Wrong Price Strategy Will RUIN Your Business (Lesson for Entrepreneurs)

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.

Big Ideas that Impacted Me in 2014

Big ideas 2014

Boiling 12 months of brain activity down into a few hundred words is an intimidating task. But rather than giving a full-on commencement speech as you “graduate” from this year and move into the next, we might as well get straight to the point.

If I was forced to share the 3 ideas that had the biggest impact on my thinking in 2014, it would be these:

The Immense Importance of Identity in Decision Making

One morning in January 2011, I was standing in a cell phone store when there was breaking news story came on the radio. A mysterious 13th zodiac sign had been discovered — and with Ophiuchus (as the new sign was called) squeezing itself into the calendar, every other sign was shifted. Scorpios became Libras and the world was all out of wack.

Half the people in the store freaked. The man playing with the laptop display searched to find out the new dates, and a small crowd gathered around him, wondering who they were supposed to be now…

(Do you remember that day?)

I share that anecdote to illustrate a point. Astrology falls into the fairy tale category, but people’s reactions were very real. Some people think about their identity largely through the lens of their zodiac signs. They had seen themselves in their horoscopes for years. What happens with that is called into question?

The way we perceive ourselves affects almost everything we do. As a marketer, copywriter or salesperson, you MUST understand the way your ideal customers see themselves. It goes deeper than just features and benefits…even deeper than problems and desires.

This incident happened 4 years ago, but I am coming to understand the power of identity more fully as time goes by and experience mounts.

We’re going to spend a good deal of time fleshing out this idea and applying this concept in my upcoming training/coaching program. In the meantime, you can read about this incident in greater detail in The Ophiuchus Effect.

The Gargantuan Difference Between Prospects and Buyers


This was The Business Growth Question I Couldn’t Get out of My Mind earlier this year. It’s been stuck there for the past 350 days or so.

There is a world of difference between someone who reads your free material but hasn’t sent you any money. I advise you to check out the link to the article, because I’m going to be brief here.

Interestingly, when someone becomes a paying customer, their identity is altered a little bit. As they become accustomed to being a customer, they may come to think of themselves in terms of your product or service. There are Pepsi people. There are Apple people. There are Chicago Bears fans (we’re a depressed bunch these days).

Some of us are as loyal to our preferred products as to our political affiliations.

Do what you can to convert your prospects into buyers. The relationship you build with your buyers is arguably the most valuable asset you have.

The Enormity of Leadership


If this sounds familiar to you, it’s probably because leadership has been one of the Big Ideas that Impacted me in 2012 and 2013. The topic is both important and compelling.

I do not speak of leadership in the superior-subordinate sense. I’m talking about something closer to “I’m taking my flashlight in this direction; who’s headed this way?

Even if you’re not giving orders, you are a leader if you have an audience. And as a leader, you have a responsibility for the well-being and progress of those walking with you. You have to

  • Teach them. Help them develop a worldview that will serve them well
  • Warn them. You see danger they can’t see yet. You’re aware of pitfalls they need to know about. Have the guts to stand up and protect them to the best of your ability
  • Encourage them.
  • Inspire them. Share your successes and the successes of other members of the group. Never miss out on a chance to give them good news.
  • Exemplify the philosophy you espouse. Walk the walk.

I’ve pontificated on this topic some more at Leadership: Burden and Blessing, if you’re interested.

Happy New Year. May this be your best year yet. Let me know how I can help you achieve that.

P.S. Have you registered to get your copy of Creating Business Growth yet? It’s going to be available for free on Amazon Kindle from January 1-5.

Weighing in at more than 300 pages, this book shares expert insights on
– Google Adwords
– Getting Referrals
– Neurolinguistic Programming
– Networking
– Search Engine Optimization
– Email Marketing
– Public Relations
– Unique Value Propositions
and plenty more.

This will very likely be the most useful book you read all year. What’s more, you’ll get to know nearly 2 dozen of the smartest marketers I know…men and women who have earned my admiration and trust over the past couple years.

Get more details and pre-register to get a free copy on New Year’s Day at http://creatingbusinessgrowth.com/.