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Valuing Information
For many marketing pros today, acquiring audiences seems harder & harder to do – especially when cost-effectiveness enters the equation. Even with the advent of new & less-expensive selling channels, capturing the attention of new customers feels too cost- and labor-inefficient.
So, how do we respond? Many of us are stuck in broadcast mode. We forget that information has value, especially fresh information. Like baby spinach, information is perishable. Its value diminishes as it ages.
Many consumers are used to paying a premium to know first, then buy first. Part of their self-concept includes being “in-the know, expert buyers� whose expertise extends to working the system to their advantage.
Some savvy marketers have leveraged this trend. They’ve developed early-bird renewal programs, but only half the equation is in place, because no premium value is attached to being able to know & buy first. Often, early-birders are rewarded by discounts. These discounts double opportunity costs. First rights should cost more, not less.
With one client, we developed a membership campaign leveraging this trend that reached 85% of the annual membership goal in the first 45 days of the fiscal year. These audience members were willing to pay $250 upward for the privilege of knowing first.
Too often we consider cost-effectiveness when what matters is revenue-effectiveness. Early birds want that buying edge that being “in the know� delivers. It’s not just about getting the best seats on the best night, either. Their self-concept drives their consumption.
Discounting can be a bad habit. When we pull the discount trigger, we focus consumers on price rather than on value. We teach consumers to wait by rewarding them by doing so. Revenue-effectiveness requires a shift of mind from “What’s it cost?� to “What’s it worth?�
Posted on November 1, 2005 05:52 AM | Permalink
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Comments
I have read this entry, thought about it and found myself coming back again to read it. Pricing is probably the toughest discussion in the arts right after balancing idealism and practicality.
I am a little confused since you first suggest charging a premium for knowing first which implies that those who come later will pay less. Then you say that allowing people to pay less later teaches them to wait.
I was also curious if the membership program you mentioned was one of the standard, "donate X and receive the opportunity to buy your tickets before they go on sale to the general public" program or were people actually paying $250 for their tickets and then being told what they were going to see?
As I write this the community is swarming to buy tickets for our performance tonight. We announced the show months ago. We sent out press releases and bought ads a couple weeks ago.
We had almost no sales until yesterday. We don't discount tickets at all. You pay the same in August as you do in March. Everyone waits until the last minute to buy which is a general trend across the country.
The thing is, I know I will get comments tonight about why I didn't advertise it more. The answer I suspect is that since they weren't looking for it earlier their eyes and ears passed it by. I'm wondering if it isn't best to invest the same money in a multiple ads in different sections of the paper and saturate radio and tv starting on Wed/Thurs.
Ultimately, I can't help feeling that people would laugh at me if I tried to place a premium on knowing first since it seems few feel at a disadvantage.
I worked at an organization that had a higher "at door" price and we eventually scrapped the early bird discount because the bulk of purchases were same day.
Thanks for your comment, Joe. I have really appreciated your excellent blog and it's a delight to see you here on my space.
Yes, people pay to have the right to both know and buy first in this instance. This membership benefit is extremely popular with this particular organization because there are events that sell out very quickly and people want the ability to be able to get "hot tickets."
I applaud your decision to avoid rush discounting. I think it's the right decision. Rush pricing encourages people to wait and drives up costs of selling.
Obviously, there will be many events that won't sell quickly, but there are a few that always do.
With this particular client, the ability to offer early knowledge and buying privileges - and this is particularly with what we might characterize as commercial promotions - her audience responds very well.
As we all know, audiences and communities vary. I think your points are well taken.
Thanks again for taking the time to comment here.
Keep up the good work with your own blog.