Speaking Sensis

I’d like to officially welcome Yelp to Australia today, a global leader in local ratings and reviews. I encourage everyone to visit www.yelp.com.au and share their experiences of local businesses by posting ratings and reviews.

Why rate and review? Aside from the fact that it’s the fun and easy way to talk about great (and not so great) local businesses, it’s sites like Yelp that are playing a big part in how we Aussies make purchasing decisions these days.

According to the Sensis® Social Media Report, social networkers read an average of six reviews before making a buying decision. So rather than waiting for a review of a business to be published online or in the local paper and then deciding whether or not to give the business a go, we are getting on the front foot and seeking these reviews out for ourselves. Yelp.com.au makes this very easy. 

Yelp first started in San Francisco in 2004 and today’s launch in Australia marks the 13th country it has opened its online doors in. In Q3 2011 the online ratings and reviews company received an average of 61 million visitors a month (up 63 per cent from the same time last year), has generated 22 million reviews on its global network as of September 2011 (an increase of 66 per cent over the same time in 2010) and saw an average of five million unique views a month on its mobile app. With results like these, it’s evident that ratings and reviews are becoming an increasingly important component of consumers’ pre-purchase behaviour.

While I’m personally excited about Yelp’s launch in Australia today, it’s also a big coup for Sensis®’ Yellow Pages®, after announcing our ground-breaking partnership with Yelp back in July. 

Yellow Pages® local business listing data has been integrated into Yelp.com.au (including mobile site and apps), which means our Yellow Pages® advertisers will be able to be found by more potential customers. And in a couple of weeks, Yelp Reviews and Ratings will be displayed on Yellow Pages® Online and Mobile. I’ll tell you more about that shortly. In the meantime, visit www.yelp.com.au to rate and review a local business near you.

Whether you consciously think about it or not, the life of a retailer, online or off, is steeped in behavioural psychology.  As we head towards Christmas, here’s a case study on how to move your customer from buying to owning.

Imagine you are a boutique fashion retailer. Time and again people come in to your store, start their walk around the perimeter, acknowledge your greeting with a strained smile and maybe a “just having a browse” mumble, and then exit without trying any of the clothes.  That’s me – I’m your nightmare. Money to spend, interest in buying, but inert when it comes to engaging with the purchase process.

How is it then that I happily and impulsively spent a few hundred dollars on a dress that I hadn’t imagined owning before I stepped into the store?

Great salespeople are a great experience. 

What got me into the store?
I’m pretty basic – it was a sale sign.  But I wouldn’t have bothered chasing a sale unless the window display was evocative.  Subtle lighting, natural tones, textured faux-stone display materials – the store fit out made me feel like a was entering a place of nature.  And what’s more pleasant than strolling around a place of natural beauty?  It felt special, the clothes were obviously cared for, and the warmth generated by the store rippled through me as I started my perimeter stroll. 

How did the sales assistant engage me? 
Catherine (yes I learnt her name through the exercise) greeted me from a non-encroaching distance. “Anything I was looking for?” “No just browsing.”  But then her genius move – “Can I try this jacket on you?”. And she did.  She effectively was asking a favour of me – and through so doing she won my trust because the jacket was great.  But then, “There’s a dress that would really suit you” – and off she skipped to the other side of the store, presenting the dress for my reaction.  She’d already managed to engage me through the jacket and I knew through this exercise she had expertly appraised my figure and gained my trust.  Most of all, it felt like she was truly interested in me not in making a sale. She had invested herself in the experience.

How did she make the sale?
The dress went on and was great. But then the show began. The other sales assistant tagged teamed as they demonstrated all the features – yes features – of this wonder dress. Tie it this way, tie it that way – multiple looks as a result of this beautifully, cleverly and practically designed dress.  Add a cummerbund and add another layer of versatility. 

Was I thinking price at this point…kind of. But by that stage it was a question of how much I would pay, not whether I would.  By that point I could have justified almost any price because I had moved way beyond ‘buying’ and was already in ‘owning’ land. And did I feel I was being sold to? No. I felt like they were helping me.

So what are the lessons for small business owners and operators?

Make the experience concrete not abstract – asking me if I was looking for something in particular would have been less effective than asking me to try on a jacket.  For online sites, telling me to click for the product catalogue is less effective than telling me to click to view details, availability and pricing for 23 skirts.

Create a consistent experience throughout the process – in this case, the store fit-out was consistent with both the clothes and the warm attitude of the staff.  Don’t set up a consumer campaign that celebrates fun, connection and happiness if you grind your customers down with a bureaucratic, boring and cumbersome purchase experience – you’ll confuse people about your brand integrity and savage your conversion rate.

Consider reciprocation – asking me for a favour was a way of making the relationship two way.  I was then prone to ask the sales assistant a “favour” ie I was more prone to ask for what I wanted – the ‘power balance’ was equalised.  Seems strange given I was the buyer with the purchasing power, but when dealing with an inert shopper like me, it was a great strategy to get me to act.  How can you create a two way relationship with your customers with the aim of making them more comfortable to do business with you?

No doubt retail is a tough gig so in the lead up to the Christmas season I’d encourage you to take a fresh look at the interactions you have with your customers and see whether some behavioural tweaking is in order. It might just make the difference.

Today we announced the expansion of our search engine marketing (SEM) product offering, with the launch of ClickManager Express – an affordable, entry level SEM product focusing on exclusively advertising through Google AdWords.

This is pretty exciting for small and medium sized businesses that want to give SEM a go but haven’t done so yet. Why? Because it’s cost-effective and we’re here to manage it all for you. We don’t expect you to be an expert on SEM – all you need is a website and we’ll take care of the rest.

We’ve noticed significant growth in the SEM industry within Australia over the last 12 months. While it’s still a relatively new area for many small businesses in Australia, as the number of businesses with websites grows, so does the need for SEM products. There are so many SEM suppliers that it can be a bit overwhelming for small businesses to know who to turn to.

We believe the combination of our partnership with Google and Yellow Pages being such an established and trusted brand provides businesses who want to give SEM a try with the confidence to do so.

The 2011 Sensis e-Business Report found the proportion of SMEs with a website continued to increase over the past year from 61 per cent to 67 per cent , while Frost & Sullivan found 32 per cent of small businesses and 43 per cent of medium businesses planned to increase their search engine marketing budget in 2011.

Furthermore, of the businesses that indicated an increase in their search advertising budget, 32 per cent indicated that the budget increased by more than 25 per cent – which shows that a significant portion of advertisers continue to make good increases to their search advertising budget allocations.

It’s really important that SMEs don’t miss out on the market opportunity available to them – having a website without SEM is like opening a shop and not putting any signage up – nobody knows you’re there. The ClickManager Express product starts from as little as $110 including GST a month and provides SMEs with an affordable, entry level solution.

The ClickManager Express product is sold by our Yellow Pages media advisors and requires the business to have a website. Sensis also offers a website solution called SiteSmart for businesses that are not currently online, so a business can go from no website and no SEM to having both in a very short period of time with Sensis.

For more information, visit www.clickmanager.com.au.

Last week, the Google AdWords Authorised Reseller program was rebranded to the Google AdWords Premier SME Partner Program (PSP). The reason for Google’s new AdWords program name is to reflect a more accurate picture to customers of companies like Sensis, who do far more than just resell AdWords, as well as reinforcing the program’s specific focus on small and medium-sized enterprises (SMEs).

As the team at Sensis is all about making marketing easy, especially for SMEs, we were very excited about the new branding.

Sensis entered into a strategic agreement with Google to become an Authorised Reseller of Google’s AdWords advertising program in Australia earlier this year. The agreement allows Sensis to sell Google AdWords to our SME advertisers and gives Google the opportunity to make its AdWords product more accessible through our sales force.

As a Premier SME Partner, Sensis is recognised in the market as meeting Google’s highest standards and criteria for qualification, transparency, and customer service. This includes completing extensive Google product and account management training.

The PSP connects Google’s trusted and experienced AdWords partners, such as us, with small and medium-sized businesses that want expert help in creating, managing and optimising their online advertising campaigns. This ensures we can provide small businesses with the most effective AdWords advertising solutions.

In addition to in-depth AdWords expertise, with Sensis’ ClickManager and Digital Plus products we provide full-service campaign management, detailed reporting, one-on-one customer support, and broad marketing guidance to help advertisers make the most of their campaigns. 

It was also great to hear what James Sanders, head of Google’s APAC channel sales partnerships, had to say about it: “We are excited to launch the Google AdWords Premier SME Partner program with hand-picked, highly qualified companies like Sensis. Small and medium-sized businesses will not only benefit from Sensis’ in-depth training, but from their years of experience in the local market.”

You can take a look at the Sensis Premier SME Partner page here, visit www.clickmanager.com.au for more information about our SEM products or contact me with any questions.

News Limited recently announced how it plans to tackle one of the big challenges facing the newspaper industry: how to charge for digital news services. The Australian website will have a paywall established in the next few months which will create a subscriber-only service by blocking digital content to those who have not subscribed to the service.

Whilst a paywall is somewhat particular to content providers, there are lessons for all businesses around why ‘free’ is such a powerful behavioural concept and what to do if you want to introduce a charge for something that was previously available for free.

So let’s start by looking at chocolate.

The persuasive power of ‘free’
In an experiment outlined in Dan Ariely’s “Predictably Irrational: The Hidden Forces That Shape Our Decisions”¹, participants were given the choice of two chocolates; high quality Lindt or, the less expensive Hersheys. Through the course of various experiments, the price of each brand was manipulated to see how consumer rationality was affected. In other words, what was the point at which price changed our judgment of what we were willing to experience from our consumption of chocolate. When the Lindt was 15 cents and Hersheys 1 cent, 73% chose Lindt.  Makes sense. We are willing to pay more when we expect to receive a quality experience.

But then life got interesting.  Prices were dropped by 1 cent. Lindt was therefore 14 cents and Hersheys, free.  Suddenly Hersheys gobbled up 69% of the customers, reversing the earlier trend. Was it the one cent price drop? No. It was impact of ‘free’. The majority of participants were now willing to act in spite of the lower level of anticipated pleasure just because the chocolate was free. 

Based on the study, it seems that ‘free’ dramatically impacts our assessment of what we are willing to experience.
Ariely goes on to speculate that the reason we are so swayed by ‘free’ is that there is no downside. In most transactions, we weigh up the pros and cons, rewards and risks, but when something is ‘free’, there is only upside.

This is the behavioural principle of loss aversion, where we are wired to avoid loss more than seek gain.  In the case of chocolates, participants were unwilling to trade Hersheys for Lindt even when they had only to pay one cent for the lower quality brand.  The risk of a less enjoyable experience was still too great. Take away that risk by making Hersheys free, and the game changed.

Introducing a charge for a free service
That’s fine for chocolate, but what does it have to do with a paywall where News Limited are trying to introduce a fee?  After all, it’s a bit like charging for Hersheys when we are used to pigging out for free.  

It shows how difficult a task News Limited have ahead of them because ‘free’ is one of the most persuasive of forces.  So here are some thoughts on how to reverse engineer free in order to transition to a paid service:

Differentiate the product – if a brand wants to charge for something that they have previously given away for free, they need to change the product.  For chocolate, it may mean changing the ingredients or packaging, or emphasising something new about the product that people didn’t know (eg now from sustainably managed cocoa suppliers).  For News Limited, it could mean re-skinning the online experience, introducing new content and/or features, and new marquee journalists.

Reframe the pricing – News Limited customers will be paying between $2.95 and $7.95 instead of zero.  These are small amounts relative to most things, but not relative to free, so News Limited needs to contextualise the price for its customers.  For example, less than a gym membership, less than a zone two train ticket, less than what you spend on lunch per day to get 24/7 access to real-time Australian news.

Introduce decoys – Pricing decoys are a very effective behavioural technique because we assess prices relative to others.  At the moment on News Limited’s subscription page for The Australian are offering a digital pass for $2.95/week, digital plus weekend papers for $4.50 or digital plus Monday-Saturday papers for $7.95.  Here it would have been helpful for them to also offer a ‘decoy’ 7 day print subscription on the same sign up page. Why? It sets a value for the print subscription that makes the print and digital bundles look more attractive. (On The Australian’s offers page which is buried a few clicks in they have moved in this direction but made the mistake of making print look the better deal at $2/week).

Get it over quickly – the behavioural principle of adaptation means we get over bad news more quickly if we are not reminded of it.  News Limited will have to be careful how it treats its customers throughout the sign-up, sign-in and billing process, with the aim to have the pricing recede in the customer’s consciousness. 

Demarcate the process – Anyone who has used iTunes may have noticed that the payment by credit card is confirmed a few days after your purchase. The effect of this is a disconnection of the process (purchasing music) from the pain (payment), which means we are less likely to remember that our downloads have cost us. News Limited should likewise consider how it finalises the payment process with the customer.

Guilt – don’t under estimate how guilt can turn free-loaders into paying customers.  Of course there will always be some people who take without giving, but most of us are susceptible to contra-free loading.  This is our innate desire to work for reward rather than just get rewarded.  Don’t scoff.  A recent move by the Indiana Museum of Art to move to free entry resulted in a 3% increase in paid memberships.
 
The key lesson to take away from this discussion of chocolates and paywalls is this; offering something for ‘free’ changes the game.  It comes with significant behavioural implications that can work well for your business to stimulate volume, but can also change how your product is perceived.  Whilst not impossible to reengineer a free service as paid, it is extremely tricky and therefore should be used with due consideration to your longer term and competitive goals.
  
1. “Predictably Irrational;: The Hidden Forces that Shape Our Decisions”, Dan Ariely, HarperCollins; 2008