Getting More Recurring Plan Signups

Our objective is to get people to buy the monthly auto-ship plan (and not the one-time option).

Here is the control (what’s online now):

Zone_Control.png

Everything is laid in front of the user. This can cause analysis paralysis (too many options). Also, the shopper is likely to pick the one-time option because they don’t want to get into a monthly membership.

I had an idea to make this better. This is what I would have done if I was working on this site.

We added a priming treatment. The idea is to activate System 2 for the shopper. Where System 1 cares about the short-term (impulsive emotional side), System 2 cares about the long-term (rational side).

Now when the user reaches the product page we show a welcome message and ask them to make a selection:

Test_Default.png

This activates System 2. We fully expect most shoppers to select, “I want to change my life for the long term” option. Who wouldn’t? When they do that we show them this screen (notice we’ve eliminated the one-time purchase option):

Test_Option_2.pngThe user will be surprised but immediately remember, “Oh that’s right, I did say I wanted long-term benefits”. It’s now 7% more likely people will stick with this choice.

If the shopper had selected “I’m looking for benefits on the short term” they would have seen this:

Test_Option_1.png

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Apples to Oranges

The best way to prevent your shoppers from comparison shopping is to make it impossible for them to comparison shop. To do this we use a tactic called, Price.

Definition: Price is a technique where we (marketers) shift shopper focus away from the physical price of the item. This can be done 312 different ways. One way is to focus on value, another is to use price anchoring, decoy pricing is a third, apples to oranges is a fourth, etc.

Here is an example of how a brand can use “apples to oranges” tactic to prevent comparison shopping.

When you shop are Toms you don’t just buy 1 pair of shoes. You also help gift shoes, sight, water, safe birth, and prevent bullying:

Toms_Shoes.png

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Can Price Sensitivity Be Influenced? Yes

Written form of the video above:

As marketers, we tend to want to put the consumer into price buckets.

I’ve had conversations where the marketer would say: our target audience are retired people, or our target audience are people who make over $130k.

This implies an affluent shopper who is price insensitive is price insensitive for ALL purchases. And someone who is price sensitive is also sensitive under ALL scenarios.

Price sensitivity is situational. Here is my story. I use a marketing tool for work and spend several hundred dollars on it each month. It doesn’t bother me at all.

I also have an iPhone app called AnyList.com which we use maintaining our grocery store. It’s great and I’ve been on the free plan for years.

I recently wanted to add a picture of a food item to the app so I could identify it at the store. That required moving to the paid plan for $11.99 / year for a family. The moment I upgraded I realized I had made a mistake because their individual plan for $7.99 / year was a better fit (since we have just one account). I immediately emailed their customer service team. It took a few minutes to locate their contact info and compose an email to explain my situation. Keep in mind the difference was $4 / year. Four dollars a YEAR. In other words, I spent more time writing the email. So, what happened here? What happened is that I was being situationally price sensitive. I didn’t care about the few hundred I spend a month on the marketing tool because I’m primed to pay for those “types” of services. But paying an extra $4 a year for an app that I’ve been using for 6 years didn’t seem like a good deal. Why? It’s because in my mind apps are free.

I’m the same person, yet I’m behaving in two completely different ways, simultaneously.

My point is that affluent customers can be super price sensitive depending on a situation, and lower earning buyers can be super price insensitive depending on the situation.

Marketers can influence the situational price sensitivity of the shopper. How? By telling better stories.

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Is Loss Aversion a Real Thing?

Sure it is.

Do I (the reader) suffer from it? Yes, you do.

Let me prove it. Which option would you pick between 1 and 2 below?

Option 1: Get $900

Option 2: Take a 90% chance of winning $1,000 (and a 10% chance of winning 0)?

If you picked option 1 you have a full blown case of loss aversion because the outcome of option 1 and 2 are identical. Don’t feel too bad, I picked option 1 too. It isn’t our fault, these are deep-rooted cognitive biases.

Can I, as a marketer, use loss aversion to convert more shoppers? Yes, and I’m glad you asked.

Instead of phrasing your marketing message as “buy xxx and save $100” phrase it as “don’t lose $100. Buy xxx.”

Are you still struggling with option 2? I know I struggled with it. Because in my head I didn’t understand how 90% chance of winning $1,000 equals $900. If I have one chance then I either get $1,000 or $0. $900 option doesn’t make it into the equation. Economist Daniel Kahneman has a suggestion: thinking in terms of probability only works if you realize we are going to be making multiple probability bets in the course of a lifetime. Don’t think about this one gamble, think of it as 100 such similar gambles with a 90% chance of winning $1,000. Obviously, people don’t look at things that way, which is precisely why nearly everyone picks option 1.

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Asymmetric Dominance Effect

Is a tactic where an option that is inferior is added to the comparison set. The lesser alternative makes the option that is dominated look more appealing.

Experiment 1: Students are presented with 2 annual subscription plans:

Option 1: $59 for online access.
Option 2: $125 for print and online access.

In this experiment, 68% chose print option, while only 32% chose online only.

Experiment 2:

Option 1: $59 for online access.
Option 2: $125 for print only.
Option 3: $125 for print and online access.

Now 84% chose the print and online option, while only 16% chose online only. No one chose the print-only selection.

Source: Dan Ariely experiment.

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Shopper Discounts Explained

Retailers give discounts to shoppers to nudge them to buy. On the face of it, one would assume discounts are the best way to improve conversation rates. But, it’s being done so much shoppers have become desensitized by discounts.

When buyers see that an item has been discounted $50 they disregard the discount amount and just look at the final price. So, whether the markdown is $2 or $50, it’s not taken into consideration, it’s ignored.

The solution? Grab the user’s attention by explaining why the discount is being given.

When you offer the shopper an explanation for why something has been discounted, it not only gets read, it improves conversion rates.

Check out the example we threw together for you below (we added the text why we’re discounting $36):

Discount_Explanation_Blog_Sample_A

When “Why we’re discounting $36” is clicked we’ll show this popup message:

Discount_Explanation_Blog_Sample_B.png

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Generating the First Sale

Eco-Fill® Deluxe 2.0

Here are details for paper system (product on the right):

1: It’s more expensive over the long run ($4.99/month versus one-time fee of $14.99)

2: More steps involved in using paper system.

3: The flow of coffee is slower with paper system so I have to wait longer for 1 cup of coffee.

4: Earth-unfriendly.

My mother-in-law raves about Eco-Fill® Deluxe 2.0 (product on the left) and is always reminding us to switch from earth-unfriendly option to the paperless system.  But it took us a whole year to give it a shot.  Habit is a hard thing to break.

This is the same resistance you have to overcome on your site.  You may have a far superior product to what the shopper currently has but just listing 5 features is not going to be enough to overcome the bigger urge to do nothing.  You have to work harder.  But the rewards are amazing on the other side.

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The Sway of Free

This is the cart page on saffronrouge.com

The shopper is about to purchase a $21 item.  As a store owner you know there is a 40%+ probability this potential buyer will abandon.  When I clicked CHECKOUT this is what I saw on next screen–

This is a genius conversion tactic for two reasons–

1: The shopper is being distracted by two free items.  This unexpected ‘gift’ completely shifts focus away from the $21 item and to the free items.

2: Saffronrouge.com presents shoppers 12 free items and asks them to pick any 2.  Studies show when shoppers can drive their own experience they covert at a higher rate.

Another clever touch is that if a shopper clicks Soothing Herbal Recovery Gel, one of the free items listed, product details are shown on the same screen–

It’s always a good idea to keep shoppers who start checkout within checkout flow.  We saw this in the eyebuydirect.com example too.

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Magic of a Loss Leader

Definition: A loss leader is a product sold at a low price (at cost or below cost) to stimulate other, profitable sales.

If etailers analyze their sales data they’ll see a familiar pattern- a small percentage of visitors buy, and those that buy once often buy again.

Before discussing loss leader strategy let’s understand what is happening online.  According to Practical Commerce, there are 600 available shopping carts.  Magento, which is just one of those 600, is the cart of choice for 75,000 etailers (source). Long story short, there are way too many online stores. Translation- to succeed etailers have to figure out a way to improve first purchase metrics.

This is where a loss leader can be useful.

Few rules for picking a loss leader-

1. It should be an item that appeals to early-stage shoppers.
2. It should be an item with broad appeal.
3. It should be an average ticket item (when choosing between a $50 and $94 dollar item pick the one priced @ $50).

For a gardening site like cleanairgardening.com Grow Your Own Food Made Easy Book is a good loss leader because it fulfills criteria 1, 2 and 3.

Here is how I’d implement the idea.  Identify new visitors through a cookie.  For new visitors display a banner graphic with the text- “Welcome first time visitor.  We have a special one time offer for you…”

Clicking this drives traffic to a page (/welcome.html) with a two sentence intro. Below that is a paused video welcome message. In the video, the CEO/founder welcomes the visitor, mentions why she started the company, talks about their unique selling proposition, presents the loss leader and notes this a one-time lowest-price-on-the-web offer. Below that we display a photo of the loss leader with an add to cart button.

Split test /welcome.html to see conversion lift. Advanced users can split test different loss leaders to identify the best one.

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