The Power of Choice

The Power of Choice Written by Nathan Redelfs

The price is right. The art of the deal. Whatever phrase you use to describe it, closing deals is vital to a company in the service industry. Balancing the desire to turn a profit while also helping and connecting with your customers and prospects is often an exercise in patience. If you’re in sales, you get used to the word “no.”

A lot of people think that selling is a process of trial and error with a dash of luck, but bring a little rhyme and reason to the process of selling and you’ll find even more success, especially if you do one simple thing: offer the consumer a choice.

Let’s play a game. Pick a number - 1, 2, 3. What did you pick? Why didn’t you choose 9?

Probably because I didn’t offer it. See where I’m going with this? Customers pick what is offered to them. If all you offer is the service they asked for, they likely won’t be picking anything else - you’re probably leaving money on the table. By implementing some choice architecture, you can start to take advantage of people’s natural decision-making behavior. Here are a few tips on how to get the most out of offering choice.

Offer Packages

The key to using choice architecture and increasing sales is to offer meaningful packages. This concept is similar to how car manufacturers offer choice. When you visit a dealership, most vehicles have various packages. You can get the sports package, the luxury package, or the tech package, etc. Bundling helps make the decision process quicker and easier for the customer, as opposed to overloading them with options.

It’s best to do the same when offering cleaning packages. Try to offer at least three choices, but no more than four. Studies show that when only two choices are offered, customers generally choose the less expensive option. On the other hand, offering too many choices causes a phenomenon known as “choice overload” and can actually create longer consideration times and decreased satisfaction due to doubt of one’s own choice. Create one package that is just the job they requested. Next, create a “best value” package, or the package that you actually want to sell. The key here is to try to upsell the most profitable and time-efficient services you have. Finally, create a “clean everything” package, or a package that is over the top. This helps “price anchor” the package in the middle.

For example, three packages could look like: Basic - House Siding: $199 Best Value - House and Concrete: $249 Premium - House, Roof, Concrete, Windows - $599

Offer them services that make sense based on your assessment of the property. Be sure to explain to the prospect why you’ve added those services. Consumers in today’s market want to be consulted, not pitched to. If you’ve built up positive expectations through your branding, marketing and sales call, potential clients will regard you as the expert and will trust you to make suggestions. This makes it much easier to get the upsell when offering packages.

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Price Anchoring

Price anchoring is an important concept to understand if you create service proposals on a regular basis. It is one of the primary reasons that offering at least three choices is vital to upselling. When consumers are given two options, they almost always choose the less expensive one. This is because they only have two points of reference: an expensive option, and a less expensive option. By adding a third option, you create an “anchor” on the option in the middle. This new point of reference helps the consumer understand the value of each choice.

Price anchoring also creates a phenomenon known as the “center stage effect.” Studies have found that when humans are offered three relatively similar choices, they tend to pick an option in the middle. It’s our tendency to avoid extremes; we also come to understand that the middle option represents a balance between cost and value. Much of this is subconscious, and by offering three choices you take advantage of typical human behavior.

That’s because humans have heuristic tendencies when purchasing a product or service. A heuristic technique is a common method to problem solving that relies on practicality - not rationality - to reach a goal, such as deciding between several options for a cleaning service. It also feeds off of our tendency toward repeat action. All around us are examples of price anchoring, choice architecture, and “best value in the middle” sales displays. We’ve gotten used to picking the one in the middle because it fulfills our subconscious notion that we’re getting the best deal.

Selling is about persuasion. You’re trying to persuade the consumer that your services is what will fix their problem. Having a great sales call, being knowledgeable and educating your customers helps close the deal, but utilizing human behavior in your favor will make your job much easier in the long run. Offering choice anchors the price and triggers heuristic tendencies in your prospects, and in turn will increase your overall sales and revenue. All you have to do is present it to them.

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