Category: Sell


Jul
2010

8 Ways to create buyer comfort

categories: comfort, Jason's Articles, Sell

Comfort radically influences bidder behavior!

Ebay auctions are a game, and governed by game theory, (remember that movie “Beautiful mind” with Russell Crowe, chronicling the life of John Nash the crazy, but genius professor), yeah, it’s that stuff. Nash is the central figure in much of what is covered in this book and his Nash Equilibrium is the basis of an enormous amount of academic work.

 According to Wikipedia, eight Game Theorists have won a Nobel prize for their work, so it’s a widely studied field. It includes fun concepts like ’zero sum game’ and ’win win’ outcomes. Believe me when I tell you, if you’re not a total math geek, you don’t want to get involved in the mathematics behind all the theorems and proofs. It gets very complicated very fast.
 What we know for sure based on all of this academic work, and what we can say, (In my opinion), is probably the most important rule for getting a successfully auction completed is a very simple concept:
High comfort = Bold Bidder Action

When a bidder has a high degree of comfort with what is going on, they become bold bidders. As their uncertainty grows, their boldness declines.

People want to know as much as possible about what is going on as the auction unfolds. Feeding your bidders information, and making them comfortable is the single greatest element for success in auctioneering. Violating this basic rule will take tens, hundreds, and even thousands of dollars off the table.

This is common sense when you think about it. The comfort level of each participant with the rules of the game, and the ’reality’ of what is happening radically influences their behavior. As people have unanswered questions, or ‘red flags‘ about even the smallest of details, they temporarily put those concerns out of their head if their desire for the object outweighs their concerns, but as the stakes of an auction get higher and higher, those red flags re-emerge as buzz kills. They become the show-stoppers that turn an active bidder into a watcher.

Let’s imagine a few Ebay listings together to clarify this idea, (and you can assume that they both have terrific pictures related to the item:

Listing #1: “For Sale: 1 pair of Levi’s 501 Jeans worn by actor James Dean the day before his death, as certified by Sotheby’s Auction house in 1966, and held in a Barkley’s Bank Vault until now. All paperwork available for inspection and certified by the Screen Actors Guild. Additionally, the 501 Collectors association value chart, (link provided), indicates that 1966 501s in top condition sell for $2,200 on average. Reserve Price: None. Starting Bid Price: One Cent. (Pictures of jeans and all documents included).

Listing #2: “For Sale: 1 pair of Levi’s 501 Jeans worn by actor James Dean the day before his death, according to Bill Parker, my uncle, who was James Dean‘s best friend, you can Google it“. Jean’s kept in a secret location until now. Starting Bid: $10,000. (Pictures of jeans included).

Obviously this is an extreme example to prove the point, but you get the idea right? The tools involved in creating comfort are not mysteries:

  1. Clear Facts about the item
  2. Clear, (high quality) pictures
  3. Details about who you are, (people buy from people).
  4. Your credibility indicators
  5. Social Proof that the item is valuable
  6. (Credible) third party endorsement
  7. A very low bid price
  8. Details about the scarcity versus abundance of the item. Is it one of a kind? Or will you sell another one tomorrow?
Here is the critical lesson in regard to rule #1 – Ebay has set up a lot of the rules of the auction system and people generally know the Ebay rules. But you as the auctioneer set up a whole collection of your rules as well. If you set them up well, people get comfortable. Set them up poorly, or leave them unstated, and people get uncomfortable. The clearer you make your rules, the more comfort the seller will have

If you fail to set up your rules clearly, or don’t set them up at all, your bidders will have a serious comfort problem. This is a huge mistake.

“The only thing we have to fear is fear itself – nameless, unreasoning, unjustified, terror which paralyzes needed efforts to convert retreat into advance.”
 
  

This is one famous quote of the late president Franklin D. Roosevelt on his First Inaugural Address on March 4, 1933.

It’s true for auctions too, fear immobilizes people. And if they won’t act because they are afraid of your ‘deal‘, you won’t have a successful auction. Comfort reduces fear.

Make them comfortable!

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Apr
2010

The 4 Pricing Paths

categories: Jason's Articles, Partner Resources, Sell

Let’s talk about your options for pricing!

Look at any seller in eBay or Etsy, (go ahead, go pick a seller), and observe whether they are listing a lot of things or just a few things, and whether they’re selling their items for a high price or a low price compared to their peers.

Over time every seller chooses one of these 4 paths, there are just four. What are the 4 paths sellers can choose from?

It’s like the sign on that old country road,

‘pick your rut carefully, you’ll be in it for the next 20 miles’

If you start your business selling a little for a low price, guess what you’ll probably grow into? Selling a lot for a low price. Is that where you want to position yourself? And if you start your business selling a little for a high price, guess what you may (or may not) grow into? Selling a lot for a high price! But here’s the hard part of your ‘journey’ to become a high volume high price seller. You’ll encounter several temptations that will try to thwart your efforts. They are,

 

1. Competitors that match your offerings and lower prices forcing you to compete on price or fail.

2. A strong temptation to lower prices to increase volume.

One of these is an external threat, the other an internal temptation. Both must be avoided if you’re going to become a high volume, high price seller. But even if you never become a high price, high volume seller, it’s often times better, in economic terms, to remain a high price, low volume seller, and just manage your brand and customer base carefully, (think Rolls Royce). How many high volume low-price stores can you think of that have horrible brands, and eventually go out of business? That happens more often than anything else.

It’s obvious that the best place to start is by selling at a high price. And of course, I’m not talking about absolute price, (like selling items over $10,000), I’m talking about relative price, (like 10 times your cost of goods). I’m talking about ensuring you start with a high margin item. And that you find a way to offer your goods at a premium price in your market. If there is tons of undifferentiated competition in your category, you won’t be able to do this, but if you’re niche is small enough to dominate, then you can position yourself as the premium brand.

Of course, you might be thinking, ‘how does running auctions fit into all of this? – because then I’m not setting my prices, the marketplace is doing that for me!’ Good point. In some ways, running an auction is like a democratic way of setting your pricing path. You let ‘the market’ help you find your way. If your designs, photography, and brand identity are all spot on, then the market will catapult you to the top of your niche. You’ll be a high priced seller. If something is off, then the market will penalize you for it. The great part is – once the ‘market’ has placed you into a high selling spot, then you can legitimately own that spot. It’s the strongest of all brand positions – a market reinforced statement of your pricing legitimacy.

Remember your pricing strategy is a reflection of your brand strategy. Price wisely.

 

 

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