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Aug 21, 2008
Case Study

Online ‘Haggling’ Button Sends Sales Soaring – 3 Steps to 685% Growth

SUMMARY: Letting your customers haggle over price online can lift your revenue. Does a 685% boost get your attention?

Check out how an eretailer hit the jackpot after adding a simple button to their website to negotiate price. Here are three steps your IT department can take with little hassle.
CHALLENGE

West Coast Golf Online faced disadvantage three years ago when competing with golf equipment brick-and-mortar stores. Like other golf eretailers, they had to abide by the industry's minimum advertised price (MAP) for gear or face the ire of the manufacturing community.

In-store reps could negotiate with customers and still be OK under the MAP guidelines. So, they could sell at lower prices not generally available to online golf retailers.

“Our viewers were reluctant to call on the phone or email us to discuss pricing,” says Ron Masters, Internet Manager, West Coast Golf Online. “And we were looking for a way to convert more of those viewers into sales before they left the site.”

In other words, any type of real-time haggling was OK. But advertisements or formal listings had to list the higher prices. This reality had put Masters eretail site at a constant price-point disadvantage when battling offline competitors.

Here are measures Masters and his team took to remove that competitive disadvantage.

CAMPAIGN

Masters and his team first tried real-time negotiations on their Website by using a makeshift button that advertised the opportunity for customers to haggle via email. Almost immediately, they were swamped with messages while they struggled to strike deals with all of them.

Amid the immediate chaos, though, something important happened – sales jumped 14.5%. Their curiosity was piqued by the boost. So they alleviated the customer email headaches, while trying to push sales higher, by implementing an automated system.

The three steps they took:

-> Step 1. Add a ‘subroutine’ before shopping cart

After huddling with their Web services vendor, they learned that the automation they wanted could be accomplished with a code written within their shopping cart. A negotiation button appeared on the product details pages -- one click before the shopping cart.

The negotiation button used what is called a ‘subroutine.’ As an example, their shopping cart already had subroutines to make product images, graphics, the ‘add-to-the-cart’ button, etc., appear on the Web page. So, they put in a subroutine to display the price-negotiation button.

-> Step 2. Pinpoint creative

They established a look and feel for the feature that would work in conjunction with the existing site. Masters and his team tested out various creative ideas for short bursts on the site as well as getting feedback from staff. They implemented the best elements onto the button.

Here are the key incarnations the button went through:

Copy: They first tried 'Buy For Less' on the button. Yet, after conducting customer interviews, they learned that the copy was seen as gimmicky and not value-driven. So, they tried ‘Make an Offer’, which tested significantly better and ultimately became the button text.

Font color: Red, green and blue were trialed. Blue showed the best results and was utilized in the design.

Size: After testing smaller versions, Masters settled on the largest one, 200-by-25 pixels. It worked symmetrically with their add-to-cart button. But more importantly, he says: “It was big enough to catch the attention of people who were window-shopping.”

Location: They tried the negotiation button to the right and then to the left of the add-to-cart button. Their test data eventually showed that people needed the button in their face if they were going to use it.

So, they put it front and center above the add-to-cart button. “We had to put it in a spot where they wouldn’t be able to avoid giving it a try.”

Help link: Masters says their site data showed that many people were confused a bit by what the ‘Make An Offer’ feature entailed. Hence, they put in a ‘Help’ link that led to two paragraphs of copy explaining the button.

-> Step 3. Price levels

They set up the ecommerce system so staff could input the needed data for products as they came into the warehouse. It included:
o Item description
o Product number
o Asking price
o Accepted price

How the system reacted to prices entered in ‘Make An Offer’:

- Amounts entered either above or equal to the accepted low price prompted this message: “Accepted Price: [$$]”.
- Amounts below the accepted low price produced this copy: “We are sorry. Your bid of [$$] is lower than we can sell this item for. Please try another bid or another product.”


RESULTS


The ‘Make An Offer’ button paid off from the get-go. “It instantly doubled our sales during the first three months in which we used it,” Master says.

In the first full year with the feature, 2006, he saw 376% more site revenue compared to the year before.

Their 2007 sales then outdid ’06 by another 82%.

Overall, annual sales have soared by 685% when compared to the year before implementing it. The haggle button has been the “key ingredient,” Masters says.

“Our customers really get into using the feature, almost like it’s an interactive game. They enjoy seeing how low the price will go and sometimes [haggle] down to the penny. After all that interaction, they seem to feel like they’ve earned the lowest price they can get. I think it encourages them to convert to sale.”

Other data linked to ‘Make An Offer’:
o Shopping cart abandons have stayed below 15% – almost four times better than the industry average of 59.8%, according to MarketingSherpa data.
o Page views have jumped 463% compared to two years ago.
o The conversion rate per unique visitor has been a modest 1.21%, but the stat -- more than anything else -- shows their site traffic increasing dramatically.

“The word really spread about the feature on golf message boards and blogs, which was a big boost to the sheer numbers visiting our site.”

Meanwhile, Masters says, it only takes a handful of hours a week to input new product and price information. “It certainly hasn’t been unbearable. Everyone takes a segment and puts the information in.”

Useful links related to this article

Creative Samples for West Coast Golf Online
http://www.marketingsherpa.com/cs/westcoastgolf/study.h
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Surf City Sites – their database services provider that programmed ‘Make An Offer’:
http://surfcitysites.com/


West Coast Golf Online:
http://www.westcoastgolfonline.com

See Also:

Comments about this Case Study

Aug 21, 2008 - Mickey Loncha of QMD says:
This case study appears to be another example of how consumers often say one thing, but behave in a totally contradictory way. I've come across lots of research which reports that shoppers hate haggling and really look for the "best lowest price." Could it be that we are retraining consumers that haggling is okay if you can do it anonymously online and not face-to-face with a guy with slicked-back hair and checkered jacket?



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