I’ve always been intrigued with how the brain works, especially when considering the psychology behind decision-making. Whether it’s using psychology to push an agenda, persuade people or utilized to sell, it’s fascinating.
Arizona State Professor of Psychology and Marketing, Dr. Robert Cialdini, wrote the book Influence: The Psychology Of Persuasion and it truly opened my eyes. I credit his book with revolutionizing how I sold cars and taking me from a truthfully awful salesman to one of the top guys on the floor.
I’ve always had a desire to learn and test my own theories and hypotheses. My newest obsession is with the psychology of pricing and using human nature to guide customers to the package a dealer wants them to choose.
For a lot of businesses, and this is especially true for auto dealers, the amount of choice a customer has can be crippling. Sure, they know the type of car they want, but which model? Which trim? How many options can be added? Is there a better deal somewhere else? Paralyzing decisions.
You know which package you hope they decide to buy; now it’s just a matter of letting them think they are choosing it themselves.
Let’s dive into this a little more. First, this TED talk from Dan Ariely is a great primer and the inspiration behind this post. He’ll explain further, but in case you can’t watch the video below, he focuses on simplifying the pricing process and using a “useless” price option, otherwise knowing as “decoy” marketing, that can send conversions through the roof.
Intriguing, right? Give it a view:
Pretty great stuff.
I’m sure some of you have already thought about how to put this into play at your dealership. Be it service, retail or fixed ops, this type of pricing can really work. Car shoppers are all bargain hunters. Pander to that and give them an option that really is “a great deal”.
Here is an example of how they put this in place at The Economist:
- Utilize a dedicated landing page focused on your special.
- Either expand your options if you don’t have enough (2 to 3) or simplify the choices (3+ to 3).
- Price #1 – Set the stage. Don’t go crazy low, as it is human nature to take the lowest price. Instead, make it competitive.
- Price #2 – Implement the “useless” price option.
- Price #3 – The one you want the customer to select. The best deal.
- Drive traffic to the page.
With every experiment, testing and re-testing are key to being successful.
- Consider A/B testing multiple landing pages, each with different price options.
- Split the traffic 50/50 or 33/33/33 to determine which is more appealing to a customer.
- Give it time and don’t give up too early. Patience will pay off.
- Once you find the magic combination, repeat, repeat, repeat.
If you already do or have done something similar, we’d love to hear your results. Good luck.