Hello readers, I regret not being able to post any articles last week.
I took a long deserved vacation and was at the beach with my wife and a bosom
friend’s family at the time I always blog. I enjoin you to find some time to
relax from your busy schedules once every while and spend it with your most
loved ones too.
I concluded the last post with a
promise to discuss ways of conditioning the customer, who already has a desire
to do business with us, to actually follow through. In business, people employ
different strategies to urge their customers into action. Sales, coupons, premiums,
installment plans and after sales services are some of the strategies regularly
used. But, I favour approaches that don’t put any dent whatsoever into the
business bottom line. In consumer psychology, they refer to such subtle
inducement approaches that have no financial consequence to the business as
NUDGES. A true nudge disguises itself so well that the customer feels the
decision to buy or close a deal is entirely his; while in actual fact the
decision was anything but that. For instance, if you walk into a consumer-psychology
compliant store, the same shelf may hold all the shampoo products but only the
premium brands will be at your eye level, the cheaper (and less lucrative)
varieties will be at your knee level; the store owner is seeking to
subconsciously nudge you to buy the expensive one. Why do you think, toys are
mostly on the ground or at your knee level? It is because that is the eye level
of your babies, who will keep pestering you till you get one for them.
Below are three more nudges.
Limited edition effect
Have you ever thought about the
psychology behind limited edition products? Do you wonder whether the
manufacturers made only three pieces of the product for some very special
people? Or was it two hundred thousand pieces they fabricated before
decommissioning the assembly lines? I sometimes do too. And though I may never
get the answers, I always allow myself to be conned into thinking that coming across
such products is once in a lifetime opportunity. Shrewd businesspeople know how
to employ this kind of effect in getting dilly-dallying customers to commit.
Let us use the example from the
last post of a shopper who comes into the store looking for a Tommy Hilfiger
T-shirt. Imagine that when he walks up to the rack, he finds that the price is
a teeny-weeny higher than he anticipated. If there are ten of the T-shirts
hanging on the rack, he might consider putting off his purchase till some later
period. But if only one T-shirt is on the rack, the fear of losing it to
another keen buyer is likely to make him move around some items in his budget,
to immediately buy it. It’s the same with a headmistress who declares that she
does not want to promise any enrollment slots for your child because she does
not want to be put on the spot, especially when the school is nearing its
quota.
Payment time frame
Behavioural economists like to
talk about this nudging approach advocated by John Gourville. Simply put, this
marketing approach convinces you that if you could afford A then you could afford
B; where B is an expensive product purchased monthly/annually while A is a
cheap product you buy daily. As an example, think of an entrepreneur persuading
a group of women who are challenging the high membership fees to register at
his gym. If he counters by saying, “If you can spend N70 on a Coke bottle every
day, then a N25,000 annual membership fee (which comes to N68.50 a day) is not
a bad investment for your health”, he would be presenting a strong case for
registering with him. By comparing the cost of something cheap like a Coke
bottle which they buy daily to the pro-rata cost of the annual membership he
can nudged the dawdling prospects into becoming customers.
Card payment
Finally, one investment you need
to make especially if you own a store is installing a POS machine (point of
sale). By installing a POS, you not only guarantee security of your funds and convenience
for your customers, you actually lower customer’s inhibition to part with their
money. It has been demonstrated that paying for goods with a card makes people
to spend more. Compared to cash payment, using the card makes for a weaker memory
of past expenses and also eliminates the guilt trip that customers feel when
they see the cash in their wallets dwindling. Just make sure that they have
good value for their money else this approach can come back to bite you on the
bum.
Thanks for reading and see you next week D.V.
Thanks brother,these tips can be taken to bank
ReplyDeleteThank you. Mc D
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