Scarcity is Scary!

limited time saleWhat is Scarcity?

Scarcity is the notion that we live in a world with limited resources some of which cannot be recreated.  Scarcity drives fear into people.  The Black Friday mania that we see each year after Thanksgiving, is driven by Scarcity.

These buyers no there are great deals on a limited number of items.  They fight to get in the door so they can take advantage of the deal.  We see people camp out for days just to save money on a material item.  Some people think this is insane while others think it is fun.  Families have turned this into a time of bonding.

Scarcity to Drive Sales

On your website, offer sales for a limited time is one example:

limited time saleThe example above is an example of a limited time offer which tugs at ones desire to GET IT NOW while you have the chance.

This next example shows the limited quantity available example:

limited quanitit

Scarcity and sales

Humans want things that other humans cannot have, and when these things are limited the value is automatically increased regardless of what it is.

Before Gold was made into jewelry it was still a valuable commodity because it was scarce.  Something like gold where a lot of work is done to retrieve the gold from the ground inherently increases its value.

You have probably seen many furniture stores close in your town having a big blow out sale for a limited time offer.  The store may close for a month or so, then they reopen the next month selling roughly the same items as before.  Watch that store and see how many times it goes out of business.

One craze I remember is the Tickle me Elmos dolls that were going for over $1,000 dollars simply because children wanted them.

In Holland in the 17th century there was a Tulip bubble where Tulips were a commodity.  Tulips were viewed as a status symbol, so the more you had the richer you appeared to be.  This drove the Tulip bubble.  The prices rose until one day the bubble ended.   Many of the sales of the tulips were made in futures contracts.  These deliveries were never made because the price of the Tulip eventually crashed.

Here is the Wiki page for this event https://en.wikipedia.org/wiki/Tulip_mania#History

Use it or you will lose it

Just kidding you will never lose it, just a little scarcity humor there for you :).  You can use this to increase sales.

As always Keep working at it, and you will see the results over time.

If it doesn’t cost a dime then it is going to take some time.

 

 

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Chialdini and the Authority Principle

What is the Authority Principle?

The Authority principle is related to the fact that we believe people we perceive as experts.  We want to learn from people who are more intelligent than us, if we perceive an individual as beneath us then we will not believe what that person is saying.  This is why in face to face sales if you are selling a sophisticated product, you should look sophisticated.  You will also need to speak intelligently and with confidence.  The focuse of this blog is e-commerce, so I will try to give this principle an e-commerce application although, I do think this one is more effective in person.

chialdini authority

Referencing Experts

In the picture above this is a weak attempt at an online store to attempt using the authority principle to convince customers their product works.  They can improve this by adding actual doctor references to their site, and the reviews need to be from real doctors that can be googled.  You do not want to get caught faking reviews from fake doctors.   The credibility of products like this is very important.

If you are selling fitness equipment online for example, you should provide written testimony from experts like personal trainers or athletes who back your product.  This lends your product a great deal of credibility.

It is better to price your product higher if it is special in some way.  If you are claiming your product is special and getting people to recommend it.  The product should be priced higher in these cases.  A product that is perceived as cheap due to its price point will not be purchased by people looking for something that actually works.  Increasing the price of a product backed by professionals in your industry lends it more credibility.

Authority Example

If my cousin worked at a Nike factory and was able to get me Authentic jerseys for a low price.  Hence I could sell these at a lower price to make profit.  I would be at a lower price than the store, but a price high enough to make myself money.

Besides this being illegal, it doesn’t work as you might expect.  If I was on the street selling the Jerseys. I could tell every person about my cousin who works at the factory.  This would be my story on how I got these jerseys.  Would anyone actually believe that?  If it were true would the average consumer be able to spot a fake if it was extremely well made?  The consumer wouldn’t know either way if I was lying or telling the truth.  The jerseys would be cheap so they would assume they were fake.

They could pay $100 and get a real jersey from the store, or pay $40 to get a real jersey on the street.  The only difference is they pay $100 and get it from the store directly.

You need to build the trust

In the jersey example, the only way this works is if the people buying the jerseys from you already trust you.  They would be more inclined to believe your story and more likely to buy from you.

E-commerce applicaton

I would suggest adding an expert testimonial page where applicable.  Perhaps ask real experts to send in video testimonial so you can paste that.  Also you will need to offer these professionals something in return, but the value this can bring is hard to calculate.  Your reputation is everything, so these experts can build your credibility.

Good luck and happy selling.  Use Shopify if you are looking for a great shopping cart platform. so here is the link:

mothers day

 

Using the Liking Principle on your E-commerce Site

What is the liking principle?

The liking principle shows that we buy from people we like or find attractive.  If you hang out in a college town there might be representatives from different beer companies at the local bars.  These people are there to get you to drink whatever beer company they represent.  They start by offering you something like a free round if you buy one round.  The hope here is that you will continue drinking that beer for the rest of your life because you remember the time this attractive female (if you are male) offered this beer to you.

Many outside sales representatives are generally attractive people though this doesn’t have to be true.  The attractiveness helps people get in the door initially, it is up to them to close the sale.  I have seen some wealthy sales people who wouldn’t necessarily be considered attractive because they can influence a buying decisions.Chialdini Influence

Are you more likely to buy?

Do you think you are more likely to buy from the site above how it is shown, or if the site was just the outfits without the models wearing them?  Chialdini’s principle will say that you are more likely to buy from the site with the models wearing the clothes.  Some of the models could be smiling and looking at the camera.  The one on the top right is the most friendly to me personally because she is staring at the camera and smiling.

It is hard to use this principle online because a lot of the liking principle has to do with personal connection.

We buy from people who are similar to us

Since we buy from people that are similar to us, you need to identify your target market and customer.  If you are a retail apparel store, your website should have models that mirror your target market.

If you are selling things for use in the technology industry, you should have models using your products that will look like your customers.  Use all available stereo types for your industry.  Stereo types are there because they are true more times than not.

Speak Their Language

When you are crafting content for your website, make sure you are using the same level of language you think your customers will use.  Use industry jargon if your site is an industry specific site.  You need to do a comprehensive study on your customers so you know who they are.  This will allow you to have a more personal connection with them even if it is through the internet on a store front.

mothers day

It won’t always work

Be aware that all of these tactics wont work all of the time, but if you are having trouble getting sales, then this could help you out.  The important thing is to remember nothing works 100% of the time.  Some of the things you try may fail and others may work.  As long as you are determined enough to keep trying, eventually you will find what works for your customers.  Thank you for reading, and I welcome any feedback through the comment form below.

If you enjoy this blog, share it!

Thank You for your help

 

Chialdini Social Proof principle in Ecommerce

What is Social Proof?

Social Proof is a principle that basically states that people do things because people around them or doing the same thing.  This is putting it in very basic terms, but this can be a powerful principle.  It is one of my favorites to study.  Social networks often prove that social proof exists and works in marketing.  The youtubers with the most followers generally make the most money or have the ability to make the most money if they negotiate right.  Because if you have 1,000,000 followers then the companies view you as more influential than someone that has 10,000 followers.  That person with 10,000 followers could be a famous person that never figured out how to use youtube, so this is not always the case.

Amazon uses Social Proof

When you purchase something on Amazon you are shown recommendations for things based on what you just bought.

Chialdini Social Proof

This is convincing you that other people just like you bought these other things, so you should probably buy them as well.

How can you use this?

Amazon gets this one a bit wrong when they word it like this.  In your store, you can set up something like this only say “90% of my customers who bought what you just bought also purchased these other items”  Show the things where this is true and you will see better results than Amazon on this.  The information has to be correct, don’t just say it because you think it will increase sales of another product.  It has to be believable.  Amazon always shows things that are exactly related to what you just purchased.

On the front page of your website you can set your popular products to pop up for quicker checkout.  The message with the pop up can say for example: 90% of customers visiting this site order this product, here is a link for easier check out.

Use with Reciprocity

When you get an order online, include a note with a free sample of another product that states:  Thank you for your order most of the people who bought what you did from our store also enjoy this.    They will love that you thought of them specifically, and they will turn into advocates for your site. Try  it out and let me know if it works out for you.  Leave a comment below.

 

Chialdini’s Commitment and Consistency Principle

Chialdini says what?

With the commitment and consistency principle, the idea is that people who take on a small commitment for your are likely to commit to something larger in the future.  Using this Blog as an example, let’s say I wanted to offer free website design service for my readers.  I would build your site using Shopify:

mothers day

After I built your site to the specs you suggested for free.  I could then ask you to start out with the most basic Shopify plan of $29.  This would obviously benefit me as well due to the affiliate link here.

How can you use this?

shut up and take my money!

You can use this principle by asking a question up front upon entry to your site.  You ask something small of the customer like “if you think our site is great, will you share it with one friend?”  then have a box pop up to check yes or no.

After this, once the person who clicked yes gets to check out, have something programmed to bring up a referral e-mail list.  When your customer e-mails their list they will have fulfilled the commitment to share with one person.  On the e-mail from put up to 5 names, and you will see your customer begin to refer more of their friends simply because they said they would.  If you include a coupon code with the share then you will see sales increase even more.

Friends trust friends

When people see an e-mail from their friends they open it.  Using this strategy will also get you more direct referral hits because the people receiving the e-mail will see a friendly person to them sent the e-mail.

It will be hard for the original purchaser to say anything negative about your product since they have now referred people to you for business.  Since they will not want to give bad information to their friends, they will always praise your product.

If they were to speak negatively about the product, they would face the question “why did you send me the link if your hate the product?”  This will diminish their friends trust if they had to admit something like that.

Encouraging the Statement

You are encouraging the statement about your product when you do things like this.  They need to own it once they have sent it out to people they consider friends.  Your customer will need to answer yes to something at the very beginning in order for this to work.  They have to make a promise to share if they buy.  When they buy give them a large form to refer as many e-mails as they can.

The Video testimonial

Something unique you can use to show these reviews is give people an opportunity to send a video in about why they bought and like the product.  Moving forward, you will feel more obliged to help this company out through referrals.

How can you use this?

I am interested in learning how you can use this principle for your business?  What sort of commitment can you gain from your customers that will lead to future sales?  Leave a comment below and happy selling.

 

Robert Chialdini

The Six Principles of Influence from Dr. Chialdini

Influence by Dr. Robert Chialdini

Dr. Chialdini wrote a book titled Influence.  If you are in sales of any kind, then you need to read this book.  You can find it at any book store or even online.  In this book Dr. Chialdini discusses ways in which people are influenced when making decisions.  There are many things that influences people’s decision when they buy something online or in person.  Even when people don’t think they are being influenced they are.

What does it mean for you?

You need to understand that these principles are real.  They have a real effect on people.  If you can understand them and use them to your advantage, then you can increase sales.  How do you think Amazon does this?  By using studies like the ones used in Influence to figure out why people buy.  This changes from generation to generation.  Over the next six days I will post about one principle in depth using examples.  I will apply it to the e-commerce world and show you sites that are using them.

Reciprocity

The idea behind Reciprocity is that we as humans feel obliged to do something for others when they have done something for us.  Let’s say a co-worker you don’t normally talk to needs $5 for a company lottery pool.  No one carries cash but you have $5 so you give it to this person.  They say thank you and pay you back later.  Even though they paid you back the fact you did them a favor will give them a sense of obligation if you ask them for something in the future.  This site makes an attempt at reciprocity:

Influence Robert Chialdini

the site is www.urbanrituelle.com.au  they advertise the Free Gift, so the consumer is not viewing it as a Free Gift just like they don’t see Free Shipping as Free.  Free Shipping is still great to advertise because consumers don’t need to worry about what the shipping charge will be before they get to check out.

There are also different gifts at different levels which moves farther away from the Reciprocity principle because if they move from $70 to $80 in their cart they will know that they are going to get a better gift at $80 than at $70, so they calculate whether or not the gift is worth the extra $10 or not.  They are weighing this in their head as opportunity cost.  They are not going to run out and tell their friends about this site because of the “gift” they received.

Just Give the Gift!

Just give the gift without advertising.  For this site it would be fine to give the gift at the different levels without ever telling people they are getting different gifts.  The person who receives the free $80 gift without knowing they were going to receive is more likely to tell their friends about this experience.  They will write about it on facebook or some other site.  If you do this with sales on Amazon, you can tell them you gave them the free gift as a token of appreciation.  Then talk about your website.

At this point what you want to do is ask for the favor.  Ask them to go to your website and send you feedback on it.  When you receive the feed back, thank them in reply.  Tell the person you are going to give their feedback to your web developer.  This will give them a sense of personal stake in your business.  It will also give you a great way to have customers go to your site and give valuable feedback from people who are interested in your product already.

Buy the book

There is research and data behind the information I have given you.  This is just one example of how Reciprocity can benefit you and your business. Leave a comment, let me know your thoughts on this.  Have you ever received a free gift from a company unexpectedly?