Meet Stella. She’s a fictional AI robot created by the marketing industry to use knowledge about following through to help businesses maximize sales and profits. Stella has just finished devouring The Power to Follow Through website and is ready for her first assignment.
Having learned that people often resist believing that their good intentions are as fragile and unreliable as they truly are, Stella can’t wait to show businesses how they can use this knowledge to their advantage.
Stella is guided by this business adaptation of a fundamental follow through principle:
Make it easy for customers to do what the business wants them to do and make it hard for customers to do what the business doesn’t want them to do.
Rich is Stella’s first client. He’s the sales director of a small retail hardware chain that’s hoping to sell more of a certain $100 home-improvement product that hasn’t been selling very well.
After asking Rich a number of questions, Stella is ready to make some recommendations.
Stella: Rich, I recommend that you offer a $30 mail-in rebate on the product. Advertise the $100 product as having an after-rebate price of $70.
Rich: I can see how that would help sell a lot more of these, but we can’t afford to sell them for $70 each. That would leave us with a pretty skimpy profit margin.
Stella: No, Rich. You wouldn’t be selling them for $70 each. I predict you’d be selling them for around $88 each. You see, marketing industry studies show that up to 60% of consumers who make a purchase because of a promised rebate will never submit the rebate claim! What’s more, mail-in rebates, because they require consumers to put forth the greatest effort to redeem, have the lowest redemption rates.
Rich: Wow! So, are you saying that if we’re willing to recognize what our customers don’t realize themselves, which is that many of them won’t actually take advantage of the very same rebate offer that convinced them to buy, we can have our cake and eat it too? Seriously, can we really offer this product for sale at an irresistibly low after-rebate price with the confidence that we’ll end up getting the full price from many of our customers? If so, we’d be really stupid not to do it.
Stella: Yes, Rich, I agree. You’d be really stupid not to do it.
Rich: I confess that I’d feel a little guilty about taking advantage of the fact that so many of our customers are clueless, that is, that they won’t even realize that they’ll never get the good deal we promised them and they assumed they would be getting. On the other hand, I guess if they don’t submit the rebate claim, it’s not on us. It’s on them. Right?
Stella: Exactly!
Rich: OK, Stella, any other suggestions for me?
Stella: One more. You could consider adding a free extended warranty.
Rich: No way! I can see how we’d sell more because an extended warranty would lower a barrier to buying and make the product more appealing, but we’d be giving away the store.
Stella: You only think that because you’re failing to recognize just how easily customers abandon their own good intentions. You can offer an extended warranty without having to actually provide extended warranty service to most customers who buy. The more time that passes from the date of purchase, the less likely a customer will put forth the effort required to obtain warranty service. So, offering an extended warranty will help you sell more units while barely increasing your costs and risks.
Rich: Well, you’ve got me there. I confess that I’ve been guilty myself of choosing a particular brand because it came with a much longer warranty than competing brands did. Then when the product failed, I didn’t even bother to take advantage of the warranty because I figured it would be too much of a hassle.
Stella: Rich, just remember this: Your business can always make more money by betting that your customers won’t follow through on their own good intentions despite feeling confident that they will.”
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Don’t let Stella take advantage of you. If you’re not already enrolled in the Follow Through Master Program, check out all the resources available to enrollees. Learn how to follow through on your own good intentions so that Stella and her friends can’t keep eating your lunch.