Category: Marketing

Reducing Choice, Increasing Revenue

According to the Toronto Globe and Mail, some major retailers and consumer product companies are experimenting* with reducing the choices they offer. The results are often positive:

Several months ago Wal-Mart  Canada Corp. decided to overhaul one of the staples of its grocery business – the peanut butter aisle.

It dropped two of its five lines of peanut butter to free up scarce shelf space for cinnamon spreads. But the decision didn’t cost the retailer a single jar in sales. With fewer selections to browse, customers wound up purchasing more than before.

“Folks can get overwhelmed with too much variety,” said Duncan Mac Naughton, chief merchandising officer at Wal-Mart in Mississauga. “With too many choices, they actually don’t buy.”

… P&G, maker of Tide detergent and Ivory soap, recently reduced the number of its soap and other skin care offerings by about one-third at one retailer, while cutting the array of detergents and other fabric care products by about 20 per cent at another chain.

Following the cutbacks, sales grew in each category. “In the skin care example, shoppers reported they felt that they had more choices because the selection on the shelf was clearer,” spokeswoman Jennifer Chelune said.

* An executive at Costco who read the same article told me this:

Costco has been “experimenting” with limiting the number of items in our warehouses for over 30 years.  We carry no more than 4,000 items in comparison to a Wal-Mart or Fred Meyer, which may carry 120,000.   So when we stop carrying someone’s favorite item (White Cheddar Popcorn or Pickled Asparagus), we aren’t trying to offend them — we are just audacious enough to want to make MORE MONEY.

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More Choice = Less Action

I recently walked into a McDonald’s in Orlando, Florida carrying a simple set of instructions: return to the hotel with three Egg McMuffins and three orders of hash browns.

I walked up to the counter and placed my order.

Me: Three Egg McMuffins and three orders of hash browns, please.

Woman at counter: Our Egg McMuffins are $2.59 each or two for $3.00.

Me: Okay, give me four.

Woman: How about the hash browns? They’re a dollar each or two for $1.50.

Me (thinking furiously): Umm… okay, I’ll just take two.

A few minutes went by, and then she was back.

Woman: We’re short one round egg, and cooking one will take a few minutes. Or you can have a folded egg now.

Me: I’ll take the folded egg.

When she brought out my food she threw a couple of apple turnovers into the bag at no charge — “for the inconvenience.”

Two thoughts occurred to me as I returned to the hotel:

1. I had just gotten a screamin’ deal: four Egg McMuffins, two orders of hash browns, and two apple turnovers for about nine bucks.

2. The next time I’m in Orlando, I will go out of my way to avoid that particular McDonald’s.

The woman behind the counter probably believed that she was helping me by offering the discounts.

In reality, she was making my life difficult. I wanted a nice, simple transaction, and instead I got something complicated.

The experience stuck in my mind a few days later when I was asked to evaluate a TV commercial for an aesthetic medicine practice. The ad suggested two possible actions: call on the phone for an appointment, or log onto the practice’s web site.

I advised the clinic to simplify the message and just give viewers instructions to call on the phone. Advertisers often find that just making this simple change significantly increases the response from the campaign.

The strategy seems counter-intuitive, but the reasoning is sound: a viewer faced with a phone number and a web address in 30 seconds won’t have the time or mental bandwidth to write down both. Faced with a decision about which one to remember, many people wind up remembering neither.

In “The Paradox of Choice”, Barry Schwartz discussed a series of studies in which car buyers were offered an array of choices:

Even though their decision was purely hypothetical, participants experienced substantial negative emotion when choosing between Cars A and B. And if the experimental procedure gave them the opportunity, they refused to make the decision at all. So the researchers concluded that being forced to confront trade-offs in making decisions makes people unhappy and indecisive.

Participants in these studies showed the pattern of reluctance to make trade-offs whether the stakes were high or low. Confronting any trade-off, it seems, is incredibly unsettling. And as the available alternatives increase, the extent to which choices will require trade-offs will increase as well.

What, then, do people do if virtually all decisions involve trade-offs and people resist making them? One option is to postpone or avoid the decision.

The last thing you want when you advertise is for your prospect to postpone or avoid a decision. Paradoxical though it may seem, offering one choice instead of two will increase the likelihood that your prospect will actually take action.

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Email Phil Bernstein here.

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Crackberry’s Sales Prevention Department

Here’s a story of what happens when a cranky customer and an inflexible merchant meet: both sides lose.

I’m a Blackberry user, willing (so far) to put up with the slow browser, lack of features, and iPhone envy. In return I get a physical keyboard and a comforting sense of the familiar.

I also have to deal with the fact that most of the really cool apps don’t come in a Blackberry version. So when I read about a travel app called Flightcaster, and learned that they make it for my dowdy old phone, I went right online to find and order it.

My search took me to a place called Crackberry. I pulled out my credit card and put through a $2.99 order at the Crackberry Store.

The next day I received an email which read, in part:

We are anxious to ship your order, however we need some additional information to complete the order process.

To ensure that only the authorized cardholder placed the order, we would like to verify the supplied billing information. Your order has been placed on hold until this verification is completed.

The following information is requested to ensure that the authorized cardholder placed the order. Please email or fax at least two of the following:

– Top portion of the most recent credit card billing statement showing, name, billing address and last four numbers of the credit card
– Photo copy of your driver license
– Photo copy of the front and back of the credit card before the order can be filled (optionally block out all numbers except first and last four)

My initial reaction was that this couldn’t possibly be real. It was clearly a phishing attempt from some nefarious individual intent on stealing my identity. But when I went on the Crackberry website, I found the same message in the “order status” section.

So I fired off an email to Crackberry Support:

…if you truly want a photo copy of my driver’s license and/or my credit card statement just to put through a $2.99 order – please cancel the order. Amazon doesn’t ask for this information. Zappo’s doesn’t ask for this information. Delta Airlines doesn’t ask for this information I spend a couple of thousand dollars on airline tickets. And I’m not sending it to you, either.

Before we go further, I’ll stipulate something that is probably obvious to the dispassionate observer: I didn’t need to go my-way-or-the-highway quite quickly. I could have politely asked for an explanation first. Noted.

But the support staff for an online retailer should be equipped to deal with the occasional customer who is quick to take offense.This one wasn’t.

I received an email from Jim B., a Crackberry “customer service specialist”, this morning:

Hello,

We have received your email request for the cancellation of your order. Your order has been canceled and a confirmation email has been sent.

Thank you,

Jim B.
Customer Service Specialist
Toll Free (888) 599-8998

On one hand, I’ve got to respect them. Crackberry has rules, and if a customer doesn’t want to follow those rules, they’d apparently prefer not to have the business.

But here’s what could have happened: Jim B. could have explained the situation (rampant fraud? a problem with my card number? something?), started a dialog, and tried to see if there was some way to accommodate a customer.

If we’d worked something out, and I got the app, we’d have a relationship going forward. Crackberry might have received further orders from me in amounts much larger than $2.99.

In addition, I’d have been a great referral source: I’d have shown off Flightcaster to my colleagues who travel, and told them where I bought it. More customers, and more revenue, for Crackberry.

Instead, it stops here. I don’t have the app;  Crackberry doesn’t have my money, future business, or referrals. We both lose.

Are there “customer service specialists” on your staff? How do they handle cranky customers?

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Email Phil Bernstein here.

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Never Eat at a Place Called “Mom’s”…

Not long ago, I met with an auto dealer in the Midwest who was looking for a new advertising strategy. I asked him what the current dealership slogan was, and he said “A Place You Can Trust”.

I advised him to dump that slogan as quickly as he could, because:

  1. It insults the industry by implying that dishonesty is the normal state of affairs.
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  2. Nobody believes you’re trustworthy because you say so in an ad. In fact, such a claim may actually make a customer less inclined to trust you.

I was reminded of this conversation when I read about the arrest of  auto dealer Seven Maynard Gronli in Newberg, Oregon. According to authorities, Gronli

…falsified and forged documents and then presented them to DMV in order to illegally obtain titles for previously “junked” vehicles. After forging documents, Gronli then sold vehicles with clear titles.

The name of his dealership? Integrity Auto Sales.

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Email Phil Bernstein here.

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When “Editorial” and “Advertising” Don’t Talk

Rod Schwartz’ RodSpots Blog has a lovely example of what happens when “news” covers a story about the dangers of alcohol, and the sales department closes a deal with a bar.

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Email Phil Bernstein here.

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