Monday, September 18, 2017

Check for Empowered Shoppers’ Compliance

A worldwide trend among health care providers is to empower consumers with the responsibility of making medical decisions for themselves. The argument is that informed consent supports ethical patient interactions, increases compliance with the expert’s advice, and relieves providers of blame for flawed outcomes.
     Researchers at Erasmus University and University of Navarra outlined the process as beginning with a statement of major options: “Here are two possible courses of action.” Next, the provider describes tradeoffs (“The downside of option X is….”) or fit with the consumer’s characteristics (“I believe option Y is compatible with your preferences because….”). The full process concludes with the decision assigned to the consumer: “We’ve discussed the options, and I’ve answered your questions. Please make your choice when you are ready.”
     Consumer psychologists view this as empowerment because power is defined as an individual’s control over resources and outcomes. Concerning the medical decisions analyzed by the researchers, the resource is information. But the researchers found that the empowerment from information can lead to bad outcomes.
     The study sample was certainly comprehensive, including a total of 11,735 respondents in 17 countries spanning a total of four continents. The study conclusion was that the amount of information necessary for true informed consent often disrupts adherence to expert advice. One way in which this happens is that an abundance of information overloads the consumer’s reasoning and emotions, resulting in unintentional non-adherence. Another way it happens is that the wealth of information bestows overconfidence, leading the consumer to subsequently listen less well to qualified experts and discount expert views different from their own premature conclusions.
     Researchers at University of Texas-Arlington and University of Calgary find that empowered consumers of products and services in realms other than health care also fail to adhere to expert advice. In fact, the consumers rebel against the advice. If they feel confident in their conclusions, the rebellion arises from a desire to see themselves as self-sufficient shoppers. If the consumers feel less than high confidence in their conclusions, the rebellion reflects a drive for independence in the face of uncertainty.
     Both sets of researchers say this downside of consumer empowerment can be alleviated by giving decision makers information only as they ask for it. It’s the overload which triggers the effects. Still, the wise provider will also check for degree of compliance with expert advice when the consequences of flawed decisions could be serious.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Thursday, September 14, 2017

Upgrade Your Upselling

Upselling—convincing a customer who has already made a purchase decision to change to a more expensive alternative—has a bad reputation. When upselling takes the form of drawing in shoppers with ads for bargain goods which turn out to be flawed and then pressuring the shoppers to buy costly alternatives, it’s called bait-and-switch.
     But researchers at Albstadt-Sigmaringen University of Applied Sciences, RWTH Aachen University, and University of St Gallen document that many consumers appreciate the options offered when upselling is done properly. One of their interviewees, a 28-year-old woman said about her hotel upgrade, “The room belonging to the higher category was available for only a small extra charge, maybe 10 Euros, and the room was larger and more comfortable. Access to the swimming pool was also included. I accepted that offer immediately.” Yes, her original purchase would have banned her from the hotel pool, but she didn’t see the upselling as an unethical bait-and-switch.
     Following their interviewing, the researchers experimented with different upselling tactics to determine which made the sale without causing ill will. They found that a critical factor was how much mental energy the shopper had invested before coming to the initial decision, before the upselling pitch. In some cases, there would be noticeable effort.
  • With services like hotel reservations and car rentals, people often book online, where they’re presented an abundance of options. Sorting through these while considering tradeoffs in price and benefits can be exhausting. 
  • Someone for whom a vehicle purchase is an infrequent benchmark event is likely to find the process more taxing than will someone who regularly purchases a replacement vehicle. 
  • When a purchase is being made for indulgent pleasure rather than for strictly utilitarian reasons, shoppers generally need to deliberate longer in order to convince themselves the purchase is deserved. 
     Serving such consumers, upselling works best when the salesperson’s argument focuses on what would be lost by not selecting the more expensive option. On the other hand, when it seems that the customer has placed little effort into making the initial decision, upsell with a blend of gain-based and loss-based reasons.
     Results from other studies suggest that you show the shopper the items or photos of the items while describing the benefits they’d personally enjoy or miss out on.
     And present price differences in round numbers: “For only $20 more,” when the difference is actually $19.25, for instance.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Monday, September 11, 2017

Influence with Trustworthy Scarcity

Why does interest in a product, service, or experience climb when it’s described to the shopper as scarce? An abundance of studies on that question say the appeal is generally due to one or more of the following:
  • Desirability. “People in the know are wanting what’s available.” 
  • Distinctiveness. “I’ll have something others don’t have.” 
  • Status. “Many aren’t able to afford what I have.” 
  • Nostalgia. “I’ll preserve memories of expired possibilities.” 
  • Quality. “Lavish attention must have been devoted to each item.” 
  • Competitiveness. “Others who don’t have this are comparative losers.” 
  • Reactance. “I want to have what others tell me I can’t have.” 
     Successful marketers use these levers. Scarcity opens opportunities for higher profit margins as long as customers accept that the reason for the scarcity is genuine. Florida International University researchers wondered whether any suspiciousness is greater with supply-related explanations (“Buy it before supplies run out” “We won’t be getting a new shipment for a while”) or demand-related explanations (“Someone else has made an offer.” “We’ve already sold more than 500 of these.”)
     The answer is that it depends on what the consumer trusts the seller to know. A manufacturer is expected to be more current about supply channel logistics than about store demand, so supply-related explanations would be trusted. A retail salesperson is on the front lines of purchase patterns, allowing for trustworthy demand-related explanations.
     Whatever the type of explanation, trust is more likely when shoppers have been warned in advance about possible out-of-stocks. Financially profit from pricing scarce items higher, but for long-term good will toward the store, provide ample notice to customers about impending shortages. Tell them how long you expect the shortages to last. Suggest alternatives they could purchase until the shortages ease. Have those alternatives in stock.
     When consumers learn that an item you carry is in scarce supply, they get emotionally aroused. Researchers at American University and University of Arizona found that one result of this is that the difference in preference between a sought item and the other alternatives grows. Therefore, the degree of disappointment if the item ends up out-of-stock (OOS) is keener.
     You don’t want disappointment generating irritation directed at your store. To head this off, take personal responsibility for the OOS. University of Bologna research indicates that outrage about the outage will be less when the salesperson says, “I didn’t adequately anticipate demand,” rather than, “We didn’t adequately anticipate demand”

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Thursday, September 7, 2017

Steer WOM Away From Surprise Bonus News

Why would researchers at Washington University in St. Louis and Nazarbayev University in Kazakhstan say that certain sorts of positive word-of-mouth put a retailer at a potential competitive disadvantage? The answer has to do with surprise, exclusivity, and price wars.
     If a customer is given an unexpected bonus at the time of purchase, the surprise endows extra value. But when the customer then tells others what happened, they won’t be surprised if coming into the store to get the bonus. Further, if the customer perceives the bonus to be exclusive to them plus a limited number of others, widespread news of the bonus award program raises expectations by other shoppers.
     Widespread news also alerts other retailers who could decide to meet the offer. The exclusivity is disrupted and the competitive advantage erased. In fact, paralleling what happens in a price war, the competition might raise the bonus offer or lower the base price, requiring you to meet a more profit-sapping threshold.
     The researchers’ advice is to under-promise and over-deliver with a surprise item or service of modest value, but not encourage your customers to spread news of the surprise value they received. Instead, satisfied customers could be asked to tell friends and family about other aspects of the transaction.
     All this bother is worthwhile because bonus gifts have been found to break ties among decisions difficult for the shopper as well as reduce returns of purchased items. The best bonus gift is one which helps the purchaser get more out of the main item they’re buying. But if you can’t easily do this, separate the purchase from the gift, such as presenting the gift after the purchase has been completed. Bundling an expensive with an inexpensive item actually detracts from the perception of value for the expensive item unless you’ve described synergy.
     And explain the reason for the gift. Otherwise, the customer might get angry, thinking that your store policies are highly arbitrary or even discriminatory. According to studies at Baruch College, University of California-Berkeley, and San Francisco State University, consumers having a Western mindset prefer demographic explanations (“We’re giving a gift to senior citizens”) or marketing-determined (“A special gift for first-time purchasers”). For consumers having an Asian mindset, the researchers found it best if the customer concludes they earned the good fortune (“You are lucky enough to have selected an item for which we’re adding a free gift today”).

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Monday, September 4, 2017

Certify the Value of Certainty in Persuasion

Whether wanting to convince people to make a purchase, a donation, or a commitment, presenting your case confidently will help, as long as your degree of confidence doesn’t outpace your audience’s judgment of your accuracy. The assessment of accuracy precedes the impact of the influencer’s degree of certainty.
     But what about circumstances in which accuracy information isn’t easily available? People will tend to assume what they’re being told is accurate, according to study results from Georgetown University, Harvard University, and University of California-Berkeley. Further, the higher the salesperson’s confidence, the less likely it is that audience members will choose to check for accuracy.
     This sets up circumstances in which consumers could be misled. It’s more likely to happen with experience and credence goods than with search goods.
  • Search goods have features, the value of which can be relatively easily assessed before purchase. A refrigerator and a car are search goods. 
  • The values of experience goods are more difficult for the shopper to assess until the goods have been used. An insurance policy, gym membership, or unfamiliar food is an experience good. 
  • Vitamin pills and investment portfolios are examples of what are considered credence goods or post-experience goods. These are items for which it is difficult to evaluate the advantages of having made the purchase even after use. 
     To exercise ethical influence, especially when selling experience or credence goods, check that your confidence is justified. The same rule holds when attempting to convince people to donate to an unfamiliar charity or to commit to a set of beliefs with hidden consequences.
     It also helps for you to project a little bit of uncertainty. That can make you more accurate about your deserved confidence. As it happens, it also makes you more influential in circumstance where people are judging your advice. In a Journal of Consumer Research article wonderfully titled “Believe Me, I Have No Idea What I'm Talking About,” researchers from Stanford University reported that expert restaurant reviewers are more influential when the reviewers say they're less than completely certain about their conclusions.
     Avoid coming across as absolutely certain in the recommendations you're making. A bit of doubt makes people more comfortable in asking questions and expressing concerns. Those questions and concerns are highly valuable to you when facilitating the sale. You can present counterarguments or you can steer the customer toward an alternative which will better fit their preferences.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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