It’s often said that it’s the small things in life that can make the difference and so surely this must be the case in business too. As more and more businesses find themselves competing in increasingly cluttered markets where seemingly endless arrays of products and services are vying for attention, the idea of going that extra mile by offering a little bit more than your competitors is a seductive one. It is easy to see why. Adding an extra incentive or feature to your product or proposition could make the difference between winning or losing business.
But are there situations where adding additional information, incentives and features might, rather than strengthen your case, achieve the exact opposite and weaken it?
Put another way, are there occasions when less is more?
A series of soon to be published studies Kimberlee Weaver from the Pamplin College of Business at Virginia Tech together with colleagues Stephen Garcia and Norbert Schwarz from the University of Michigan suggests that people often believe that presenting extra features and information will strengthen their influence attempts because of the ‘additive’ effect they should provide. However these same people may fail to appreciate that those evaluating their propositions might adopt an ‘averaging’ approach.
Much like adding warm water to hot leads to a more moderate temperature, attempts to clinch a deal by adding extra features to an already strong proposal, could mean a reduction in the overall attractiveness of that proposal. In effect each additional feature or piece of information provided serves to cheapen the overall package.
A concept the study authors label as “The Presenter’s Paradox.”
In one experiment participants were assigned to either a presenter role or a purchaser role. Those in the presenter role were provided with two MP3 packages. Package one was an 8-megabyte iPod Touch that came with a choice of cover. Package two was exactly the same with the added benefit of a free music download. Presenters were then asked to choose which package they considered to be the most valuable and that they would offer to the potential purchasers.
Those in the purchaser group were told, “Imagine that you are looking to purchase an MP3 player for a friend.” They were then offered the two iPod Touch packages and asked how much they would be willing to pay for each. ckage one was an 8-megabyte iPod Touch that came with a choice of cover. Package two was exactly the same with the added benefit of a free music download. Presenters were then asked to choose which package they considered to be the most valuable and that they would offer to the potential purchasers.
The overwhelming majority of presenters (92%) chose to offer the package that included the additional free music download. However those in the purchaser group were willing to pay less for the iPod and cover package when it came bundled with the extra free song download. Choosing to add the music download to the package in an attempt to increase its value counter-intuitively led to the overall package being cheapened in the eyes of many the purchasers.
In a second experiment customers looking for accommodation via a well known travel website were asked how much, on average, would they be willing to pay to stay in a hotel with a 5 star rated restaurant. When those customers came to learn that the hotel also had a 3 star rated pool the amount they were willing to pay reduced by some 15%. Interestingly almost three-quarters of hotel owners believed that adding the pool to their advertisement would allow them to command a higher average rate when in fact the opposite was the case.
Across a range of studies the researchers uncovered a similar pattern. Sellers believed that spending more money to add features to their already strong propositions would strengthen them further, yet on each occasion adding an extra feature served to cheapen the overall proposition resulting in potential customers saying they would pay less.
Now some of you may be thinking this is all very well for folks who sell products and services but does this Presenter’s Paradox effect extend to other types of influence challenges? For example what if your challenge is to sell ideas or services rather than products?
Well the researchers thought of that too.
Imagine for a moment that you are responsible for a program to reduce littering in your neighborhood. Suppose also that part of this campaign requires you to propose one of two penalty options for offenders who do litter;
Option A: $750.00 fine or Option B: $750.00 fine + 2 hours of community service
Which would you think would be more likely to recommend?
In the study (which included participants who were current government employees charged with making such decisions) 86% recommended option B even though those evaluating the consequences rated the $750 fine + 2 hours of community service as less severe than a $750 fine alone! Adding an extra negative feature made the unattractive consequence of littering slightly more attractive.
So what is potentially causing this disparity between presenters and evaluators?
Weaver and her colleagues conclude that when constructing offers presenters have a tendency to focus on the individual components of their offer leading to piecemeal processing when evaluating their own case. Evaluators, however, are more likely to process offers holistically focussing on the overall gestalt.
So is the recommendation to simply not provide additional information or features when making your case? Certainly not. Regular Inside Influence Report readers will be familiar with prior research showing how the “and-that’s-not-all” approach, where a communicator adds an additional smaller benefit to a larger item can, in certain contexts, be quite effective (see Burger).
Instead the recommendation is to adopt the best parts of both these strategies.
This means that rather than investing additional resources to add a small extra feature for every customer, it might be wiser to invest the same amount in a more significant extra feature for fewer selected customers.
Doing so affords you two potential benefits.
First you could avoid losing money providing extra benefits to customers that, like the case of adding warm water to hot, will actually reduce the temperature of your overall offer. Second you bring to bear the powerful force of reciprocity, by providing customised and significant additional benefits targeted to your most cherished customers.
What business examples do you have or know of where offering more has led to actually generating less?
Weaver, K., Garcia, S.M., and Schwarz, N. (2012) The Presenter’s Paradox. Journal of Consumer Research Vol 39 (forthcoming) DOI 10.1086/664497
Burger, J.M. (1986). Increasing compliance by improving the deal: the that’s-not-all-technique. Journal of Personality and Social Psychology, 51, 277 – 283