How Perceived Value Increases Sales
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whatUseek Weekly Contents
1) Article: How Perceived Value Increases Sales
2) Contest: Enter To Win - Your Ad In 3 Issues ($238 Value!)
3) Weekly Marketplace: Exceptional Products and Services
4) Article: The End Game - Profit, Profit, Profit
If you have an informative article that you would like us to feature, please email your article to editor@whatuseek.com. If we use your article, a link to your web site will be featured as well.
1) HOW PERCEIVED VALUE INCREASES SALES
If your web site is not generating the type of numbers you were hoping for, it's time to rethink your marketing strategy. If no one is buying what you're selling, then you have nothing to lose by making some changes.
People love SALES. I know I do, and I know my wife does as well. There have been many times that I purchased things that I didn't even need, but talked myself into buying anyway, because the item(s) were ON SALE.
Here are some reasons I've used to justify purchases:
The deal was too good to pass up! I had to buy it just on principle! I may not need it now, but I will probably need it later!
"Sales" in general, work because of these two reasons:
1. Perceived value. If you think you're getting a good deal, there is a greater chance of you making a purchase.
2. Time limit. If the sale ends Saturday, you know that you have to make your decision by Saturday, before the price goes back to normal. The time limit presents you with a call to action and a sense of urgency.
Knowing this, how do you increase sales on your web site?
Have a "sale" or hold a contest.
THE SALE
If you have a product that you want to sell for $50, but it has a "value" of $100, then list the price of your product as $100, and offer the visitors of your site 50% off the list price if they make a purchase within 48 hours.
Create an online form that doubles as a 50% off coupon. When the visitor completes the form, have an autoresponder send them an email that links to the URL where they can order your product for 50% off. This email can also include other information (additional sales pitches) to help you close the deal.
If the visitor does not make a purchase within the first 24 hours, send them a follow up email reminding them that they have only 1 day left to get 50% off.
THE CONTEST
Hold a contest to give away your $100 product to a lucky winner each week. People that enter your contest are qualified leads. Remember that they would not have taken the time to enter your contest to win your product, if they didn't want or need it.
Each week, choose a winner and award your product to that winner. Then contact all of the other people that entered your contest that did not win, and let them know that they didn't win the contest but they have qualified to get a 50% discount off the product for the next 48 hours.
You will be surprised at how many people are willing to buy your "$100 product" for $50, which is fine because $50 is all you wanted for your product in the first place!
BOTTOM LINE: All of the top name department stores, furniture stores and electronic stores hold sales just about every week. Perceived value will increase your sales on your web site, just as it does in the big stores.
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3) WEEKLY MARKETPLACE
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*_______ A word from our sponsor - start _______*
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4) The End Game: Profit, Profit, Profit
What was once the most forgiving and freely rewarding stock market in history has quickly about-faced and become--gulp--realistic. For the last few years, it was enough to say that you're an Internet company--viable road-to-profitability-be-damned--and, with a healthy push of good PR, you were on your way. Unforeseeable ends to cash flow shortfalls weren't necessarily negatively viewed. No, instead they were quite exhilarating jumps into an exciting unknown that would unquestionably be fed in several rounds by a hungry bunch of angels and venture capitalists. Yeee-hahh!
At some point, though, individual investors en masse had a coalesced realization that it was their money--real money--on the line, and thought better of blind-betting their retirement savings and college funds. The complete loss of faith in tech stocks got so bad--and currently still is so bad--that being a publicly traded tech company can be an immediate liability.
I expect with great confidence that the current blind sell-off of all-things-tech will end, the total bleed-out will cease, and things will on land a far more realistic, acceptable track. This is great news for the good Internet companies with acceptable roads to profitability, for which they will eventually be amply rewarded. This is, however, very very VERY bad news for those tech companies where the ink is expected to run red indefinitely, for which many will be punished by the inability to raise the rounds of outside funding needed to patch their ongoing cash flow shortfalls. Trite as it may sound, this is truly the time when we separate the wheat from the chaff. Lesson to be learned? Be the wheat.
So, assuming this currently tres wicked stock market is some sort of parable, what should we have learned? I've boiled it down to the following:
How you'll monetize your business should be easily understood. That great idea you have in your head about a Web business--you know the one I'm talking about, right? Yeah, well, be sure that beyond clever, it is truly monetizable. The stock market, not too long ago, rewarded innovation first, with any understanding of monetization and profitability as an afterthought. First-mover advantage is still key, but you'd better be first-moving on a viably monetizable model.
Don't plan on making it on a model that will be wholly dependent on banner advertising alone. We have seen the value of our run-of-network advertising inventory decrease significantly over the last two years. Targeted ads generate more revenue per unit impressed, but in order to sell highly targeted advertising, your site has to be able to move a very large bulk of banner inventory. We generate millions of page impressions per month--far more than the average Web site--and we're only starting to be able to take advantage of rich targeting. Long story short, it ain't easy to make it on banner advertising alone.
Hire smart. Prior to the stock market "adjustment", many freshly funded Web companies were hiring at an astonishing rate--a lot still are. Unfortunately, the faster you hire, the less selective you may end up being. We have chosen to hire at a very conservative pace, and with a high level of selectivity. Make sure to be as selective--extract as much value out of each hire you make. And before you make the decision to extend an offer, make sure you can answer "yes" to the question, "Will this person help bring us closer to profitability?" Recently, in a conversation I had with a gentleman we do business with, he expressed that his Internet company would not have hired nearly as many people as they've already hired if they had foreseen the current market conditions. Remember, in a market like this, later rounds of outside financing might not be there for you, and personnel is often a company's biggest expense--so hire smart.
Smaller is sometimes better. If your business is going to be largely dependent on partnerships, try closing lower-friction, smaller partnerships first. The top-tier Web companies--Yahoo, Lycos, GoTo.com, eBay, Amazon.com, About.com, Go2Net, Looksmart, etc.--might make ideal partners, but you'll probably find that the process will move more slowly than you expected. Try closing several smaller partnerships first. This will help bring quicker revenue in, and will also help bring you to the attention of the top tier players.
And there are many more lessons still. Obviously, these suggestions don't apply to every Web company. At the end of the day, though, we all have to answer to our shareholders, and the only thing that satisfies them in the long run is profitability. When the market shakeup is over, the chaff will be put to rest. Be the wheat.
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