients that received the more expensive aspirin reported more relief. In this example, the price didn’t only influence which one would be more likely to sell, it actually influenced the level of relief received. Imagine if your price could actually increase your sales, and decrease your refunds because people enjoy your product more.
Human emotions are fragile and shouldn’t be taken advantage of, so I encourage you to use each of these techniques judiciously. Never manipulate and never try to scam your customers. Simply understand how the psyche works and utilize these buy buttons with care.