How can eCommerce businesses, digital stores and brands increase conversion rates without adjusting their pricing or marketing strategy?
The answer lies in a small psychological adjustment that could make a massive financial difference.
The technique I’m about to explain goes against the strategies adopted by the vast majority of online stores. I see it when I’m shopping online, when I’m clicking on ads that’ve retargeted me (because checking out landing pages is something I’m sad enough to do in my spare time) and when I’m browsing brands and eCommerce stores.
The rejection then retreat strategy is a psychological technique that tips prospects who are on-the-fence into buyers, and increases the average order value of visitors who’ve entered your store with a buying mentality.
What Would You Do?
Before we get into explanations, reasons and applications, I want you to read the following examples to better understand rejection then retreat.
Let’s pretend (for the sake of this article) that we’re average customers who’re in the market for a new mobile phone contract.
- You visit a mobile phone provider’s website. The first thing you see on their homepage is an amazing deal for a cheap phone. It wasn’t what you were looking for but it’s a good deal. You then look at the phone that you really wanted and it’s more than 2x the price. This makes you think that the phone you wanted is expensive. So, you go back to look at the deal for the phone you didn’t want.
- You visit a different mobile phone provider’s website. The first thing you see is an offer for their premium, top-of-line phone with tons of storage and add-ons chucked in. It’s out of your budget but the price aligns with your expectations. You then search the website until you find the phone that you really want. It is less than half the price of the premium phone, making it seem great value. What would you do?
Whilst the above scenario might seem simple, the psychological effects it can have on buyers is immense.
To help me explain, let’s look at an example given by marketing psychology supremo Dr. Robert Cialdini…
A boy scout approached Cialdini, asking him if he wanted to buy a $5 ticket to a scout’s social event. The thought of attending a scout’s social event and having to adjust his calendar, resulted in Cialdini turning this offer down.
As soon as Cialdini said no, the boy scout asked him if he’d like to buy some $1 chocolate bars to help them fundraise for the event. Cialdini bought 2.
This doesn’t sound too amazing, right?
That’s because up until now, you didn’t know that Cialdini doesn’t actually like chocolate.
The psychologist hypothesised that the only reason he decided to buy the chocolate was to help the boy after rejecting his first offer. Had the boy scout initially asked him to buy chocolate bars, Cialdini would’ve said no…
…but, because he was presented with a larger, more expensive and less reasonable offer first, he felt obliged to accept the smaller offer.
This is the power of the rejection then retreat strategy.
There are three psychological reasons that explain why opening with a premium, high-end offer first, before following it up with your best-selling price point (and upselling on it), works so much better than presenting your low-value product first.
Let’s take a look at them…
The Principle of Contrast
Everybody knows what contrast means, right? It’s when there is a striking difference between two things.
In this case, it refers to price.
As a psychological demand, we seek relation. It allows us to compare, judge and come to informed decisions. This puts tremendous importance on the first price you present to prospects.
The rejection then retreat strategy uses the principle of contrast to align brands, products and offers with the high-end, premium corner of the market, before contrasting this feeling with an industry average price point…
…this contrast, causes urgency to buy and convinces sceptical prospects to purchase.
For example, I look on a branded sportswear website for a new pair of running shoes. I immediately see a pair of trainers that look amazing, but they are way out of my price range. This makes me see this product as an aspirational purchase. Before I leave the site, I see a similar pair of trainers that are within my price range. This effect primes me to buy.
The principle of contrast highlights the importance of always showing your premium options first, as long as prospects are aware that this is NOT the only option available to them.
This principle also works in reverse. When prospects see a cheap price first, they are much less likely to make high value orders. Think about it…
…why would somebody want to spend a lot on your brand, when others can align themselves with the brand for much less?
The Theory of Reciprocation
I’ve actually written an entire article about this amazing technique, check out The Theory of Reciprocation: Get Back Big, By Giving Small First if you’d like to learn more!
Reciprocation (at its most basic level) is the psychological compulsion to return a favour.
When somebody does something for us, a powerful psychological effect drives us to reciprocate in turn.
For example, has somebody ever bought you a birthday present that wouldn’t normally? When their birthday arrived, did you buy (or feel a need to) get them something in return?Have you ever been invited to an event by somebody you don’t know very well? And then felt compelled to invite them to something in return?
This theory works in the rejection then retreat strategy, because by retreating to a lower priced offer, you are reciprocating to your prospects needs. The reduction in price and demand is a favour.
The retreating element of rejection then retreat is perceived as a sacrifice or concession in order to fulfil your prospects need. And as a result, you will have triggered a psychological need to reciprocate in your potential buyer (making them much more likely to accept your second offer).
Structured For the Odds
The rejection then retreat strategy increases your chances of a prospect buying from you, because (as well as all the amazing psychological effects) you are able to make more than one offer.
Brands and businesses that go straight in with their best offer, will only win a new customer if this is accepted. If it is rejected, they have nowhere else to go.
However, by implementing the rejection then retreat strategy, you will win BIG if they take your premium offer, but if they reject it, you have a second chance to win by offering your best deal.
By implementing this strategy, not only can you use the powerful effects of contrast and reciprocation, you can also enter in a (digital) negotiation with your visitors, offering multiple deals.
The structure of a rejection then retreat offer increases your odds, simply by doubling the number of offers.
How Can You Use Rejection Then Retreat Online?
If you’ve ever visited an IKEA store, you’ve seen this principle working in a physical environment. You are made to walk through every section, with their most expensive products always on display first (in the showroom areas).
Hopefully, you’ve already thought of a few applicable ideas (for your brand) but, just in case you haven’t, I’ve put together a list of broad ideas that could be applied to (near-enough) any digital business:
- Always having your products listed (by default) in descending price order, from highest price (at the top) to lowest
- Promotional banner ads (at the top of your homepage) featuring aspirational, premium products (and their prices)
- Re-marketing emails to cart abandons, offering them a discount on their purchase, or suggesting similar, cheaper products with the same product tags
- Prominently featuring your most expensive products
- Using rejection then retreat to negotiate on price in conversational marketing (primarily chatbot promotions)
- Running premium priced products on ads, or using a catalogue ad with a premium product featured BEFORE a standard offer
- Pop-up triggered upon exit intent with an offer for a cheaper product or discount
- Displaying prices for all plans when offering subscription deals
- Asking for contact details when a warm lead rejects your offer
How Shouldn’t You Use Rejection Then Retreat?
When implemented incorrectly, the rejection then retreat strategy can have the opposite effect, lowering conversion rates and driving prospects away.
To avoid this painful situation, make sure you avoid these mistakes:
- Inflating the prices of your regular products. Doing this will allow you to implement rejection then retreat, but prospects will automatically see you as being overpriced. Only use this tactic with premium offers!
- Testing with mid-range products. Rejection then retreat will not work if you’re not all in. Be bold, offer your premium range first.
- Assuming that you cannot use this tactic because you only sell one product (or many similar priced products). Whilst it isn’t worth creating a premium product purely for the sake of this strategy, you can ask for the contact details of anybody who declines your only offering. This smaller ask is less taxing and will build your marketing list.
Rejection then retreat is a powerful strategy that is often overlooked.
Every day I see websites that start out by offering (or promoting) their cheapest offer, before trying to upsell prospects to their premium products. This type of strategy only works when a brand has a clearly defined sales funnel…
…and the sad fact is, most brands are not that well prepared.
Try things in reverse for once. List your highest priced products first (or at least alongside your best value offer) and upsell when they accept the retreating offer! This will boost conversion rates and your all-important average customer value.
What do you think of this strategy? Have you ever implemented it?