Subscribe to Offering Self-Image Benefits

A benefit to customers of a subscription is that they don’t need to think about the subscription after the initial purchase. If you belong to the fruit-of-the-month club, the periodic arrival of your box of goodies requires no further action unless the subscription expires.
     But researchers at University of Arizona and Yale University find that with those subscription purchases most likely to profit the suppler, thinking about the subscription is an important benefit. That's because the subscriptions reinforce those consumers’ self-identity. This helps explain why customers renew or allow automatic renewal even when they find themselves using the product or service only rarely. It’s more than the inertia of a habit or a laziness about cancelling.
     In one of the studies, 93% of a group of 600 consumers were able to think of subscriptions or memberships they maintain which they don’t really use. In another study, participants completed an inventory of self-concept clarity and were also asked to indicate the likelihood they’d retain an unused subscription or membership. The example given to the participant was a magazine, a club, a daily app, or a snack delivery service.
     It was found that those people with lower self-concept clarity reported the highest likelihood of continuing renewals. Further inquiries provided additional evidence of the relationship. When the experimenter guided participants toward greater clarity in their personal self-concept, they became less likely to renew an unused subscription. People with limited self-concept clarity were unlikely to begin a subscription for or membership in an offering projecting a strong self-concept, although they might try out a one-shot participation. A one-month subscription to the dress-of-the-month club, for instance. People with an unclear self-concept shop for providers of projects and services which lend clarity and then settle on and stick with ones which feel comfortable.
     Marketers utilizing a subscription-based business model should highlight the advantages of the purchase for clarifying an attractive self-concept. Receiving regular shipments of fruit reinforces a self-image of eating healthy, signing up for the gym strengthens a self-concept of fitness, and subscribing to National Review helps clarify one’s self-concept as a political conservative. That stays true even if you never eat the fruit, attend the gym, or read the magazine.
     Make use of this effect by referring to subscribers as members, emphasizing the self-concept clarity advantages at times the member will be considering whether to renew, and encouraging members to give unused items to friends.

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Subscribe to Community Supported Retailing
Strengthen Fitness with Control
Weigh Flat-Fee Pricing
Satisfy Each Customer’s Self-Concept

Keep Up with Seniors Spending Down Funds

In an appointment with my financial advisor after I’d reached my senior years, she said to me, “I want to be sure the funds in your accounts last long enough for you to be comfortable for the rest of your life.” Based on that, I’m sure she’d sound an alarm if I suddenly raided my retirement savings.
     Prevention might be better, though. How can those concerned about the financial welfare of seniors spot those most likely to unwisely withdraw from their portfolios?
     A pair of financial planning faculty members at Texas Tech University analyzed investment accounts, demographic data, and personality profiles for 3,678 American adults. The average age of the 3,678 was 70 years. The portfolio withdrawal rate was computed as portfolio distributions for the year divided by total financial assets.
     The profile of someone most likely to make withdrawals was an older married senior who expected to live another ten years and had credit card and family loan debt. Drawing down the retirement account was not necessarily unwise for these people. Paying off debt is good, and the older you are, the less future you need to save for. The only indicator here of a foolhardy approach is that people who planned to live for another ten years might want to preserve funds.
     Among seniors least likely to make withdrawals from retirement accounts were those with a college education who wanted to bequeath to others. Personality characteristics associated with this were conscientiousness and confidence in managing finances as shown by thorough knowledge and clear organization of their income, debits, and expenditures. These are indicators which a financial advisor and others concerned about the senior’s financial wellbeing could assess.
     An absence of these personality traits should signal a need to regularly caution the senior about excessive withdrawals, especially if the absence occurs alongside indicators of impaired financial capacity, such as:

• Declines in payment management skills. Difficulty issuing payments or keeping records while carrying out everyday transactions.
• Arithmetic mistakes. Errors making or receiving change to pay for items at the store or when computing an appropriate tip in a restaurant.
• Memory lapses. Failing to pay bills or paying the same one several times.
• Disorganization. Losing track of financial and other documents.
• Impaired judgment. Abiding interest in get-rich-quick schemes or unfounded anxiety about the nature and extent of one’s personal wealth.
• Conceptual confusion. Difficulty understanding basic financial terms and concepts such as mortgage, will, or annuity.

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Protect Seniors from Poor Financial Capacity
Resolve Identity Crises for the Elderly

Slant Referral Rewards Toward the Referred

How should the incentive be allocated? To get the best from referral programs, what proportion of the reward should you offer to the referring customer and what proportion to the referred?
     Researchers at University of California-San Diego, Washington University in St. Louis, and Harvard University recommend giving most of it, if not all, to the referred customer. This does seem counterintuitive. Classic economic theory says that if you want somebody to take an action, you offer as large a reward as possible to that person. To keep a new customer referral program cost-effective, we must limit the amount of the reward. Shouldn’t we slant as much as possible of that amount to the party we want to initiate the action?
     But this economic reasoning overlooks two considerations. First, becoming a new customer is usually tougher than recommending a new customer. Santa Clara University, University of Maryland, and University of Texas-Austin studies concluded that switching costs exert a stronger influence than does customer satisfaction on whether a consumer will continue to patronize a business. Those researchers identified three sorts of switching costs in retailer-to-consumer and business-to-business sales:

• Procedural. The end consumer asks, “How difficult will it be for me to change my habits if I shop at the other store?” The business consumer asks, “How hard will it be for me to set up new accounts if I change retail suppliers?” 
• Financial. “Will I lose frequent shopper points, quantity purchase discounts, or deposits if I switch now?” “Are there deposits I’ll need to make to do business with a different retailer?” 
• Relational. “I lose a steady identity which comes from association with the business.” Customers of small to midsize retailers enjoy seeing store staff they recognize and who recognize them, or even call them by name. A hindrance to switching is the consumer’s discomfort with having to become acquainted with a new set of store staff. In addition, people often augment their self-identity using the personalities of the stores they frequent. 

     The other consideration overlooked by classic economic reasoning is the social reward given to the referring customer by the referred customer. Appreciation for matchmaking with a competent business. Gratitude for pointing out the referral bonus. Praise for the referrer’s expertise.
     In the field trials, rewarding both parties worked well. However, the highest rates of referred customers and of retained customers occurred when the rewards were slanted toward the referred.

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Cost Past Customer Satisfaction
Reward Customer Referrals with Congruency
Reference Prices for Referrals

Tempt the Frugal to Spend

Frugal consumers derive pleasure from extending the lives of their current possessions rather than trading the possessions in for newer versions. Researchers at HEC Montréal describe the frugal as not wholly against consumption, but rather as highly skeptical about consumption. Unlike tightwads, the frugal don’t find it painful to spend money. Instead, they are open to investing both their dollars and time if this would maintain the value of what they own.
     This, then, is one basis for tempting the frugal to spend. Offer maintenance services with the benefits statement that such services keep items in tiptop condition. Arrange for special orders of add-ons which allow an old product to better handle current demands. Provide training in how to repurpose an obsolete item for another function.
     To sell additional items, recognize the appeal of slow fashion to the frugal. “Slow fashion” refers to consumers’ desire to purchase items they’ll want to use for a relatively long time. Slow fashion is part of the drive for environmental sustainability. This provides another lever for tempting the frugal to spend, suggest study results from University of North Carolina-Greensboro. To employ this lever, emphasize one or more of three points in your marketing:

• Fair trade manufacturing practices so the welfare of workers is respected. 
• Local origins for the raw materials, the production, and/or the supply so that a good portion of the item’s retail purchase price will sustain the quality of life near where the purchaser lives. 
• Backstories for the items so that the lore surrounding the product or service is preserved. 

     The HEC Montréal studies revealed yet another tactic for tempting frugal consumers to open up their wallets: Make a case that what they currently own is considered inadequate by others whose opinions they respect. This triggers the frugal consumer’s resistance to wasteful behaviors. Using an inadequate product is wasteful, since you are not getting the most for your time and money. Frugal consumers are especially sensitive to self-perceptions and perceptions by others that they are ineffective or inefficient.
     In the research studies, the arguments of item inadequacy were on either functional or aesthetic bases. The functional concerned specifications of the item, while the aesthetic concerned the style. The two were equally effective. Either type from a source a frugal consumer considered to be authoritative successfully moved the consumer toward getting rid of an item with which they had been previously satisfied.

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Loosen Up Tightwads’ Wallets
Slow Fashion Up
Shelve Self-Control with Risk Mates
Sketch Item Aesthetics If Appreciated
Close In on How Shoppers Close Out Use

Improve Weight Loss Diets by Adding Concrete

High-quality weight loss programs combine ample physical exercise with diet restrictions. Hitotsubashi University researchers find that people seriously intending to lose weight tend to think about the exercise and the diet in different ways. Exercise programs are construed at a relatively abstract level having to do with ultimate effectiveness. “How many pounds will I lose?” The diet is considered at a relatively concrete level having to do with the feasibility of eating and not eating certain foods. To increase the effectiveness of the diet, encourage dieters to select specifics which they consider feasible, though not easy.
     Also help dieters avoid traps which can arise from concrete thinking. Calorie counts constitute one such trap. Researchers at Cleveland State University, University of Kansas, and Arizona State University noticed how many food and beverage marketers state calorie counts in potentially misleading ways. An item will be listed as having 799 calories, for instance.
     Do 99-ending calorie counts tempt dieters in ways similar to how 99-ending prices tempt shoppers? For the health-motivated, yes. A group of health-motivated participants expressed higher purchase intention for a 99-calorie beer than for a 100-calorie beer. There was little difference in purchase intentions among those with low health motivation. People with high health motivation expressed little interest in consuming a sugar donut, whether it was said to be 199-calorie or 200-calorie. But they did say they’d feel less guilty eating the 199-calorie version.
     Food names are another likely trap for concrete-thinking dieters. Researchers at University of South Carolina and Loyola University offered study participants a mix of vegetables, pasta, salami, and cheese, all arranged on a bed of fresh romaine lettuce. Some of the participants identified themselves as dieters, and some said they were not on a weight loss diet. To some of each of these groups, the concoction was described as a salad, and to the rest, it was described as pasta.
     Dieters who heard the name “pasta” rated the offering as less healthy than the dieters who heard the name “salad.” The name made no real difference in ratings of healthfulness to the non-dieters.
     In the marketplace, some fruit chews are in fact candy chews, colored potato chips might be called veggie chips, milkshakes can masquerade as smoothies, and sugar water is called flavored water. These name choices increase consumption intentions among dieters.

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Cement Positives by Spotting Concretes
Expect Exceptions to 99-Ending Pricing
Describe Products to Fit Shopper Objectives
Perpetuate the Health Momentum

Discount Doubts About Veterans’ Discounts

Why did consumer evaluations of a T-shirt turn negative when a prominent American flag image was added to the plain green shirt’s front? Was it because the researchers were at China’s Zhejiang University and Shanghai University of International Business and Economics, where there could be anti-American sentiment? Probably not, since the consumers themselves were all from the U.S. Maybe it was because the colors in the flag clashed with the color of the shirt. No, that explanation seems inadequate, too, since the same findings held when the item was a tote bag, an insulated beverage bottle, or shoes carrying other colors.
     Additional studies indicated that the real reason had to do with the consumers, ranging in age from 18 to 66 years, seeing the addition of the flag as a contrived appeal to patriotism. The researchers described the study participants’ reaction as outrage.
     If the flag image followed the words “Made in,” the negative bias faded. Then the flag was no longer a shallow gesture. A still meatier appeal to patriotism is to honor military veterans by offering special privileges such as discounts. Study results from Middle Tennessee State University argue strongly for doing this. Both the veterans receiving the special consideration and people who don’t qualify will build positive attitudes toward the retailer. Tapping into the patriotism of the consumers strengthened agreement with statements like “I have a more favorable attitude toward businesses that give discounts to active military and veterans than those that do not” and “I am willing to pay more for products if it means that active military and veterans will be able to get discounts.”
     As a general rule, you should exercise caution when favoring one set of shoppers. The unfavored can feel cheated. But there’s more. When you tell a customer they’re receiving a price discount, they’ll build good will toward your store. If you add that the discount isn’t available to every other customer, the good will might be even greater. Or your announcement might make the customer uncomfortable.
     Researchers at University of Oregon and University of British Columbia analyzed situations in which a consumer receives preferential treatment in front of fellow consumers. Unless the reward could be shared, most recipients were less satisfied with the product or service than if the treat had been delivered outside the earshot of other shoppers.
     These concerns are unnecessary with price discounts for military veterans.

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Salute Sales to Concerned Patriots
Offer Exclusive Price Discounts Cautiously
Stay Aware of the Drive to Share

Hands Right on the Food, But Not the Furniture

As the popularity of food trucks and fusion cuisine grows, people are frequently eating without benefit of knives and forks. That’s for the good, according to studies at New Jersey’s Stevens Institute of Technology. Handling our food directly leads to greater pleasure from the consumption experience. Middle Eastern, Central American, and South Asian restaurants offer up ample finger food options. Other dining establishments should consider doing so as well, this research suggests. Move beyond the tacos and pizza to sophisticated entrees. Almost any concoction can be handheld if you include a thin flour pancake to wrap it into.
     There is a qualifier on this recommendation, though. The enhanced pleasure from touching the food was seen clearly among people intending to exercise self-control in their eating, and the enhanced pleasure was found to lead to consumption of greater quantities. A dining utensils option will benefit dieters.
     Another qualifier concerns the generalizability of the recommendation that you should promptly encourage customers to fondle the merchandise. Researchers at University of Alabama, University of Wisconsin-Madison, and Norwegian Business School identify some boomerang consequences of a retail employee asking shoppers not to touch specific items. Shoppers in a home goods department store were shown a customizable closet system with an abundance of movable drawers and smooth-siding racks. Some of the shoppers were encouraged to examine the furniture as the features were described. The others were told the closet system was for display only and asked not to touch it.
     In the studies, no-touch instructions caused consumers to counterbalance the loss of freedom by handling other merchandise. This is to a retailer’s gain because decades of consumer research shows how when a shopper feels an item, they become substantially more likely to purchase it. In the store study, the group of shoppers instructed not to touch the closet system subsequently purchased items for a larger total, average $133 each, than did the other shoppers, $53. The best sequence for a salesperson might be to restrict initial touching of certain items followed by presentation of alternatives available for touching and then invitations to touch previously forbidden items.
     The process at work with “Do Not Touch” is called “reactance.” It kicks in when shoppers sense that their freedom of choice is threatened. Reactance occurs across cultures. It’s found not only in places like the U.S., where individual initiative is treasured, but in collectivist cultures like South Korea.

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Sense the Pleasure from Tactile Ordering
Fork Over Those Smaller Plates
React When Faced with Reactance

Perfect Mistake Claims in Reviews

When buying beauty products, a consumer wants to avoid errors. So why would Yale University and University of Toronto researchers find that Sephora shoppers pay greater attention to purchase recommendations from shoppers who point out mistakes they’ve made in their own purchases? Reviews of haircare products on the Sephora site which included phrasing like “mistake,” “my error,” or “my bad” were rated by readers as more helpful than those not using such phrasing.
     The effect isn’t limited to haircare items from Sephora. Similar results were found for reviews of headphones, spearmint mints, and florists. Shoppers place greater trust in recommendations from others who talk about their previous purchase missteps in that item category. As to why, the researchers find that consumers usually attribute a higher degree of expertise to people who recognize their errors and are confident enough to admit them.
     Encouraging your customers to reveal their mistakes, especially if those mistakes concern prior transactions with you, may seem like a strange marketing tactic. In the research studies, the reviewer wrote about how they’ve learned from the blunder. This may be necessary for the review’s effectiveness. However, a substantial stream of consumer behavior research finds that a sprinkling of any sort of negative adds believability to the positives. When there is no mention in the reviews of areas for improvement, shoppers’ trust in reviews fades.
     Further, when the shopping decision is significant, reviews which include both strong positives and a few negatives develop curiosity. The curiosity can lead to the shoppers wanting to check things out for themselves. Once you have their attention, you’ve the opportunity to persuade them.
     Do it with appropriate humility, though. 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.
     Based on that finding, here's the hint for retail salespeople who are seen as product or service experts by shoppers: Avoid coming across to the customer as absolutely certain in the recommendations you're making. The bit of uncertainty makes the customer 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 needs.

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Grouch If Store Reviews Are Grouch-Free
Sell More by Being Less Certain

Remedy Safety Overconfidence

Skier Heidi Julavits’ avalanche safety instructor cautioned his students about the indisputable statistical evidence: As a result of participating in his workshop, the students would become much more likely to die in an avalanche.
     With her subsequently written New York Times Magazine article, Ms. Julavits reports the main reason as overconfidence. People who believe they know how to avoid avalanche dangers choose to ski in areas susceptible to those dangers and otherwise persist in the face of avalanche signs. My guess is that the instructor’s warning was not intended to discourage workshop enrollment, but rather to stifle overconfidence. When preparing your customers, clients, and patients for a course of action which is markedly risky, provide the same. A caution to remain cautious. One tip in the avalanche safety workshop was to test snowpacks for proof of instability rather than proof of stability. When testing for stability, you’re seeking permission to go ahead.
     Permission to go ahead also can arise from backup plans. The availability of smoking cessation programs can lead to people smoking more, since the people get the impression they can stop anytime they choose to. And once a consumer has gone through a debt consolidation program, that consumer may become more likely to spend irresponsibly, since the consumer figures they can go through a debt consolidation program again. Researchers at University of Pennsylvania, University of Florida, and University of North Carolina-Chapel Hill point out how backup plans—in this case, what is called remedy marketing—can have unintended consequences.
     As a marketer, also remedy for yourself any overconfidence in safety when collaborating with others. Working with retailer colleagues or with your suppliers has many advantages. And handling risks is an inevitable component of ongoing organizational success. But the risky shift often looms.
     “Risky shift” refers to how groups of people make more extreme recommendations than if those people acted individually. Being insulated from full responsibility by the group, members of a committee can find themselves tempted to take potentially perilous chances. Contributing to the risky shift regarding avalanches and high stakes marketing are the temptation to exploit unexplored terrain, pride in commitment to a challenging outcome, and a reluctance to call for a halt when with enthusiastic partners.
     Taking on considerable risk is sometimes necessary for successfully achieving objectives. In appreciating the advantages of exercising caution during those situations, you will help ensure the success is ongoing.

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Know Correlation Won’t Tell Causation
Caution Shoppers for OTC Safety
Back Away from Backup Plans
Tune In to the Supplier Channel Together
Pay Your Dues, Then Do for Yourself