The behavioral psychology behind the Coldwater Creek promotion?
I thought this was a unique and non-intuitive marketing device from Coldwater Creek, a women’s clothing store.
I’m curious if anyone reading this knows someone who works in marketing for Coldwater Creek who can shed more insight into how well this worked, or if you’ve tried a similar promotion and seen it outperform something more traditional? Email me if you want to share something.
My initial reaction was that this won’t outperform a typical online sales promotion, for example: “This weekend, for 3 days only: 30% off!”
A premise of this particular sale is to get a shopper to start worrying about scarcity, a common marketing tactic. You don’t want to miss buying something now, and risk missing the item you want because someone else purchases the inventory before you do.
Hence the “Tomorrow they may be gone!” sub-headline.
But if you are successful at getting people to start thinking about inventory scarcity and getting them to worry about missing those pants they might want, why on earth would you give them a way out of that thinking by telling them: “Oh but if you want it cheaper you can wait for tomorrow.”
Why give them an escape hatch?
It doesn’t do you any good as a retailer to give them a tiny ounce of encouragement to just come back tomorrow to save more.
That’s why rarely do you see a store attempt to telegraph their sales. Walk into a GAP and ask when the next sale is, and you’ll usually get an employee reluctant to give an answer. They might very well have a prediction, but they aren’t encouraged to tell you about it. They want you to buy today, not to possibly (but unlikely) come back tomorrow to try and spend less money.
The flip side however to my initial reaction, is that maybe this ad will actually be more successful than a traditional campaign because it creates a situation of relativity.
…humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly. (For instance, we don’t know how much a six- cylinder car is worth, but we can assume it’s more expensive than the four- cylinder model.)
That’s why if I want to sell you an iPad, and you haven’t heard what an iPad costs, my game plan is likely going to tell you first, what you’d expect it to cost given all the magic inside. “Folks expected to pay $999 for this”. Then I would tell you “but it’s actually $499.” Now relative to $999 that doesn’t sound so bad.
That’s exactly what Steve Jobs did when he introduced the iPad.
And if you buy an Apple product, you won’t be shown 1 model to buy. But likely 3. Even 6.
6 iPads at $499, $599, up to $829. A $829 iPad!? The “cheaper” models’ prices look like deals now.
Perhaps, Coldwater Creek knows that a 30% off sale is usually the sweet spot for them in terms of how much they want to sacrifice to a discount and where they’ve found the most lift in sales.
So what if now shoppers see that they could get a 20% off sale but that isn’t as good as 30%, or they could get 40% but then have a much greater risk with dwindling inventory. Now getting the 30% off sounds even BETTER.
Those other relative options in Coldwater’s promotion might just greatly increase the impact of the 30% off day.
Definitely an interesting promotion I don’t believe I’ve seen before. I’d love to have a chance to experiment with this type of technique. Know anyone who has?
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