Any business selling products knows how important the profit margins are to its success. What if I told you that you could increase those profits without altering the products? Well, I've got good news. This is easily attainable if you can enhance the perceived value of your items. Then, you can charge more money for the same products you're already selling and get sky high profits. But there's a science behind this method. If you've been selling the same item at a $5 price point for the last ten years, you can't just start selling it tomorrow for $500 and expect people to buy it. It's all about creating a brand image that's perceived as high class, luxury, or exclusive. For those of you who have been promoting a bargain brand for a long time, this strategy is not as easy to implement as it is for other businesses. But for new businesses or existing companies selling products at a price point that's not too low, there are subtle changes you can make to increase your perceived value. Granted, this won't happen overnight. Consumers may already have a certain perception of your brand and products. It's your job to change that perception so you can charge more and benefit from higher profits. I'll explain how it's done. Narrow your target marketCharging more for your products means not everyone can afford what you're selling. That's okay. Take a look at the cars for sale on the Range Rover website: They've got base models starting at over $80,000. That's more than double the average transaction price of a car in the United States, which is roughly $35,000. Higher prices mean you're alienating the majority of consumers from your brand. You need to analyze the current trends and focus your marketing campaigns on a specific audience. Sure, deep pockets may be a good place to start, but you'll have to dig a little deeper than that to zoom in on a target market. Segment potential consumers by factors such as:
Next, create a customer journey map to put yourself in the shoes of your customers. That will help you identify whether your perceived value is high enough to charge premium prices. Quality is important too. For example, when you eat at a global fast food chain, you have modest expectations of quality you will get there-with a matching price. But when you order a steak and lobster dinner at a fancy steakhouse inside a 5-star resort, you're expecting the quality to be much better. Each place I described above has its own target market. Promoting your brand to a narrow niche creates a feeling of exclusivity within the target demographic. They like the idea not everyone has the means to buy what you're selling. Produce a limited quantity of each itemNow that your target audience has changed, you don't need to produce as many products. Just focus on selling whatever you manufacture. If you're making a high-demand item, you can produce even fewer quantities to make them rare. Take a look at how Ferrari accomplished this in 2016: The luxury brand made only 209 of the LaFerrari Aperta models. Ferrari wanted to keep nine of the vehicles for themselves, so they put the other 200 up for sale. They sold out right away. No, that's not a mistake in the CNBC headline. The price for each vehicle is $2.2 million. That's $440 million in sales. Now, I don't know the exact cost of manufacturing of these vehicles, but I can guarantee those profit margins are astronomical. Let's reflect on our last point for a minute here. Ferrari doesn't care about the millions of drivers across the globe. They just need 200 people to buy this product. Owning one of these vehicles makes people feel as though they are part of an elite group. This strategy drastically differs from that of other companies such as Honda Motor. To compare, the Japanese car manufacturer sold over 360,000 Honda Civics in the United States alone in 2016. Their brand targets a mass audience, so they have to produce enough products for everyone. Limit the buyer's choicesIn addition to producing fewer items of each product, you should also limit your product lines. Giving people too many choices ends up hurting your conversions. Louis Vuitton recognizes this and limits their product lines accordingly: If you're shopping for a Nano bag on their website, you'll have only four products to choose from. Having hundreds of options available would confuse the customer. It's too difficult for them to decide what they want, so they may not end up buying anything. If they do end up selecting an item from a large field, they will be more likely to have buyer's remorse. They'll keep reflecting on decisions they could have made instead. That's not the feeling you want your customers to have after buying something from your company, especially if they are paying lots of money for it. Those negative feelings will give them a bad association with your brand and could prevent them from buying something else from you in the future. Here's a study to illustrate my point about too many choices, the jam study: As you can see from the research conducted by this grocery store, customers were much more likely to buy the product when they were offered fewer options. The data also suggests that not as many people were attracted to the jam when fewer choices were available. That's fine. We already established we're marketing to a narrower target market. As long as your conversion rates are high and you're selling everything you're producing, you won't have anything to worry about. Enhance your packagingThink of your packaging as an extension of your product. If you're selling something like a ring, necklace, watch, or another piece of jewelry, you should consider packaging your products in a carrying case. Have you ever bought a pair of cheap sunglasses from a kiosk at the mall or a vendor on the street? They usually package them in some kind of soft cloth that won't protect them from damage if you drop them. But sunglasses that come with a durable carrying case can enhance the perceived value, and the price can reflect it. It makes the customer feel that what they're buying is worth protecting. But don't stop with the functional parts of the packaging. Everything else needs to be enhanced too. For example, if you go to big box stores, you'll get all your items tossed in a standard plastic bag when you check out. But if you shop at a luxury retailer, your purchase will be placed in a customized bag that's durable and sleek, possibly with a cloth handle. Your purchase may even be wrapped in tissue paper or have something else to make it look nicer. Take a look at how Jordan Brand packages their shoes: These shoeboxes are much more than just a way to get your sneakers from the store to your house. The packaging makes it a collector's item. That's why Jordan is able to sell out basketball sneakers priced at over $200. Stand by your productsIf you're selling at a high price, you have to go the extra mile when it comes to your customer service. Offer the customer things like:
It will put the customer's mind at ease and make them more willing to spend the extra money. If you have physical retail locations, make sure your staff are trained properly to relay these messages to the customer. For those of you with an ecommerce store, clearly and proudly display your guarantees on your website. Look at this example from Red Wing Shoes: Red Wing lets customers return their purchases within 30 days of the sale, even after they've worn the shoes. That's a huge incentive for customers, especially since this company is known for selling work boots. You can buy a pair of boots and wear them in the snow, dirt, and rain every day for a month. If you're not happy, bring them back for a refund. Guarantees like this enhance the perceived value because them make the customer assume they'll be satisfied. Nobody would offer a return policy like this if every pair of sold shoes were brought back in. Red Wing is able to charge more money for their products because of this. You can easily apply the same strategy in your business. Produce high-quality products, and back them up with an outstanding return policy or warranty. Use social proofSocial proof drives sales, especially if your brand partners with a celebrity. In 2013, Adidas teamed up with hip-hop icon Kanye West. They let Kanye design his own shoes: When celebrities endorse a product, it enhances the perceived value. After consumers see a celebrity wearing something, they want to buy it too. But Adidas also used one of the strategies we talked about earlier and produced only limited quantities of these shoes. If you look at their website, you'll see all of the sneakers are sold out: These sneakers are such commodities that they are sold on the secondary market for thousands of dollars. Obviously, those aftermarket sales don't generate more profits for Adidas. However, they definitely enhance the perceived value. That's because Adidas focused on a narrow audience, produced a limited quantity, and used celebrity social proof as a branding strategy. So they can charge more money for these sneakers compared to other items sold on their website. Raise the prices, and don't offer discountsSometimes just raising your prices can be enough to enhance the perceived value. Let's say you're sick and go to the pharmacy to get some medicine. As you look through your options, you see a generic, store brand medicine for $3. Right next to it, you see a name brand medicine for $11. You might say to yourself, “I recognize the name of this brand, and the product is more expensive. So it must be better, right?” Maybe not everyone will feel this way, but if you're sick, you might not want to take the chance of buying medicine that might not make you feel better. Here's a visual representation of different pricing segments for wine: As you can see, the more expensive the wine gets, the higher the perceived value becomes. If you're comparing two bottles of wine based on the price alone, it's natural for you to think the more expensive bottle is better. Furthermore, if you're trying to establish your brand as high class or luxurious, you shouldn't offer discounts. Items on sale lower the perceived value. It can also deter customers from buying your products at full price. They may wait until you send them some kind of promotion. While coupons and sales incentives are normally a great way to market your products and drive sales, it's not the best way to enhance your perceived value. Remember, you're marketing to a narrow target market. These people don't necessarily need items to go on sale to be able to afford what you're selling, so just stick to your current prices. Let's look at the Gucci website: Notice anything strange here? You don't see any words like:
Those terms aren't part of their branding strategy. Instead, you see a limited quantity of luxury items that are perceived to have a high value. That's why they are able to put high price tags on these products. ConclusionYou can charge more for your products if you change the consumer perception of your brand. This strategy may require some rebranding if your company has been in business for a while. Don't expect to see results right away. Slowly implement the strategies I described here to your products and start to raise the base prices. You need to focus your marketing efforts on a narrow target audience. Less is more. Produce limited quantities of each item, and limit the buyer's options within each product line. Enhance your packaging, and make sure your brand stands by everything you sell. Celebrity social proof can also make your products appear more valuable. Sometimes having high prices alone are enough to enhance the perceived value. Don't offer any coupons, discounts, or sales promotions if you're pursuing this strategy. What steps are you taking to enhance your brand's image and the perceived value of your products?
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I'll be honest: I don't like general marketing statements. You know the ones. I cringe a little bit when I hear “know, like, and trust.” The problem is that these are too flimsy. They're not actionable or instructive. And they very rarely come with cold-hard data behind it. Turns out, though, that there's a little truth in this one. People do like to buy from people they know. Or, maybe more accurately, who know them. Here's what I mean. Accenture recently released data that shows that three-fourths of customers want to purchase from companies that:
It's no wonder that by 2020, Gartner is predicting 'smart personalization engines' will increase profits 15%. What, exactly, does that mean? It means a company will be able to understand what buyers are looking for and give it to them in real-time. This is why personalization is such a big deal. Not only do customers prefer it. But it can also get them to buy more, more often. Go login to Amazon to see this for yourself. What's the first thing you see, straight away on their homepage?
In almost every study you can find, personalization has the power to increase conversions across the board. At Home in The Country added Amazon-like product recommendations and increased revenue 13%. Personalizing your marketing is almost guaranteed to increase results. I say “almost,” because most companies still struggle with actually doing it. On the one hand, 77% of them will agree that it's crucial. While on the other, 60% struggle with implementing it. Fortunately, I've learned a few tricks over the years. And I'm going to share them all with you in this article. But there's one thing you need to realize, first. Personalization starts with collecting data. You need to know more about current customers before you can ever serve them personalized content or messages. So let's begin there, with a few simple places to start.
1. Track PageviewsCustomer surveys are important. Getting qualitative data can help you figure out exactly what people are struggling with, in their own words. It's one of the best places to uncover customer habits or preferences. And we will cover survey-based information in a minute. But you can rarely start with surveys. The problem is convenience. Surveys might take a few minutes to complete. However, if someone doesn't know who you are, they're never going to agree to a survey. They're not going to take time out of their busy schedule because there's nothing in it for them. That means you need a different approach initially. One of my go-to techniques to begin with is to simply tailor messaging based on the page someone is on. You can also use past pageview history to help personalize messaging, too. I'll show you how to do this with a few tools later on. But let's keep it simple for now. Someone came to your site and is now looking at your product page. They're trying to check out the features to see how it can help them. Check out how Drift did this recently when I visited their features page: The main headline on the page talked about “Automating your sales funnel with Playbooks.” They're trying to promote one of their features that can help companies replace steps in their sales process with bots to automatically book sales meetings for them. Then, guess what the on-page message said? It reiterated the same message. “Drift Helps thousands of businesses book more sales meetings with bots…” The call to action was perfectly aligned with the page content. This is like 'message match' in advertising, where you match the same value props from an ad someone clicks to the landing page people see next. See how simple that is? You should already know what content or messaging is on each page. So it's fair to assume that people visiting that page will be interested in it, too. OK, that was an easy one. Let's see the same underlying tactic, applied to a new CTA. 2. OverlaysAdmittedly, pop-up overlays are annoying. I don't love them as a visitor, either. And yet, I still use them. All the time. Why? Because they work. Check out this quote from Bryan Harris from Videofruit:
When there's a quarter of a million on the line, of course you'll use an overlay, too. The trick is to treat overlays like ads. Why don't people like banner ads? Because they're irrelevant. They're advertising products or services that you could care less about. The trick, again, is message match. You infer what people want by looking at the pages they're visiting. Let's take a blog as an example. You might have thousands of posts on your site. There's no way you can customize unique overlay messages for each one. Instead, use the blog post category as a guide. Authority Hacker used OptinMonster to target both category and post tags. They created new offers that perfectly lined up with the content in each of those blog posts. So the “juicing” category, for example, had a juicing-related ebook offered: Simple, right? And what do you know - the conversion rate for this single pop-up was well over 4%. I'll show you some advanced personalization techniques in a few moments. But you can already see that implementing personalization, at least on a small scale, isn't too challenging. Chances are, you're already running campaigns like these. The trick is to look at how you can make them more relevant to the people already visiting. The fastest ways to increase results is to start with low-hanging fruit. And that's the current audience you already have. 3. Survey ResponsesCustomer surveys only become useful once you have a sizeable audience and database. Math is the problem. First, response rates tend to be pretty low. Some surveys, like Net Promoter Scores (NPS) will be a little higher than most. But you're still only looking at responses from a fraction of the list. The second problem is statistical significant and the third is confidence level. In other words, you run the risk of making bad decisions based on incomplete information. So you typically need to run your results through a calculation, like this one from Genroe, to make sure your sample size is large enough. But once you jump through all of these hurdles, customer surveys can be gold. Not only for general business or marketing campaigns, but for better personalizing results for them, too. Here, I'll show you what I mean. You need to connect whatever survey tool you use back with a CRM or marketing automation platform. Personally, I like Typeform and Gravity Forms, depending on what you're using them for. Both have solid integrations right out of the box. That means you can often connect directly from Gravity Forms to ActiveCampaign, for instance. New customer responses will flow automatically into your CRM, updating the contact's record. Otherwise, you can also use Zapier to connect both tools for you. The sky's the limit when you connect apps like Typeform and HubSpot, for example. Zapier works by setting a trigger and action. In this case, the trigger would be a new form fill. The action would by updating that contact's record. You can also use an intermediary step to filter out results based on other criteria (like if they're a lead and not a customer). OK, so what's happening here? Survey responses are added back to each customer's database record. They're essentially segmenting themselves, letting you know what kind of business type or size they fall into. In other words, they're doing all of the work for you! Segmenting new leads or customers is tough because you don't know enough about them. But it becomes really easy when they literally tell you all the answers. Now, you're going to build out automated sequences based on this information. So all of the people that match “solo” + “developers” will receive completely different messages and offers than the “agency owner” + “designer.” 4. Link ClicksI can already hear a few objections to the last tip. “What if you can't get enough people to answer those surveys?” No problem! Here's another trick I like to use. Again, you're going to need a marketing automation tool to help you organize everything. There are so many options here now. HubSpot, Drip, ActiveCampaign, ConvertKit, InfusionSoft: they're all good. Many times, you try to get someone to answer a survey, but they won't. To make matters worse, they stop responding to a lot of your emails and other messages. How can you win them back? You need to test a few options. You can start by sending out an email with various links, for example. Each link might have a different value proposition. So one might be related to a “website,” while another is “SEO.” Then, you track which ones they click. If they click “website” and not the other ones, you now know what they're most interested in next time they visit your site. Again: We're not just talking about personalizing emails, here. That stuff is helpful. But ultimately, the main objective is to personal your website. The problem is that you can't do that until you know more about what makes each person tick. Although, by now, if you follow these first few steps, you should be getting a whole lot closer. 5. Ad Campaign InteractionMost people won't buy something the first time they hit your site. A recent Unbounce study found that somewhere between ~2-6% of people who hit a landing page might purchase. Unfortunately, that means the vast majority of your site visitors are probably going to leave without giving you anything. Hopefully, you did get one thing from them before they left. Remarketing or retargeting campaigns can read that little browser cookie and automate ad campaigns to past visitors. Once again, though, you don't want to stop there. You also want to be able to track how people respond to those ads. Let's say you visit Hotjar, but leave without signing up. Now, they're going to retarget you on Facebook with this case study ad: Nice, right? Ultimately, though, they want to see if you click that case study and signup. They can see which value propositions worked best. Hotjar has like five tools in one. They want to see which one of those tools piqued your interest the most. Then, following our theme here, they can use a tool like AdEspresso's data sync to create a two-way connection between your retargeting campaigns and customer database. Once the connection is created, your contact records will be tagged, filtered, and updates with the appropriate data. And here's where things get fun. 6. Tag and Filter ResultsWebsite personalization techniques need to be triggered. They need to have some data source telling them how or what to personalize page content with. So far, we've been collecting tons of data points. Now, it's time to start using them. Your marketing automation tool should be recording all of these interactions and updating records accordingly. That's typically done through a combination of events, actions, tags, or conditions. Here's what that looks like inside ConvertKit: 'Conditions' are like IF/THEN statements. They say, “If this happens, then do this.” First, you start by assigning the criteria that needs to be met. That might include specific page views and a number of site visits, like this Drift example: The “then” part is what you do with the information. We're getting really close to that part. 7. Smart Lists“Smart lists” work with similar conditions. You can set criteria that dictates if someone can join the list or not. Think of it like segmentation. If someone visits your Pricing page, for example, there's a pretty good chance they're interested in purchasing your product. What makes these lists “smart,” though, is that they update constantly in the background. So these lists will add people or kick them off certain lists based on all of their interactions. Relate this back to your marketing funnel.
Make sense so far? Hopefully, because ultimately these lists will be used to power website personalization. 8. Location DataCara Harshman, former head of content at Optimizely, announced at the Call to Action Conference that they saw over a 117% lift in people signing up for an account based solely on their homepage personalization. How did they do this? First, they collected data! They identified key accounts, like Microsoft or Target, to go after. Then, they used a database to help trigger the appropriate site messaging. Optimizely has 25 different audiences pre-created, using everything from demographic data and previous behavior. If they don't have your personal data already, they'll use other criteria. For example, visit their site in the morning and you'll likely get a warm cup of coffee: In this case, they're looking at location to help personalize what's appearing. Optimizely will also use location to showcase different products. If you're in a warm climate, you'll see warm stuff. If you're in a cold one, you'll see more jackets and boots. Optimizely goes to such extensive personalization lengths because they're one of the leading providers of the technology. But they're not the only one. 9. Dynamic content blocksMost websites today run on content management systems (CMS). HubSpot's calls their offering a “content optimization system.” The difference? They have site personalization baked into the process. Their toolset already includes a full CRM and marketing automation suite. That makes it easy to create 'smart content' that references the data they already have: The first few, including country or device type, are helpful when you have limited data. However, the real power comes down below with contact list membership or lifecycle stage. This brings us back to the smart lists from earlier. If someone is on a specific contact list, they'll receive a different experience from everyone else. And using this combination of 'smart' features can literally automate your entire website personalization strategy across everyone who visits. HubSpot's toolset also allows you to customize just calls to action if you want. That way, you don't have to overhaul your site. You can simply replace content blocks, like you would with a banner ad. But HubSpot will reference their database to determine what to show someone, and when. 10. Referral sourceThere's one final tip if you're still stuck or without these high-priced tools. You can use referral source to segment your marketing funnel. For example, someone visiting your site based on a PPC ad will see something different than another who came from social media. RightMessage is a new tool that can help you personalize pages based on referral source. So you can create a single landing page design, for instance, but customize all of the content based on if someone is visiting from a partner website, email message, or it's their very first time to your site. The tool comes from Brennan Dunn, who was able to use its content personalization techniques to increase sales on one page by 70%. Not so fast, though. Before Brennan was able to see those awesome results, they had to put together 81 different variations! How? By going through a lot of the same steps in this article! He used detailed survey responses to pinpoint what his customers needed. Studies show that more landing pages tend to equal more conversions. However, that doesn't just mean more offers. It also means more relevant ones. It means more variations on the same pages you're already using. Think about your own user flow for a minute. How do people go from one step the next? When you start plotting it all out, you'll see drastically different end points along each step: PPC traffic tends to convert well because people are typing in exactly what they're looking for. They have intent. That means they should receive a landing page offer, most likely. But someone who arrives to a blog post from Google? They're just starting to get a lay of the land. Say you Google “content marketing”: That's a pretty generic search query. Chances are, you're just looking for information at this stage. So instead of a product offer, your next step is probably to learn more information about the website you're currently on: Why are we talking about this? Because it shows that someone's referral source can often clue you into what they want. Want more tips? I'll give you 3 more: ConclusionPersonalization is one of the leading trends in marketing. Almost everyone agrees that it's important. And almost every study shows positive results. Why don't more website look like Amazon's then? Because implementing personalization is much easier than it looks. The tools are out there. Sure, many can get pricey when you're on big plans. But the technology exists and is affordable to most legitimate businesses. The problem is that most companies don't collect enough useful data points about each customer. They gather demographic data, like household income. But not key data, like “what are they looking for on my site?” Surveys can help. However, you'll need enough people on your list, first. Instead, start relying on more behavior data. People are literally already telling you exactly what they want. Their clicks and actions are out there in the open. You just need to know where to look to find it. What's your favorite example of website personalization in action? About the Author: Neil Patel is the cofounder of Neil Patel Digital. |
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