You’re shopping for a new car.
The salesperson shows you two models of the car you wish to buy. The first is the Standard model. It has everything you need and is affordable. The second is the Enhanced model. It includes air conditioning, special alloy wheels and a sporty engine. It costs fifteen percent more. Which will you buy? Three out of five buyers settle for the Standard version. Two buy the Enhanced.
Let’s add a third option and see what happens.
You’re shown the Standard and the Enhanced versions as before. The salesperson now shows you a third, Super-Enhanced version. It boasts a high performance, hand-built engine, leather upholstery and is jam-packed with advanced features. It costs forty percent more than the Standard. Which will you buy now?
Three out of five buyers go for the middle, Enhanced version. One still buys the Standard but one chooses the Super-Enhanced. The total value of cars sold is significantly higher.
Does selling the power of three work in other areas of business? Absolutely. It’s human nature. Even the most analytical of buyers falls for the trap. Why do you think coffee shops offer you a choice of three sizes? Because most customers default to the middle size. It costs them pennies more to make and the extra price is pure profit. When you visit a car wash, which service do you buy? (Some business-to-business examples below)
The trick is to make the Standard price competitive, to attract buyers and to make the middle, enhanced option a more rewarding purchase. The job of the Super-Enhanced is to pull buyers up to the Enhanced option. A few will buy the super-enhanced, which is a bonus.
Here are some key points to remember:
The Standard option
- Competitively priced to pull in more customers – ‘I can afford to buy a Mercedes’
- Can also be used as a lost leader – it’s what car manufacturers do.
- An acceptable fall-back for those customers who can’t or won’t pay more
Don’t call the Standard option ‘Basic’. It makes it appear cheap and unattractive. Its job is to pull in the customers. Mercedes offer three models, ‘SE (Standard, the base price they advertise), Sport (Enhanced) and AMG (Super Enhanced and very expensive)
The Enhanced option
- Priced towards the higher end of most customers’ budget
- Designed as the most attractive choice for customers.
- Includes desirable features that cost you little but are premium priced.
(A higher power car engine is often only a software variation with a few modified parts that costs a manufacturer very little, but commands a premium price)
The Super-Enhanced option
- Expensive, to attract those who want the best or want to flaunt their affluence
- Designed to make the Enhanced option appear the best value for sensible buyers
What if you only have one option?
Be creative. Invent a Standard, Enhanced and Super-Enhanced version by bundling compatible products or services. For example:
- Office cleaning services - offer a Standard service that is affordable and price competitive, an Enhanced bundle that includes cleaning computer keyboards, screens and phones and a Super-Enhanced that also includes the supply and care of pot plants.
- Accountancy services - offer a Standard business service, an Enhanced with payroll and director’s personal tax and a Super-Enhanced that includes financial consultancy and insurance to cover against Revenue investigations.
- Machinery and tools - bundle accessories, spare parts and service to create your three options. Bundling can also help you to sell weaker, less attractive products or services as your options.
- Office chairs - offer three alternative designs with different features.
Where can you apply the power of three?
Sales presentations and in salespeople’s presenters; sales quotations and proposals, price lists; product or service literature; web site; exhibition stands – well almost anywhere. It makes perfect sense.
Give it a go.
One of a series of articles by Mike Kingston FInstSMM, designed to help you sell more. www.mikekingston.co.uk