Make Your Next Best Offer

Decide what type of product or service your customer will want before he himself knows. This way, after he completes the purchase of one item, you can guide him toward the best selection in the next category. Researchers at Babson College, Citibank, and Deloitte Consulting LLP refer to this as the salesperson’s skill at identifying the NBO—Next Best Offer.
     They find the timing of the NBO as well as the NBO item itself is determined by more than what will satisfy the shopper’s needs. As important is what will serve the retailer’s goals. If the goal is to increase the current sale, the NBO might be made immediately and be for an item stocked close to the one just selected. If the goal is to add on sales by tempting the shopper to return to the store soon and often, the NBO might involve giving the customer a coupon for a discount on a specified item on her next visit.
     The more you know about the customer, the better you’ll be at NBOs. On the other hand, you must be selective in your information gathering. Ask too much and you’ll frighten the shopper. Spend too much time asking questions and you’ll irritate the shopper.
     Something too often overlooked in analyzing the data is that shoppers’ preferences move in cycles. Researchers at University of Utah and University of Iowa find that monthly paycheck cycles affect not only how much money people will spend on merchandise, but also the types of merchandise they’ll find most attractive.
     In the days soon after receiving a paycheck, consumers with full-time jobs become more interested in products and services which help them gain more than what they currently have. This is a time for you to suggest the latest technologies and the toothpaste claiming to whiten teeth.
     Then as the days after the paycheck pass, the person becomes progressively more attracted to products and services which help them avoid losing what they have now. They'll become more interested in nostalgia items, familiar brands, and the cavity-fighter toothpaste. The researchers determined that this cycling was not due to a declining checking account balance or to the pricing of different types of products.
     The retailer using NBOs should also cycle, according to the Babson/Citibank/ Deloitte researchers. The best salespeople learn from the results of past NBOs, building their skills for the next round with the consumer.

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Predict Consumer Preferences by Asking Why
Merchandise to Fit Purchasing Cycles

Take Refuge from Controversy in Principles

“I don't care what they say, as long as they spell my name right.”
     Researchers at University of Delaware and University of Hartford published their findings with this as the title. The studies tested the claim that any publicity, even if negative, improves profitability.
     The researchers say it doesn’t. However, research also identifies an exception: If you can take refuge in principles important to your target audience, the controversy tossed around by negative publicity can lead to you being noticed without being hurt.
     A decade ago, Chrysler Group—the company selling the Dodge Ram truck—paid for a marketing campaign which included hate mail about Dodge Ram drivers. The objective was to stimulate protestations of love for the truck.
     The campaign’s designers set up a website on which was posted a video of a drag race won by a Dodge Ram. There was no mention of the name, only images of the distinctive grill design. The impression from looking at the site was that it was designed by and intended for fans of the Dodge Ram. In fact, though, it had been set up by a marketing team.
     Next, the team starting sending letters to newspaper editors bemoaning the increase in drag racing and blaming Dodge Ram drivers for it. This produced spontaneous statements of praise about the truck and its owners. The praise was for upholding the principle of the open road.
     An example these days comes from the yoga-based retailer lululemon athletica using the slogan “Who is JOHN GALT?” on their shopping bags.
     First off, this action seems to be the company upholding the right to completely shun upper-case letters in proper names or use only upper-case letters in proper names, at will.
     But there’s more to it. Some people say that because the John Galt slogan is an integral part of Atlas Shrugged by Ayn Rand and because Atlas Shrugged advocates self-interest over social responsibility, these people now hate doing business with lululemon.
     How do I know that some people are saying this? There are articles about it in Maclean’s, The New York Times, Retail Customer Experience, and Daily Finance. The last of those four includes a recommendation to buy stock in the company.
     The articles also report how supporters of lululemon athletica praise the company for advocating principles of personal empowerment: The slogan is about John Galt, not about Ayn Rand.
     Nice PR outcome, lululemon?

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Arouse Lovers by Flaunting Haters
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Present Low-Risk Comparisons for the Nervous

In comparative selling, the phrasing we choose could be saying to the prospective customer, “The item I’m suggesting to you is better than the alternative you’ve been considering.” Or our phrasing might be communicating, instead, “The alternative you’ve been considering is not as good as the item I’m suggesting to you.” It’s a positive framing versus a negative framing.
     Does it make a difference? Researchers at Babson College and Western Kentucky University find that it does.

• When presented the comparison as a positive frame, shoppers tend to analyze the product features more carefully than when a negative frame is used. If your good reputation as a retailer has not been firmly established, you’re more likely to influence the shopper by using a positive instead of a negative framing.
• When presented the comparison as a negative frame rather than as a positive frame, shoppers become more likely to consider the quality of the store surroundings, how much expertise the salesperson seems to have, and how positive a mood they find themselves in. They’ll still look at the lists of features and compare the prices, but these will carry somewhat less importance when there has been negative framing.

     A third alternative is to say to the consumer, “What I’m suggesting to you is just as good as the alternative you’ve been considering.” It’s not that one is better or one is worse.
     Are there situations where this phrasing is best?
     Yes, say researchers from Indiana University, Northwestern University, and New York University. The situations are ones where the shopper believes the decision is a risky one. With one or a combination of the following sorts of risks, the shopper wants to know that, whichever choice she makes, it’s likely to work out fine.

• Functional risk: “Will the product or service solve my problem or meet my needs effectively and efficiently?”
• Financial risk: “Am I paying too much money?”
• Time risk: “If I make this purchase, does it mean investing too much time for what I gain?”
• Physical risk: “Is my health or safety or that of those I love in danger if I use this product or service?”
• Social risk: “If the people I admire know I’m using this product or service, am I in danger of falling out of favor with them?”
• Psychological risk: “Does using this product or service conflict with the image I want to maintain of myself?”

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In Comparative Ads, Don't Show Users
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Reduce Unwanted Risks for Your Shoppers

Effect Spillover Buys via Surprise Specials

In a research article published a few years ago, Professors Narayan Janakiraman at University of Arizona, Andrea C. Morales at Arizona State University, and Robert J. Meyer at University of Pennsylvania asked readers two questions:
     “Consider a consumer who makes an urgent late-night visit to a local supermarket to purchase a pain reliever. Upon arriving she notices that the store is offering routine discounts on a number of unrelated goods such as milk and paper towels, and she makes a mental note to pick up a few on the way out.
     “But she then encounters an unexpected shock: She sees that the pain reliever is being sold at twice its normal price. Will this negative surprise affect her decision to buy the other, unrelated, items she saw in the store?
     “And what if the situation were reversed; would she be any more likely to buy extra items if the store was offering an unexpectedly large discount on pain relievers?”
     From your retailing experience, how would you answer those questions?
     The correct answers have to do with cross-category spillover effects. When a shopper encounters an unexpectedly high price on an item in a particular category, she becomes more likely to purchase an alternative in that same category, but less likely to purchase items in the store from other categories. If the name brand pain reliever is being sold at twice the price she expected, she’s more likely to buy the house brand pain reliever, but she becomes less likely to buy the milk and paper towels, even if they’re being sold at a discount.
     The answer to the first of the two questions above is “Yes.”
     That’s also the answer to the second question. In the Arizona/Pennsylvania study, participants had to buy an essential item at the store because they were completely out at home, and they also could buy other items while at the store. In one experimental condition, the essential item was priced 80% lower than usual.
     This surprise discount resulted in about an 8% increase in the quantities purchased of other items available at the store. On average, this could much more than make up for the lower profit on the item sold at the 80% discount.
     This study doesn’t stand alone. Other researchers found that giving shoppers an unexpected cents-off coupon for the purchase of one product in a store increased overall spending at that store.

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Have Unannounced Discounts on Common Purchases
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Leverage for Changing Consumer Behavior

With a name like Unilever, you might expect them to announce one, not five, levers for changing consumers’ behavior in buying and using products.
     Unilever’s broad portfolio of brands includes Dove, Vaseline, Lipton, Hellman’s, and dozens more. Chances are their products are on your shelves or the shelves of a retailer in your area. They’re sold in 180 countries.
     The “Five Levers for Change,” were developed by a team of experts which included Dr. Richard L. Wright, Behavioural Science Director at Unilever. I’ve topped off the list of five with two bonus tips and added a few research-based angles:

• Make it important for yourself and for your customers. Before you undertake efforts at behavior change, check that you’re aiming for differences which will benefit all around. You’ll earn a higher profitability. The customers will achieve better value than they are now.
• Make it specific enough. Identify the current set of consumer behaviors, the desired replacement behavior set, possible incentives for the consumer making and sustaining the change, and likely disincentives for the consumer making and sustaining the change. Not overly specific, however. Recognize there are almost always a variety of ways consumers can change their behaviors to achieve your desired outcome.
• Make it understood. Raise awareness of the benefits of the change among consumers and your retail staff. Don’t assume that people promptly recognize why they should change. Acceptance often requires repetition over time and reminders in a variety of ways.
• Make it easy enough. Confidence comes from convenience. Convince consumers that they are capable of making the changes. At the same time, maintain enough difficulty to intrigue the consumer and let them know this change is more than trivial.
• Make it desirable. Show how the new behavior fits in with how the consumer likes to think about herself and enhances what others will think of her. Your promises here can range from helping the consumer to show off to allowing him to show social responsibility.
• Make it rewarding. Once your customer has changed his behavior, point out the gains. Unilever says that this step demonstrates the proof and the payoff.
• Make it a habit. You want to maintain sufficient motivation to hold the changed behavior in place. After it’s carried out repeatedly, it becomes part of the consumer’s repertoire. To the degree you can, catch consumers at the times they’re choosing what to do.

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Acknowledge Inertia in Consumer Behavior

Feather Your Shoppers with Light Thoughts

Researchers at National University of Singapore have been studying the effects of a shopper’s physical tension on purchase behavior. In collaboration with University of Chicago researchers, they found that clenching one’s fists at the moment of temptation strengthens resistance to making a buy.
     Timing counts here. If the shopper bunches up his fists, extends his fingers, contracts his calf muscles, or stiffen his biceps too far in advance of facing the temptation, he will fatigue himself, with the result that he’s actually more likely to end up succumbing.
     This suggests that when your prospective customer is tense at the moment of the sale, it will be more difficult for you to overcome objections. I guess you could keep the tension high for a while, fatiguing the prospect into submission. Better yet, though, is to relax the shopper a bit.
     That idea is central to a later set of studies, this time in a collaboration of researchers at National University of Singapore and Chinese University of Hong Kong. First, it was confirmed that physical tension does lead to consumers taking relatively routine purchase decisions quite seriously. To produce tension, the participants were asked to hold shopping bags full of water bottles. Then another set of participants who had carried the heavy weight were instructed to think about feathers and balloons. It turned out that this was sufficient to lighten the mental load. These feather-weight participants were more open-minded when thinking about purchase evaluations.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Clench Your Fists to Fight Temptation
Start Your Shoppers Feeling Yes
Lift the Spirits of Your Customers