Increase profits by up to 45% w/o new products, better converting or +traffic

If you've not had a chance to read Dan Areily's book “Predictably Irrational” you should. It's right up there with “Influence” by Cialdini as a must read for marketers looking for key insights into human buying behavior.

One of the most interesting things he talks about in his book is something called “The Decoy Effect” . Wikipedia defines the “Decoy Effect” as follows: The Decoy Effect is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated. An option is asymmetrically dominated when it is inferior in all respects to one option; but, in comparison to the other option, it is inferior in some respects and superior in others. In other words, in terms of specific attributes determining preferability, it is completely dominated by (i.e., inferior to) one option and only partially dominated by the other. When the asymmetrically dominated option is present, a higher percentage of consumers will prefer the dominating option than when the asymmetrically dominated option is absent. The asymmetrically dominated option is therefore a serving to increase preference for the dominating option.

Ok, so now that your half asleep, allow me to give you two examples. One is a test done by the Economist Magazine, one of the most respected financial publications in the world, and another done by yours truly a slightly less famous and well repsected financial publisher.

The Economist Magazine was trying to bring up revenue and sell more subscriptions.

In the fist test, they offered two options. A Web Only subscription for $59 and a Web and Print Subscription for $125. In this test, 68 people took the Web Only Subscription, while 32 opted for the Web and Print Subscription option. This resulted in revenue of $8012 for the economist.

In the second test they offered THREE options. Option one was a Web Only subscription package for $59, option two (DECOY) was PRINT ONLY for $125, and finally option thee, Web and Print for $125. In this test only 16 people took the web only subscription, while 84 opted for the more expensive, web and print package. This resulted in an income of $11,494 for The Economist, an improvement of nearly 45%! without even having to create a new prodct or package at all! Pretty cool if you ask me.

So, I'm not the world's smartest guy, but I am good at ripping off great ideas.

My client has a subscription product in the Forex Niche, a newsletter giving picks, and another product, a course. Most people are not interested in the course at all because they are lazy and they want to have someone do all the work for them, so it doesnt sell very well.

In the past our numbers looked like this.
Newsletter Subscripion $197 per year, 78% of all our purchases
Course teaching them to be great traders and not need a newsletter: $247, it was only 22% of our sales.

Now we offer :
Newsletter for $197
Course only for $247
Newsletter and Course for $247

Our last two hundred purchases have been 83 newsletter buyers, 2 course only buyers (I don't know what they were thinking) and 117 Newsletter and Course buyers. This has resulted in income of $45,744 in the last 3 ½ weeks. Had we continued to use the old model, our expected income would have been $41,600. This means we increased our income by over 10% without getting any more traffic, without creating any products at all and without inreasing our overall conversions at all. Needless to say my client is happy.

Try this out and let me know what it does for you. Thanks to Chris Brisson for telling me to check out the book.