Psychology of Pricing
I have been talking to a service industry company recently about a study I had heard of where a gas station gave out punch cards where you could earn a free carwash after 10 fill ups.
The gas station “pre-punched” some of rewards cards which gave customers a sense that they had already progressed toward the goals and got a higher customer loyalty rate among those customers receiving the boost toward the reward.
We tend to be loss averse, so even if we get something for free, we don’t value it at the exchange amount, we mentally endow it with value because we possess it.
I’ve been thinking that service companies can use this emotional commitment toward goal completion to drive customer behavior in various ways, including in sales cycles.
In software sales, prospect and seller spend significant time and energy communicating specific technical capabilities and mapping those to business use cases. When the sales process produces a base level of project implementation requirements documentation it feels like choosing that vendor will start you ahead in implementing their solution.
Where this falls apart is when the sales team and the delivery team are different individuals and don’t have solid communication after the sale. When the handoff between sales and delivery teams goes poorly customers are left feeling that the starting value has been destroyed and maybe even caused more delays and confusion instead of kicking off the project with an Endowed Progress Effect glow.
I’m wondering how this would translate to physical construction projects like electrical, plumbing, engineering and architecture, where similar to software the upfront technical design services are used to sell a project and alignment on those specifications is critical to the project.
A good article on how this worked at Starbucks:
https://lnkd.in/gPQQU_Pg
Carragee Consulting 
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