3 Ways to Increase Margin
Posted by jonpape | Filed under Internet Marketing
Marketers, behavioral economists, and psychologist all realize that consumers do not make logical purchase decisions. A variety of factors influence perception and can increase the conversion rate.
Below are three easy ways to increase conversions and margin.
1) Reorder
Rearranging the order of options on a product detail page can dramatically effect the purchase choice a customer makes.
I haven’t done any tests into why this works but I have run tests on e-commerce sites and have seen AOV take off.
I hypothesis that the reason it works is due to a) customer laziness to continue to compare options when they find a good deal and b) peoples reluctance to change their mind after they have made a purchase decision (imprinting).
On the test site, we change the order of the options from the least expensive first and the most expensive last to the most expensive first and the least expensive last.
Original
a. Buy One $79
b. Buy 2, Get One Free $158
c. Buy 3, Get Two Free $237
New Higher Order (w/ higher AOV)
a. Buy 3, Get Two Free $237
b. Buy 2, Get One Free $158
c. Buy One $79
Before, most people purchased the first option. After, most people purchased the second option. This leads us to our second technique….
2)The Middle Item
By arranging your second highest margin item to have a “middle” price, you encourage customers to choose this option.
This technique is mainly used by brick-n-mortar shops and I have not personally tested it.
Take three products with similar features and price your highest margin item to be in the middle of the other two. This technique is based on the relativity and the way people compare items.
The great thing about this technique is it allows the merchant to adjust the prices of the products up and down.
Example:
RCA 42 HDTV – $499
Sony 42 HDTV – $549
RCA 48 HDTV – $699
The bottom price sets the anchor of the product range. It is the floor that arbitrarily sets the price for the other items. However, price is not profit and the merchant should focus on margin when setting product prices.
3)The Decoy
This method uses product and price relativity to encourage the customer to purchase the product the merchant wants.
Example: Two product that are similar but have different attributes.
a. Chunky, Garden Style Spaghetti Sauce $2.59
b. Healthy, Organic Spaghetti Sauce $2.99
These two items are had to compare and the customer will make their choice based on preference.
However, if you include a product that is similar but inferior to one of the choices, it gives the customer an anchor and encourages them to buy the premium original product.
Example 1:
a. Chunky, Garden Style Spaghetti Sauce $2.59
b. Healthy, Organic Spaghetti Sauce $2.99
c. Generic, Organic Spaghetti Sauce $2.79
More people will purchase option b.
Example 2:
a. Chunky, Garden Style Spaghetti Sauce $2.59
b. Healthy, Organic Spaghetti Sauce $2.99
c. Generic, Garden Style Spaghetti Sauce $2.29
More people will purchase option a.
Features I Expect to See on E-commerce Sites
Posted by jonpape | Filed under Internet Marketing, Usability
Some cool features I expect to see in the future on e-commerce websites and where I found the inspiration.
- From Spymaster -level bar – Spend $2000 for a free itouch
- From Continental – Award points – for emails and CC signup
- From Linkedin – your profile is % complete
- From Amazon – Affiliate share bar that users could activate
- From Google Leader – Like button and links to other users who liked. Click to view profile, friend
- From Amazon – other people who purchased this purchased this (level 1) other people who viewed this viewed this (level 2) in order information.
Rules for Beginning Developers & the People who Manage Them
Posted by jonpape | Filed under Business, Internet Marketing, Usability
Inspired by the blog “1,001 Rules for My unborn Son” I decided to create 10 rules for beginning web developers and the people who manage them.
- Never criticize someone who emails you in all caps. They usually own their own business.
- Its better to quit a project early then work for poor management.
- Always setup domain nameservers ASAP.
- Resumes will never tell you how good a web developer is. If a web developer can’t show you sites they have worked on, it’s a bad sign.
- Developers often underestimate how long it will take to communicate ideas to laymen.
- You’re doing something wrong if you have to write the same code twice.
- Always check the domain before you email someone you don’t know or reply to an email.
- If you put something back together after you tore it apart, left over screws are usually OK. Left over wires are bad.
- Websites don’t live in a vacuum. If search engine can’t index a website it better be really, really cool.
- Never read a computer book that is over 5 years old.
