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Stores use these discount tricks to get you to spend

(Source: vox.com)

The holiday season in America is one giant spending fest, as the months of November and December can account for 30 percent of a brand’s sales, according to the National Retail Federation. Between Black Friday deals and other pre-Christmas shopping, Americans will spend about $720 billion — and companies employ many time-tested tactics to ensure they do.

It’s not so much tricking shoppers as it is laying out a trail of breadcrumbs to lead them to believe they’re scoring time-sensitive deals. These strategies are especially evident during the holidays, but companies also use them periodically throughout the year.

I spoke with two experts on either end of the shopping spectrum to find out some common marketing strategies brands use to get you to spend more. Cassie Young is the chief commercial officer of the marketing startup Sailthru, which works with companies on tactics like emailing and social media to grow their customer base (and revenue, of course). And Dr. April Benson is a shopping addiction therapist and author of To Buy or Not to Buy: Why We Overshop and How to Stop.

Both said that while sometimes there are deals to be scored, other times, you’re really just being manipulated into opening your wallet. Read on to learn to tricks of the trade, and decide for yourself when it’s worth it to spend.

The “Christmas creep”

The “Christmas creep” is a well-documented phenomenon in retail. Well before it’s chilly out, stores start blaring Christmas music over the loudspeakers. Black Friday isn’t until the end of the month, yet retailers like Amazon, Best Buy, and Walmart are starting to mark down prices — and notify shoppers about them — as early as November 1. Target ran a “Black Friday” deal on November 1, and NewEgg ran one on November 2. Lowe’s has declared, paradoxically, that the entire month of November is Black Friday.

Young says this is a purposeful push to get people in the holiday (read: spending) spirit earlier. “These brands know they’re facing a ton of competition, and they don’t want to limit the spending abilities to a few days. Instead, they want to build mindshare early on,” she says. “It’s become an arms race to the inbox to stay on top of mind.”

Sales that are tied to a day

Our general craving for a good deal has spawned countless shopping days that are basically national holidays. No longer is there just Black Friday — now, there’s Small Business Saturday, Cyber Monday, Green Monday, and Super Saturday, all trying to capitalize on our collective case of the shoppies. While Black Friday is hailed as the biggest shopping day of the year, these newer “holidays” procure tons of sales too. Last year, for example, Cyber Monday turned into the largest online shopping day in American history, hitting a record $6.6 billion.

“These holidays feed on herd mentality, where everybody is rushing to shop because there’s all this hype,” Benson says. “People need to be asking themselves, ‘is it really true I won’t get these deals any other time of year?’” Sometimes the prices are indeed slashed, but most of the time, she says, the deals will likely reappear throughout the year because “it’s more about pressure on you to spend money than about you saving money.”

Benson adds that tying the sales to certain days works because it feeds anxiety. Shoppers hate to miss out on a deal, so there’s a rush to spend money, even when it’s on something they don’t need. The FOMO of missing a sale can often outweigh the logic that you’re spending unnecessarily in the first place, albeit at a discount.

Putting credit in your account

Last year, some Everlane shoppers were delighted to find that during the holiday season, the ethical transparency fashion company had credited them some purchase dollars. The athleisure brand Fabletics does the same thing during the holiday season.

This is actually a savvier method for a company to ensure a shopper will spend money with them than offering a discount.

“If you offer a heavy promotion, the shopper will be trained to buy things on sale,” Young says. “Giving someone a credit instead maintains the sanctity of a brand’s price and value. Plus, it lets the brand put a cap on their discount. A brand will make more money off you if they give you $25 to spend, as opposed to someone like J.Crew, which marks things down to 30 percent to appeal to shoppers.”

Young adds that brands put expiration dates on those account credits to trigger that sense of urgency — it preys on our tendency to want to grab a deal before it disappears. Is credit at a store you like good? Sure. But just remember that you don’t necessarily have to cash in on it, says Benson. The “money” is, after all, technically nonexistent.

Buy one, get one free

BOGO is an infamous shopping phenomenon. Benson calls it the marketing tactic with “the most significant effects” on customers because it convinces us we’re getting something for free.

“This tends to work especially during the holidays, when people are buying gifts for other people but feel like they can keep something for themselves,” Benson says.

Studies have found that BOGO is the promotion shoppers like most and the one that gets us to spend the most money. But watchdog shopping blogs have pointed out that products promoted through BOGO are often the things stores are trying to get rid of. Shoppers who’ve done the math have also found that BOGO items are actually overpriced, so in reality, BOGO means “buy two at the regular price.” Stores know shoppers aren’t thinking too hard about the value, since they’re in deal-hunting mode, and so they often fall prey to BOGO sales, says Benson.

There’s something particularly American about it too, she notes, since it feeds off a “more is better” mentality.

A good way to navigate a BOGO deal is to determine if the price of one would be fair, and if you’d buy it on its own, without the promotion.

Selling things in smaller sizes

Gift sets are popular during the holiday season, especially in beauty. Benson advises shoppers to research the price of the larger sizes, as customers are often duped into buying overpriced smaller bottles and thinking they’re scoring a deal because they come in sets.

“The small size is another way to encourage more spending because people don’t think about the small things they pick up,” she says. “The small bottles speak to the buyer who doesn’t want to spend $26 but doesn’t think much about losing $6. Stores happen to make a great deal of money off the small things.”

Stores like Anthropologie and Sephora place these mini items near the checkout area for people to peruse as they wait in line to pay. While Benson notes mini products are a great way to be introduced to a new or intriguing beauty company, she cautions shoppers to study prices and consider if the smaller option is actually better. She also notes that people are less likely to return a small product that they didn’t spend much on.

“A lot of beauty shoppers return things to Sephora, and you’re less likely to bring something back if you don’t like it if it’s a small size,” she notes.

Free gift with purchase

For decades, beauty brands at department stores have been offering little makeup bags and beauty samples to customers who hit a certain spending threshold — it’s practically a no-fail tactic to get shoppers to spend more.

Benson says this strategy “taps into the human desire to win,” since there’s a reward factor to spending money. The gift often entices shoppers to drop extra dollars — you could spend $50 OR spend $80 and get something for free! Benson adds that even something as insignificant as a sample-size beauty item can influence spending behavior because the messaging is very specific.

“They call it a gift, and that appeals to the part of us that wants to get gifts for ourselves too,” she says. “You go shopping for other people, but your generosity [only] goes so far. Getting this gift often causes people to not think things through.”

Benson recommends analyzing the gift and seeing if the extra money spent to hit the gift-with-purchase threshold is worth it: “You don’t want to be spending [more] just to get something worth $5.”

Some stores will also give customers store credit after they’ve made a purchase. How many times have you shopped at the Gap and been handed a coupon for money off your next visit? Young says this type of promotion is trying to incentivize shoppers to return.

“Holiday shopping brings in customers that are one-and-done purchases, and so this incentivizes the customer to come back,” she says. Just remember that you don’t have to.

More Info: vox.com

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