Tip of the day: The Compromise Effect
Several years ago, an American retail store called Williams-Sonoma introduced a high-end bread maker to their product range to sit alongside their existing best-selling model. What happened next was astonishing – rather than selling out the newer, better product, sales of their traditional product almost doubled. Why was this?
Science shows that when customers need to consider a set of product choices, the tendency is to make a sale middle ground choice for something that sits between what they need at a basic level and what they can afford at the maximum price point. For a choice between two products, people will often choose the lower priced product because it’s then perceived to be more attractively priced. However when a third product is introduced, customers will be drawn to the compromise choice of the second product.
Consider choosing wine in a restaurant – most people will choose the second one down, in order of price. By placing the most expensive choice at the top of the list, business owners can elicit the powerful force of compromise in the human brain.
In your own product ecosystem, consider framing your core product with choices that make it appear more attractively priced, and offer the most expensive one first. This doesn’t mean that you remove the non-selling high-end product if it’s not selling – to do so kickstarts the mental process with your next one down. Try it and see!