If you work with me for any amount of time you’ll likely hear some of my stories and analogies. One of my favorites is an old direct marketing story passed down to me when I was just getting started.
The Pen Salesman
There once was a pen salesman who had two types of pens. One was a very nice but basic model and the other was a fancier, more expensive, high-end model.
The pen salesman was doing a pretty brisk business but he had a problem. He wasn’t selling enough of the high-end model. This was troubling because the margin on his high-end pen was … higher. People seemed to like the high-end model but, on par, most wound up buying the basic model instead.
So what did the pen salesman do?
He decided to create a new premium pen. It would be even fancier and more expensive then his high-end pen. Now the pen salesman had a selection of three pens from which to choose. The secret was that the pen salesman didn’t really want to sell the premium pen! In fact, he wasn’t even really stocking them. But a funny thing happened, customers began to select the high-end (now the middle) model in droves.
When presented with three choices (good, better and best), the middle pen suddenly became far more attractive and looked like a better value. Had the pen changed? No. But the context in which it was presented did, and that made the difference.
That doesn’t mean you can go on forever adding more and more models to your product line and expect similar results. No, I can also talk your ear off about The Paradox of Choice by Barry Schwartz some of which is based on work by Sheena S. Iyengar, author of When Choice is Demotivating (PDF).
In short, consumer behavior is fascinating and powerful.
Internet Marketing Maxima
I sometimes wonder if we as Internet marketers are using these old school techniques and stories when implementing our campaigns. The ability to conduct A/B and multi-variate tests has soared but the root of most successful campaigns is in understanding context and consumer behavior. Don’t get me wrong, I love numbers and am all about data-driven decision making. But not in isolation.
I worry that the technology we rely upon creates local maxima issues, which is a highfalutin way of saying that we constrain ourselves to the best of a limited set of outcomes instead of seeking a new (and better) solution altogether. Harry Brignull of 90% of Everything and Joshua Porter or 52 Weeks of UX explain this far better than I could, so go off and do some reading and then come back to finish.
The pen salesman could have tried different colors (of pen or ink), or a different pitch, or added features or cut prices or offered a gift box with purchase or any number of other typical marketing techniques to help increase sales of his high-end pen. But it’s unlikely any of them would have achieved the monumental shift in sales he saw by introducing that premium pen.
So I hold on to the story of the pen salesman as a way to remind me to think (really think) about context and consumer behavior.
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Comments About The Pen Salesman
// 5 comments so far.
Peter Fuller MBA // August 01st 2011
Interesting stuff!
Testing is important but coming up with the right alternatives to test is the key
Peter
AJ Kohn // August 06th 2011
Peter,
Thank you for the kind words and for your Tweet. As you say, testing is important but you don’t want to get caught in a local maxima where you’re not finding the breakthrough idea that might leapfrog your conversion rate or sales.
Karen Goodman // January 22nd 2012
Interesting article. Last year I created a flyer with Basic, Better and Luxury pricing plans for my team’s real estate listings. We offered to give people some of the luxury features as a free bonus when they hired us at the Better plan pricing.
We changed around the way to did our presentations and this flyer stopped getting included, but I think I need to reintroduce it.
I really do think people like buying in the middle. And almost every website with paid subscriptions is doing something along this line (free or basic, solid, and silly expensive that only big companies would need).
AJ Kohn // January 23rd 2012
Karen,
I’m so glad you found this little post. It’s one of my favorite stories. I’m a very big fan of consumer behavior and psychology. It’s often not what is offered but in what context it is offered. So, I’d certainly play around with different scenarios so the customer feels content with their decision and it’s the decision you wanted them to make.
Jane Grodin // August 04th 2014
My dad was one of the first pen manufacturers in America. He and his 6 brothers started the plastic throwaway pen and promotional pens in 1948, right after WW2.
He started with the plastic stripe pen which Bic eventually copied so he went on to invent “The Little David” which was sold as a promotional pen in Las Vegas. He and his brothers made millions from plastic pens. No education. But were they ever hungry. And the most charming lot of men you would ever meet when it came to sales.
This is just an FYI and a story I like to keep alive. They were The Grodins.
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