Sorry, But Your Price Is too LowOr, How to Lose a Sale by Not Properly SupportingYour Pricing Strategy
Of all the complaints you might get from a prospective customer, "Your price is too low" has to be at the bottom of the list, right? When did a great deal become a problem, you might wonder?
Actually, it is more of a problem than you might expectespecially when you're trying to sell through direct marketing.
Several years ago, I received an offer in the mail for a series of three directories listing all of the manufacturers in New England. I get these offers all the time, and sometimes I bite because I can use these directories for prospecting. Typically, the books run about $100 to $200 each.
But this particular offer was different. This company, which I didn't know, was selling all three books for just $29 total. Now these directories usually are very thick books, and so $29 probably wouldn't even cover the cost to print and deliver them to the customer. I wanted to ask the publisher, "How are you making any money on this?"
So I hesitated and decided to think it over. I put the mailing in my "read later" pilea very high pile, I might addand didn't come across it again for several months.
Does this experience of mine sound familiar? Here I had a product that interested me at a real bargain price ... and I didn't act. Why? Because the low price made me nervous.
Like most people, I have come to accept that if something seems too good to be true, it probably is. It made me stop and wonder, "What's the catch?" And as we all know, inertia is the enemy in direct mail.
The Need for "Reason Why" Copy
If you were dealing directly with a salespersoneither face to face or over the phonethis situation would be different. You could ask the salesperson why the price is so low. And perhaps there would be a good reason:
* The company was having a clearance or going-out-of-business sale;
* This was just an introductory offer to get me in the door for future sales; or
* The product is being replaced by a newer version. (I suspect this was the case with the directories offer I
received. All directories need to be updated, and paper directories lose their value dramatically once a new version is published.)
Whatever the reason for the bargain price, when someone is buying by mail, through an ad or via the Internet, there is no salesperson to talk toat least not right awayso he or she hesitates, and puts the offer aside with plans to find out more at a later time.
The Hesitation Roadblock
Hesitation is one of the true roadblocks to successful direct marketing. When someone hesitates, more often than not, he or she is lost forever. Your offer gets buried under all the other important items on your prospects' and customers' to-do lists.
When you are writing for direct mail, advertising or the Internet, you need to be aware of the possible hesitation points. Ask yourself: "Is there anything in this offer or promotion that is going to make my prospect stop and wonder?"
If so, you need to confront those issues. For example, you need to provide an explanationor at least a plausible reasonwhy your price might be considered low by the target audience. In the case of the directories example, it would have been so easy for the publisher to point out: "We are ready to publish our newest edition ... but we still have some of last year's books available, which we are now offering at a greatly reduced price."
Or, maybe the letter could have included a paragraph or two under the subhead, "Why is our price so low?"
Taking these steps isn't overly complicated. But it certainly requires more than simply crossing out your list price and noting the sale offer.
Is It Really Free?
I recently started writing a marketing blog as an extension of my customer newsletter. Before I could write the blog, however, I had to set it up. As many of you know, you can set up your own blog using a blogging service, and it's free. Yes, it's really free.
I would have started my blog months ago, but I kept putting it offin part because I couldn't understand what the blogging service was getting out of this business relationship. Why would these companies do this for free? And so what would I be getting myself into?
I have since learned that blogging services can make money offering add-on services and by running ads on the blogs they sponsor. They have other long-term business strategies as well, but the bottom line is that their service is free.
The word "free" remains one of the most powerful words in direct marketing. I use it whenever I can. But free doesn't always mean "without obligation" or "without some commitment at a later date."
When people attend a free seminar, they know they are committing themselves to a sales presentation in some form. When they request a free white paper, they know that a salesperson is likely to call in a few days. When they fill out a questionnaire for a free trade journal, they know they are providing mailing list information. It took some time and some lawsuits, but people eventually caught on to the fact that those free gifts for time-share visits were in exchange for a high-pressured sales pitch.
Sometimes it's clear (or it becomes clear after some experience) what's free and what has strings attached. But too often, it's not so clear for prospects what the offer proposition is, which causes that dreaded hesitation. This is especially true of offers presented on the Web, where many things are free for no apparent reason. I'm sure there is a reason, but it's just not apparent. And when the terms of the offer are not spelled out, everyone gets suspicious and assumes the worst.
To leverage the immense power of the word "free" and reclaim it for the good of your direct marketing program, be sure to back up every promise of something for free with a reasonable explanation of why you're giving something of value away at no charge. If the freebie is a sample, make sure people know that your goal is to give prospects a chance to see why your product is different than competitors'. Whatever the freebie, give "free" meaning by letting prospects see that there is nothing sinister up your sleeve.
Low Prices Are Okay
The point of this article is not to suggest that low prices are unsupportable. Low pricing is still a good thing. The offer (which is primarily the price) remains one of the pivotal elements in any direct marketing program. The lower you can make the price, the more response you are likely to get.
But if your price is unusually low or if "free" just doesn't make sense, do yourself a favor and give your readers a reason why.
Bob McCarthy is president of McCarthy & King Marketing Inc. in Milford, Mass. A 20-year veteran of direct marketing,
he is past president of the New England Direct Marketing Association (NEDMA) and, for 10 years, taught direct response copywriting in the Bentley College Direct Marketing Program. He can be reached
at (508) 473-8643 or firstname.lastname@example.org.
Brush Up on Your Pricing Know-how
Creative and format tests hold great appeal, for it can be fun to explore new copy platforms, graphics and mailing styles. But price tests can open up a world of better profitability for your campaign. If it's been some time since you reviewed your pricing strategies, one of the following books or seminars on the topic could help you brush up.
* "46 Ways to Raise Price ... Without Losing Sales," by Marlene Jensen. (Pricing Strategy Associates) www.pricingstrategyassoc.com.
* "Power Pricing," by Robert J. Dolan and Hermann Simon. (Free Press) www.amazon.com.
* "The Price Advantage," by Michael V. Marn. (John Wiley & Sons) www.amazon.com.
* Pricing Strategies: Capturing and Sustaining a Competitive Advantage seminar, conducted by the American Management Association; www.amanet.org, to check cities and dates.
* "The Strategy and Tactics of Pricing," by Thomas Nagle and Reed Holden. (Prentice Hall Business Publishing) www.amazon.com.