Third Thursday Memo – May 2010

About Today's Third Thursday Memo:

The 20/60/20 rule abounds in life. It says that for almost any given thing 20% will be positive, 20% negative, and 60% will be neutral. This can apply for employees in a company, with 20% strong performers, 60% average, and 20% weak performers. This rule also plays out in pricing and your customers. We have an article on a experiment conducted by sociologists that you will find very interesting.

Give Meat, Not Cheese

Also from our favourite advertising wizard a Monday Morning Memo by Roy H. Williamson the importance of finding the meat of your message in any advertising or promoting that you do.

--------

20/60/20 Rule:

Sociologists conducted an experiment at a department store to test the 20/60/20 rule. They placed three stoves side-by-side. On each machine a tag was placed for customers to take to the cash register to complete their purchase. Hidden cameras where set up to record the action.

After one month the sociologists gathered the tags to check their results. Each of the stoves was exactly the same --- the only difference was the price of each stove. One was priced low, one was priced mid-range, and the third was priced expensive.

Without fail 20% of all customers purchased the most expensive machine shown. For these people, few took the time to examine the differences between the units. Another 20%, again without fail, spent little time studying the differences between the stoves, before quickly opting to buy the cheapest one shown.

The other 60% studied the stoves with great care, as if to learn the difference between the machines, and then, in the end, purchased the mid-priced range.

The lesson learned is that price is the ONLY factor in a purchasing decision 40% of the time --- half of those people will always choose the cheapest product, and the other half will always choose the most expensive.

The remaining 60% of the consumers in the marketplace are more interested in determining the value of a particular product and making their decision based upon the perceived value of the product they are considering.

Build value into your product offerings. The more value customers perceive, the more they will be willing to pay for products.

Putting meat in your message (see below) is a good way of showing your customers the value of what you are offering....