Sunday, January 23, 2011

Free Up Shopper Resistances to Trial

An article in last week’s Bloomberg Businessweek analyzed the offer by H&R Block to prepare people’s tax returns for free. Building on the analysis in that article, here are some shopper psychology tips on using free offers to your most profitable advantage:
  • Free offers are a fine way to have resistant purchasers try your core services. H&R Block views the promotion as a way to draw in footsteps. But be sure to set strict enough conditions on your free offer. The H&R Block offer covers only the filing of the federal 1040EZ, not more complex forms. It doesn’t apply to state tax forms. The offer is good only from January 14 through February 15. The company estimates that many of the people coming in for the free offer will learn that they need to file forms for which there is a fee. For those who don’t, says H&R Block, about 55% will be in that situation within two years, so familiarity with the office is a valuable advantage.
  • When you’re giving no-cost samples, ensure that any conditions are abundantly clear and that there is minimal sales pressure to go from free to fee. Ecommerce shoppers have become so accustomed to getting things of value for free that they feel betrayed when they expect it to happen and then are told they’ll have to pay. The sorts of customers H&R Block hopes to draw in are those who are short on money and are therefore turning to computer-based tax preparation. Those people are especially likely to have ecommerce mentalities.
  • Be sure to state the usual price of whatever it is you’re giving away. Better yet, if what you’re thinking of giving away is part of your core business, considering charging a token fee instead. Researchers at Monash University in Australia find that consumers have an easier time recognizing the value of a big discount when charged a token price than when getting it for free.
  • Make your offer with flair. H&R Block has had enough punches to muster up the emotion. Bloomberg Businessweek reports that their retail tax preparation business dropped more than 6% in 2010 and that the company’s main promotional hook from the recent past—the Instant Money Refund—is under attack by U.S. regulators as usurious. Before embarking on a free offer, tap into emotions that motivate you to do it dramatically.
Click below for more:
Give Shoppers a Comparison Point
Serve the Underserved
Keep Discount Conditions Strict Enough
Give Free Samples of New Products

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