I believe 100% in treating prospects with honesty and respect.
So I’m curious to know what you think about this…
It’s one of the worst mistakes in the history of modern retail.
Back in 2012, JCPenney CEO Ron Johnson decided to eliminate coupons from the department store’s business.
Up until that point, Penney put coupons in newspapers, credit card statements in the mail and online. They were a major driver of sales.
Johnson slashed prices 20-25% on most products companywide to make up the difference. He figured customers would appreciate the built-in savings.
If you’ve studied marketing you can guess what happened — which means you’re more insightful than at least one Fortune 500 CEO.
The strategy flopped hard.
Sales dropped almost 25% and Johnson left the company to “look for other opportunities.”
I remember it like it was yesterday.
At the time, I worked in the stockroom at JCPenney, unloading trucks full of clothing at 3am (I haven’t always been able to pay survive purely on copywriting income).
My stockroom job got whole lot easier because we sold through much less product.
I also remember JCPenney hiring a mob of temporary employees to remove the price tags from all the merchandise in the stores…
Marking prices BACK UP to their pre-Johnson levels…
And starting to send out coupons again.
Revenue popped. Customers came back, happier. And the company tried to forget what happened.
Lots of Lessons. But here’s the main point
Decision-making is not a rational process.
In this instance, customers preferred cutting out a coupon to save $20 on a $60 sweater over walking into a store and picking up the same sweater for $40.
They were happier because they FELT the savings.
So they bought more frequently. And JCPenney raked in more cash.
Everyone wins.
This is not me telling you to add coupons to your business (I’ve found that credits often work better than coupons, anyway) or lower your prices.
I’m suggesting that skillful, effective marketing figures out why your people make their emotional decisions…
And works to elicit the right motivating emotions with respect, honesty and in your buyer’s best interest.
I knew the JCPENNEY model would fail. No matter the socioeconomic level, every woman shopper loves a good bargain or sale. If l can afford a Hermes bag, l am still bragging about how l got it for $47,000 instead of $90,000.
Makes perfect sense, right?!
I remember the environment. Employees who interacted with the customers knew it was a doomed strategy. Even though they weren’t necessarily marketing experts, they knew their customers. An important lesson.
Thanks for reading and commenting, Linda. (I can’t think of the last time I got a blog comment!)