June 24th 2020
Have you exhausted all kinds of tactics and schemes to increase your income?
Perhaps you’ve sent out thousands of emails, posted it everywhere online, alter your website design, and tried everything in-between, yet you are still trying to look for ways to earn more?
I’m not sure if you know about this, but one of the most ingenious ways to encourage your customers to purchase your product and/or service is to employ the Three Box Strategy.
If this is the first time you’re learning about this unique strategy, don’t Google it just yet; rather, let me illustrate with a resonating example:
Imagine, you’re going to the cinema to watch the next blockbuster, and you’re considering to grab a snack to enjoy while watching the movie.
Figure One: Illustration of the different offers you may find at the food stand
In front of you, there are two options: the first one is a 12 oz soft-drink for $5, or you can pick the 24 oz with a tub of popcorn for $15.
More likely than not, you would veer towards the $5 soft-drink, because not only is it enough for you, but you think that the value of the $5 soft-drink is worth the price, compared to an upsize, which may be fulfilling, though not worth at the increased cost.
However, at the management’s perspective, they would, of course, want you to purchase the $15 alternative, because that option offers better profit margins for them. They want to get as much customers to select that alternative, thus how may they persuade customers to do so?
Let’s make use of the Three Box Strategy:
Figure Two: Illustration of the different offers you may find incorporating the three box strategy
Apart from the initial $5 & $15 offer, management introduces a new offer, which is a 36 oz soft-drink with a jumbo tub of popcorn for $26.
At first glance, you may tell me: Bradford, that is insane!? How would this increase sales?
But if you look at it from the perspective of the customer, they observe how vast the choices are now.
Some customers may still opt towards the $5 offer, because that is as much as they can go. There will be those that go for the premium offer of $26, as they want the best- even if you aren’t counting on this option to sell.
The $26 offer offers a contrast between the expensive and cheap option. The $26 offer looks too much, and now the $5 offer looks insufficient. Due to this effect, most customers would settle for the middle-ground between two vast options, which is the $15. They believe that they are getting the best value of popcorn & soft-drinks for its associated cost.
The customer gets what they want while increasing the movie house’s profit margins. Mission Accomplished!
This is the Three Box Strategy, introducing a lavish and premium offer, that would convince customers to settle for the middle, the best option.
You may now be wondering: how do I implement this now, Bradford?
To start, cement your first two offers, in a way that you would be able to earn from it and provide adequate services. Afterwards, you craft your most expensive offer, incorporating tons of high-value products & services that you may offer. Ensure that you can provide the items you’re listing down for this offer. You may also consider raising the price of your medium offer, since it would look cheaper than the expensive offer. Lastly, ramp up sales through marketing your offer in social media and other strong channels.
Watch your income naturally go up by implementing this strategy, as it would not only encourage people to purchase your service, but also go for the offer with the best profit margins. This technique would work best throughout the longrun. The small things does make all the difference!