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Yellow Plus Blue Does Not Equal Green, Featured on Internet Retailer

Our founder, Brice McBeth, was featured on DigitalCommerce360.com as an author on their Internet Retailer blog. This article was originally posted on their website, which you can see here!

Back in my real estate marketing days, I made a name for myself when I made a realization. I call it “the yellow plus blue does not always equal green” theory. There’s a useful story that led me to this discovery.

It was standard practice to crunch numbers on the thousands of land sale transactions to find our target market and our ideal clients. Once we found those averages we used them to devise campaigns and to inform media buys, both online and offline. We did a lot of direct mail to campaigns, radio buys, newspaper ads, paid search, email campaigns, and all sorts of other marketing techniques aimed at a specific customer profile. Based on the data we collected, our ideal client was a mid-40s married couple with two kids and a net family income of $120,000.

However, once we dug deeper into the data, we realized a lot of this data was completely wrong albeit it was based on data that was completely accurate. How did that happen? Our average client was not in their mid-40s nor did they make $120,000.

When I dug into the data, I realized we actually had two very different average clients. We had one average client who was in their early 30s who either worked for a successful Big Five consulting company or was an entrepreneur making $300,000 a year. Some of these couples had a young family while others were just planning to start a family. The audience put a high value in raising their family in a rural setting away from the hustle and bustle of the urban lifestyle.

The second typical client was very different. This client was a couple in their late 60 or early 70s, recently retired, perhaps grandparents but with no kids in the household on an average day. They had money in the bank but little to no actual salary or income other than returns from their nest egg. This family was looking to build their dream home, the one they had been planning for 30 years.

Now if you average those two clients together, you can see how our original target client was generated by the average of these two sets of numbers.

Instead we had the 30-year-old successful couple and the late-60s retiree, that when averaged together look like a 45-year old. And instead we had the $0 income couples and the $300,000 per year income families, that when averaged together look like a $120,000 per year family.

Each of these clients required a different marketing approach because they were looking for different things. Yellow plus blue does not always equal green.

As a marketer, knowing these differences can help make invaluable decisions about how to reallocate dollars within the marketing budget to target each of these two audiences differently. The young families need space to play but still want to be part of a community and want to know they’re making a sound investment in their home. Older couples want space for peace and tranquility without being too far from amenities like hospitals. It would be more expensive to build two different campaigns for these two different audiences, but it would also prove to be infinitely more effective thereby generating a much higher return on investment.

Similarly, when in 2011 we launched Standish Salon Goods, an online retailer selling salon chairs and related products, we had clients calling to negotiate prices every day. They would call the phone number on the website, ask to speak to a salesperson, and attempt to haggle over the pricing. This mystified us. I’ve never called Amazon and tried to haggle with them like at a garage sale, but I’m not my own client, so what do I know?

In this phase, we also discovered a strong correlation between the people who purchased and the people who looked at our company profile page. We could see that website visitors were looking at our company profile, reading our warranty and reviewing our return policy.

So we really wanted to dig into that more and try to understand whether or not having the “About Us” content influenced people to purchase in a positive way, or was that just a coincidence? We weren’t exactly sure exactly what the motivating factors were, but we initiated A/B split testing. Our hypothesis was if there’s more transparency on the site about who we are, our policies and our warranties, then it would give them a higher degree of confidence and increase sales.

We created thorough profiles of all our employees, especially those that interacted with customers on the phone. We added more credentials on the site, including a badge from the Professional Beauty Association.

Next, we added elements especially for the people who wanted to negotiate pricing and get the most for their money. We added a much clearer statement on the home page that said we were working hard to provide cool salon furniture at affordable prices. We hope that would clear up any misperception we sold only expensive items.

We also tested putting our unique selling propositions in the header and adding an offer for free shipping over a certain threshold. We didn’t charge sales tax. We had a magnificent return policy. We included discounts on our bigger purchases and tagged some items for quick shipping. From our industry research we knew there was a complaint about smarmy sales staff, so we added a line about our friendly staff.

The changes we tested in this version of the Standish site increased the conversion rate by about 25%. Our average order value also increased about 15%. The new site was not as pretty as the first one, but it created a bigger return on investment.

So we dug deeper into our analytics. Our average sale for Standish was a bit over $1,500 and included about eight and a half items per order. Then we began exploring our transaction and we discovered that we had two distinctly different average clients. One type of client was a salon replacing an existing chair. These customers were usually on a tight budget and wanted to buy the least expensive chair that had high-quality characteristics.

Our second client was very different. This buyer was a salon owner looking to open a new location and needed at least five fully furnished operator stations. Those transactions ranged between $4,000 and $20,000 per sale. Just like in my former real estate work, we didn’t have one average buyer, we had two distinctly different buyers.

The key change we made accordingly in this version of the site was to intentionally create discount tiers based on the amount of the sale. So when somebody called in for a discount, we’re able to respond with, “Yes, we’d be glad to give you a bigger discount if you buy more products.” This gave us a formula for dealing with the hagglers and a clear motivator for people to move up to the next pricing level. It eliminated the need for a lot of negotiation, which reduced the burden on our sales staff.

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We have used Reap for our marketing services for several years. Brice is a brilliant guy, he and his team look at marketing from the vantage point of conversions - turning visitors into customers instead of just a branding agency.
-Ben Peterson

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