Previously, we talked about the importance of simplifying your offers. Today, I will give you a couple of actionable tips that are going to impact your bottom line.
I would like to refer to Dan Ariely’s work. He is a Professor of Behavioral Economics at Duke University. He is also the author of “Predictably Irrational”, an extremely interesting book on human behaviour. He predicts many cognitive mistakes that we make. Such mistakes range from innocent ones such as confusing colours or length of lines to more serious errors like donating your organs. The book is a must read. But, let’s use one example he gave during his TED speech.
Ariely sees a subscription offer that made no sense at the Economist’s website. There were three options: Online only subscription for $59, print subscription for $125 and print and online subscription for $125. Obviously, the Economist made a typo and removed the offer from their website shortly. Offering an inferior option for the same price does not make any sense. Or does it?
Ariely conducts a research and shows the three options to subjects. Of course nobody chooses the middle option (print only for $125). A whooping 84% chooses the print and online option for $125 while 16% chooses the online only option for $59. That is no surprise. But wait, it is not over! Tables turn when he eliminates the middle option and runs the research again with two options (Online only for $59 and print and online for $125). This time 68% chooses the online only option! The expensive option that sold 84% before is now down to 32%.
As you see, the seemingly useless option serves as an anchor boosting the popularity of the expensive option. When you are presented with an obviously better option, you tend to choose it even though it is more expensive.
Today’s actionable tip: Always, have an almost identical yet inferior version of the option you want to sell. You will see that it will improve your sales! Why don’t you give me an example of such a bundle?