When Should You Reveal Price?
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When Should You Reveal Price?

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    When Should You Reveal Price? When Should You Reveal Price? Presentation Transcript

    • When Should You Reveal Price?The 3 principles of presenting price and how they helped onecompany generate a 97% increase in conversion#webclinic
    • #webclinic2
    • #webclinicJOIN THE CONVERSATION ON TWITTER#webclinic
    • #webclinic4TODAY’S PRESENTERDr. Flint McGlaughlin – Managing Director, MECLABSFlint McGlaughlin is the Managing Director of MECLABS Group. Theorganization has partnered with key market leaders including TheNew York Times, Microsoft Corporation, and Reuters Group.Dr. McGlaughlin also serves as the Director of Enterprise Research atthe Transforming Business Institute, University of Cambridge (UK), asthe Chairman of the Board of Governors for St. Stephen’s University,and as a Trustee for Westminster Theological Centre. Dr. McGlaughlinoriginally studied Philosophy and Theology at the University ofLondon’s Specialist Jesuit College.Today, his primary research is focused on enterprise as transformativeagent. His work has won multiple awards and has been quoted inmore than 13,000 online and offline sources.
    • #webclinic5EXPERIMENT: BACKGROUNDBackground: A large sports entertainment provider sought to increaseconversion on it’s main landing page.Goal: To increase league start-upsResearch Question: Which page will generate the most league start-ups?Test Design: A/B Single factor splitExperiment ID: TP1645Record Location: MECLABS Research LibraryResearch Partner: [Protected]Research Notes:
    • #webclinic6EXPERIMENT: CONTROL• The original version ofthe page emphasizedthe value proposition ofthe app software itself.• We wanted to testemphasizing differentaspects of the valueproposition as well asthe impact ofdeemphasizing theprice.
    • #webclinic7EXPERIMENT: TREATMENT #1• For this test, we werelimited to changing onlythe banner section of thispage, and our languagewas constrained.• In the first treatment, weshifted the focus of themessage from the appitself to the value of thefree trial.• We also tested the effect ofde-emphasizing the price inthe eye-path.
    • #webclinicEXPERIMENT: TREATMENT #2• In treatment 2, we shiftedthe focus of the copy andimages to emphasize thevalue of the company.• However, the most radicalchange is that wecompletely removed theprice from this pagealtogether.
    • #webclinic9EXPERIMENT: RESULTSWeb PageFree TrialWeek 1Free TrialWeek 2End of FreeTrialWeb PageFree TrialWeek 1Free TrialWeek 2End of FreeTrialWeb PageFree TrialWeek 1Free TrialWeek 2End of FreeTrialControlTreatment 1Treatment 2• THE CONTROL strongly emphasized the price at the beginning of theprocess. TREATMENT 1 revealed, but de-emphasized the price on the firstpage. It was not until the second week of the free trial that price wasemphasized. TREATMENT 2 did not reveal the price at all until the secondweek of the free trial.The Presentation of Price
    • #webclinic10Subscription PathLeague StartRateRel. diffStatisticalSignificanceControl 5.01% - -Treatment #1 9.25% 84.6%Treatment #2 9.85% 96.6%97% Increase in League StartsTreatment increased conversion rate by 96.6%99%EXPERIMENT: RESULTS99%What You Need to Understand: In this case, there was a strongrelationship between the moment the price was revealed and theconversion rates. When price was de-emphasized early in the process,we received a greater response from prospects.
    • #webclinic11EXPERIMENT: RESULTS• Price is a complex, yet vitalaspect of offer-responseoptimization.• Often, we are leavingsignificant revenue on thetable because we have nottested and optimized thepresentation of price.How should price bepresented??
    • #webclinic12Today, we are going to walk through the three mostimportant principles that a marketer should know whenpresenting the price of an offer.TODAY’S FOCUS
    • #webclinic13PRINCIPLE #1:Price Does Not Equal Cost
    • #webclinic14Key PrinciplesPRICE DOES NOT EQUAL COST1. It is essential that marketers do not confuse price with cost.Price may be the least part of the cost.2. Cost does not exist on the web page (or in a product’s price),cost exists in the mind of the customer. Many elements otherthan price can contribute to cost.
    • #webclinic15PRICE DOES NOT EQUAL COSTPrice + (X) + (Y) + (Z)… = CostConfusion Effort FearPsychological Costs
    • #webclinic16OTHER CONTRIBUTORS TO COSTOther contributors to cost:Confusion• Headline “Go Pro” is disorienting. What does itmean?• Competing information makes it confusing toknow what is important.Effort• The difficulty in reading the white on blacktext.• Layout presents multiple calls-to-actionsFear• Is this software simple or will it difficult tounderstand?• Does it have all the functionality I want?
    • #webclinicKey PrinciplesPRICE DOES NOT EQUAL COST1. It is essential that marketers do not confuse price with cost. Pricemay be the least part of the cost.2. Cost does not exist on the web page (or in a product’s price), costexists in the mind of the customer. Many elements other than pricecan contribute to cost.3. The goal of the marketer is to minimize (not eliminate) as muchnon-price specific costs as possible.
    • #webclinicVisit: MECLABS.com/LPOsampleMECABS Landing Page Optimization CourseSPECIAL RESOURCE FOR LIVE ATTENDEES ONLY• Clinic attendees save 30% ($200)• Exclusive discount code:451-OC-3006• Available for one week only• View the first session for free
    • #webclinic19PRINCIPLE #2:Price can be either P+ or P-
    • #webclinicPRICE CAN BE A EITHER P+ OR P-PerceivedPositivePerceivedNegative
    • #webclinic21Background: Well-known B2C company offering an online encyclopediasubscription productGoal: To get visitors to sign up for a free trialPrimary research question: Which landing page will have the highestsubscription rate?Test Design: A/B split test (variable cluster)Experiment ID: Encyclopedia BritannicaLocation: MarketingExperiments Research LibraryResearch Notes:EXPERIMENT: BACKGROUND
    • #webclinicEXPERIMENT: CONTROLLet’s look at howprice is presentedin the control…
    • #webclinicEXPERIMENT: CONTROL• On the original landing page price is NOT presented until they decide to clickthrough to the next step.Top of Page
    • #webclinicEXPERIMENT: CONTROL• On the original landing page price is NOT presented until they decide to clickthrough to the next step.Bottom of Page
    • #webclinicEXPERIMENT: CONTROLPage #2• Price is presented in the cart. It is presented in a standard way and is mostlyperceived as a negative. Is there a way to present the price so that it isperceived as a strong positive?
    • #webclinicEXPERIMENT: TREATMENTLet’s look at howprice is presentedin the treatment…
    • #webclinic27EXPERIMENT: TREATMENT• Top of the landing page has been optimized to better express the value of theoffer. By intensifying the value, our researchers hypothesized that we couldpresent the price earlier in the process.Top of Page
    • #webclinic28EXPERIMENT: TREATMENTBottom of Page• The price has been moved from the second page to the first page, and it ispresented in such a way that it is actually a perceived value. It states that thisprice enables you to “Save $1,251.60 off the print [version]”
    • #webclinic29EXPERIMENT: SIDE-BY-SIDEControl – Page #2Treatment – Page #1• Price revealed negativelyon the second page• Price revealed positivelyon the first page
    • #webclinicVersions CR Rel. diff Stat. ConfControl 1.00% - -Treatment 2.03% 103%103% Increase in ConversionThe Treatment generated 103% more free trial sign ups than the control What you need to understand: By intensifying the perceived value of notonly the offer, but even its price, the treatment was able to double theconversion on the page.EXPERIMENT: RESULTS95%
    • #webclinic31Not thisBut thisNOT THIS, BUT THIS
    • #webclinic32When Should You Reveal Price??KEY QUESTIONSooner? Later?
    • #webclinic33WHEN SHOULD YOU REVEAL PRICE?Key Principles1. In most cases, price should be presented only when the value is establishedand the fulcrum is fully weighted on the value side. It is essential that the valuemust be conceptualized, imagined, and fully appreciated prior to revealing theprice.2. However, our research also suggests that in some cases delaying thepresentation of price can actually create anxiety – particularly in industrieswhere people expect to see the price up front. People fear they are beingmanipulated.3. The key is to understand how price impacts the variables in the thoughtsequence.
    • #webclinic34PRINCIPLE #3:Price Must be Tested
    • #webclinicEXPERIMENT: BACKGROUNDExperiment ID: (Protected)Location: MECLABS Research LibraryTest Protocol Number: TP1154Background: National Alert Registry was a subscription service that offeredalerts when convicted sexual offenders moved into your neighborhood ornearby.Goal: To increase the total revenue generated by the subscriptionPrimary Research Question: Which price point will generate the highestrevenue?Approach: A/B split testResearch Notes:
    • #webclinicThe only change on the page was theprice of the activation fee.The three price points tested were:• $10.00• $12.50• $14.95EXPERIMENT: TREATMENTSControl Price-Point: $10
    • #webclinicWhich price point will generate the most revenue??Price Point Total Sales Total Revenue$10.00 ? ?$12.50 ? ?$14.95 ? ?TEST YOUR MARKETING INTUITION
    • #webclinicPrice Point Total Sales Total Revenue$10.00 156 $1,560.00$12.50 94 $1,175.00$14.95 74 $1,106.30EXPERIMENT: RESULTS33% Increase in Revenue with the Cheapest PriceThe control price-point of $10 generated at least 33% more revenue.What you need to understand: The less expensive pricegenerated 33% more revenue than the next expensive price and41% more revenue than the highest price. Essentially, the moreexpensive we made the product, the less revenue we generated.
    • #webclinicPrice Point Total Sales Total Revenue$10.00 156 $1,560.00$12.50 94 $1,175.00$14.95 74 $1,106.30EXPERIMENT: RESULTS (A CLOSER LOOK)33% Increase in Revenue with the Cheapest PriceThe control price-point of $10 generated at least 33% more revenue.What you need to understand: The less expensive pricegenerated 33% more revenue than the next expensive price and41% more revenue than the highest price. Essentially, the moreexpensive we made the product, the less revenue we generated.
    • #webclinicEXPERIMENT: RESULTS (A CLOSER LOOK)Control Price-Point: $10• The results are even more interesting as wefactor in the add-on option to subscribe tothe monthly reporting service.• More people were likely to subscribe to theadd-on option at the $10 price point, leadingto an even greater revenue increase – exactly$247,233.94 per year.
    • #webclinicPrice Point Marketing Cost Total Revenue ROI$10.00 $808.02 $1,560.00 93.06%$12.50 $808.02 $1,175.00 45.42%$14.95 $808.02 $1,106.30 36.91%EXPERIMENT: RESULTS (ROI ANALYSIS)93% Return on InvestmentThe control price-point of $10 generated a 93% ROIWhat you need to understand: The less expensive pricegenerated more than double the amount of ROI for the marketingcampaign.
    • #webclinic42Key Principles1. Presenting price is part science and part alchemy.2. Company value is generated by maximizing the gap betweenyour price to deliver and the customer’s willingness to pay.3. You cannot know that you have the right price until you haverun an experiment where you have charged too much (andthus discovered the top threshold of “willingness to pay”).Price Must be Tested
    • #webclinicAmountSoldPriceTHE PRICE FRONTIER GRAPH
    • #webclinicSUMMARYPRINCIPLE #3: Price Must be TestedPRINCIPLE #2: Price can be either P+ or P-PRINCIPLE #1: Price Does Not Equal CostIt is essential that marketers do not confuse price with cost. Cost does notexist on the web page, cost exists in the mind of the customer.Price should be presented only when the value is established and the fulcrumis fully weighted on the value side. It is essential that the value must beconceptualized, imagined, and fully appreciated prior to revealing the price.Presenting price is part science and part alchemy. You cannot know that youhave the right price until you have run an experiment where you havecharged too much.
    • #webclinic45Live Optimization
    • #webclinic46
    • #webclinicMarketingExperiments.com/subscribeMarketingExperiments Optimization NewsletterFree subscription to more than $20 million in marketing researchJoin 89,000 of the top marketers from around the world as we work together to discover what really works.#webclinic