Don’t remove the customers favorite part of buying just cause YOU feel awkward. They WANT the endorphins!
Imagine implementing a strategy that caused your annual sales to fall from $17 billion to $11 billion, and lost the jobs of 40,000 employees!
That’s exactly what happened in the 17 months of Ron Johnson’s time as CEO at J.C.Penney.
This is one of my favorite case studies EVER, and today, I want to share with you the vital lesson that all entrepreneurs can learn from Johnson’s disastrous stint at Penney’s.
Here’s what happened:
HOW TO LOSE 6 BILLION IN SALES
In June 2011 J.C Penney’s announced that they were hiring Ron Johnson, the man in charge of Apple’s wildly profitable retail stores.
Johnson mission was to radically overhaul the department store chain by getting rid of its discount culture and restyling its stores along the same lines as the Apple Genius Bars.
In early 2012, Penney’s stopped most of its couponing and discounting strategies.
The new message to market was “discounts are fake.”
Johnson reversed the discount strategy and sold $20 shirts at “honest” $20 instead of $19.97. Items were no longer marked up, and no discount coupons were sent out.
The message changed to “Hey, you’re a smart customer. You know that these coupons we send out aren’t real – so we’ll just sell to you without the games.”
In the 17 short months that Johnson was in charge:
- Stock prices dropped alarmingly
- Customers voted with their feet and their wallets
- Sales fell from $17 billion to $11 billion
- 40,000 employees were fired
By April 2013, Johnson was out, and J.C.Penneys spent the next two years repairing the damage and reversing most of his strategy.
So, how did everything go so wrong – and what does this tell us about the psychology of sales? And how can we use this lesson to become better marketers ourselves?
THE CUSTOMER’S ENDORPHIN RUSH
There’s a high that people feel when they anticipate the excitement of purchase. It’s a chemical reaction that happens in the brain which produces endorphins and releases the neurochemical dopamine.
Once these chemicals get switched on you feels great – which means you want to do whatever it is that made you feel good more often
The coupons and the discounts created this excitement, and even though without ‘the discount coupon’ the item may still be the same price, the excitement and the drive to buy is removed.
Even though the customer can buy the product at the same price – without the thrill of the coupon and the discount – they feel less satisfied because their neurochemicals have not been activated by the anticipation of finding a deal.
If you give the exact same product away and don’t play these scarcity and urgency games, and you literally kill the fun the purchase. There’s no reason to Buy Now because there’s no thrill of a deal and no warm fuzzies to motivate them.
Coupons and discounts are just another way to create the best pre-purchase experience for your buyer – Check out this article
The thrill of the purchase is exactly what JCPenney lost when they brought in Ron Johnson in to revamp their sales strategy.
As a marketer, you can enhance the thrill of purchase by using techniques like:
- Offer Stacks
- The Countdown Timer
- Limited Offers
- Discount Codes
- Price Slashing
THE KOHL’S EFFECT
The other day, I went and quickly grabbed a pair of swim shorts at Kohl’s. When you go to the checkout, they tell you how much money you’ve just saved on what you’ve bought.
I just look at them and smile – they know that I know what’s going on, but they just say, “Thank you. Congratulations.”
In reality, I didn’t save $149, I spent $20. But the way that it’s said makes it attractive.
It’s a very clever strategy.
I’m starting to use it on some of my Thank You pages, and you can use this strategy in your copy too.
Instead of focusing on how much the customer has spent – congratulate them on how much they’ve saved.
It’s the same at Kohl’s, most people know that they haven’t really saved $149 bucks when they buy a pair of socks and a shirt.
However, the psychology behind what they’re doing makes the customer feel good. Those endorphins get released, and the dopamine starts rushing around your body…
And you associate feeling happy with shopping at the store. You are neurochemically primed to become a regular customer because shopping at Kohl’s always makes you feel good.
PLAYING THE GAME
On a webinar, we have a fantastic tool called the stack. The stack is a way to structure your offers and then present the offers. The stack is a beautiful, amazing, incredible thing…
However, it can feel a little bit weird to present, right? A bit like an infomercial (Remember the ShamWow! Guy? – I talked about him, here)
“If you call now – in the next 20-minutes (‘cause we can’t do this all day) we’ll give you a second set absolutely FREE! – So that’s 8 ShamWows for $19.95 – it comes with a 10-year warranty – Here’s how to order…”
The infomercial people are experts at creating offers stacks, and that’s exactly what we do in internet marketing too. Next, we add some anticipation, urgency, and scarcity to increase the thrill of buying.
However, it’s pretty common for a funnel builder to say, “I don’t know if I wanna to do that whole like price slash thing. I don’t know if I wanna use a countdown clock. I don’t know if I wanna use all these scarcity and urgency tactics…”
And while it’s true that some of your customers probably know what’s going on, it doesn’t mean you don’t play the game.
People like to know the rules, they like to know what’s going on… which is great because they know that you’re going to ask for their money.
All the scarcity and urgency tools we use to push customers over the edge, they’re there for a reason
Just like the coupon mailers, they prompt people to get off of their butt and buy now.
Don’t feel awkward about it. Don’t feel weird about it. People want an excuse to buy now.
That’s why I love the J.C.Penny case study so much because it shows that customers love the deal and the endorphin rush it gives them.
When JCPenney took away the deal, they took away their customers reason to buy. And the customer’s didn’t like it!
It’s the classic Kohl’s model – that’s why there’s always a deal going on. That’s how they run all those department stores.
This is a huge lesson. Buying is a game, and YOU need to let people play the game.
THE CONSUMPTION INSTINCT
People want to purchase. When you have a cool product, it makes them happy to buy. They want to buy things. We have a consumption instinct.
We want to consume. And that’s not a bad thing.
However, sometimes you can get in the way of this consumption instinct your own emotions and feelings of awkwardness. Don’t do that!
The customer wants to play the game. It is a courtship that they’re dancing with you.
If you don’t play the game someone else will be waiting in the wings willing to play the game. And when you look at it that way, it’s a lot of fun.
If something is proven to help you sell a product – then stay the course, and as long as it’s ethical and moral, use it to sell your product.
I think that goes without saying, but maybe it doesn’t, so let me go ahead and just say it again:
As long as it’s ethical and moral, as long as your product is amazing, don’t let feelings of awkwardness stop you playing the game and giving the customer what they want
There’s a great book called the Consuming Instinct if you want to learn more.
Lately, I’ve been adding more of these strategies to my sales process:
#1: It’s laced inside of my copy. I’ve been saying things like:
“If you don’t get this now, are you ever going to be successful doing this stuff? Absolutely not!”
It just for fun, and my customers know that it’s a joke, but it’s a way to lace in my personality along with some scarcity and urgency.
#2: When somebody buys from me, their name gets sent straight to my phone, and I send a quick video with a personal “thank you” to them. I crack stupid jokes – I don’t care if they’re stupid. That’s not the point.
I’m keeping the thrill of the purchase laced inside of the buying process.
Don’t be boring to buy from – don’t be boring in general 😉 – but don’t be boring in the actual order process.
The courtship of the purchasing experience is so important
WHAT DO THEY WANT?
One of the easiest ways to work out what urgency, scarcity, and thrill of purchase YOUR customers respond to is to look at other products that your customers are buying to solve the same problem.
Then, instead of just hacking the funnels, study the way that scarcity, urgency, and the thrill of purchase are laced into the sale of those products.
What methods are they using to keep the fun and thrill of purchase for their customers?
Make sure you’ve got those little things laced inside your purchase path to. Make it easy for them to buy. Make it fun too.
MY FUNNEL STACHE
Another tactic you can use to increase the intensity of the feel-good rush that your customers get when they buy from you is to add some CULTural touches to your offer.
Russell talks about building a CULTure in Expert Secrets, so if you don’t know what I’m talking about, do yourself a favor and go read it.
We’ve just launched a product called My Funnel Stache, as in “mustache.” It contains ALL of the top end funnels that I built while at Clickfunnels for Russell and his clients.
I rebuilt the funnels in front of a live audience and then made them available to buy for your own use. They’re FREAKIN’ *ALL CAPS* AWESOME. These aren’t your grandma’s funnels.
It includes application funnels, webinar funnels, event funnels, e-com funnels, supplement funnels, B2B. It’s the whole SHEBANG!
When someone buys My Funnel Stache I send them some sunglasses with one red lens and one blue lens – they’re 3D glasses, but they look like the Clickfunnels colors.
Then I send you out a fake adhesive mustache. Why? Because it’s fun. That’s the only reason. It builds CULTure – it increases the thrill of the purchase. We’ve got 500 fake mustaches, and we’re shipping them out!
If you guys want to check out My Funnel Stache, go to myfunnelstache.com, and watch how I built the whole thing – including the marketing.
- Marketing is a game – play it
- Fund ways to increase the thrill of the purchase for your customer – or they’ll go elsewhere (Remember JCPenney)
- People have a consumption instinct (they love to buy) – so don’t feel bad about ethically using this to sell awesome products
- When you hack funnels, remember to study the urgency, scarcity and CULTural tactic that add to the thrill of the purchase
- Find ways to add endorphin and dopamine warm fuzzies to your customers purchase experience – remember the Kohl’s Effect
- Check out My Funnel Stache to see how I designed my product with all this in mind – it’s grandma approved 😉
- What methods can you use to increase the fun and thrill of purchase for your customers?
Until next time – Keep Crushing It!
Hey, whoever controls content controls the game. Want to interview me or get interviewed yourself? Grab a time now at SteveJLarsen.com