The Power of Mental Accounting 💡💰

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How to E-commerce
August 10, 2024 • Estimated Reading Time: 14 minutes

#HTE 316 -Strategies, examples, and much more!

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In the ever-evolving world of marketing, making strategic decisions is crucial to driving success. Whether you're navigating the psychological principles behind consumer behavior, deciding where to allocate your marketing budget, or seeking out influencers to amplify your brand, understanding these key areas can significantly enhance your campaigns. Mental accounting 💡💰 helps us grasp how consumers perceive and manage their finances, influencing their purchasing decisions. Meanwhile, with Amazon's unmatched conversion rates 📈 and the rise of influencer marketing 🌟, knowing where to spend your next marketing dollar and how to forge successful partnerships can make all the difference. Let’s explore these powerful strategies to optimize your marketing efforts and drive impactful results.

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The Power of Mental Accounting 💡💰

💰 Where Should Your Next Marketing Dollar Be Spent, And Why Is It Amazon?

6 Places to Find Influencers or Creators for Your Marketing Campaign (and 4 Best Practices for Partnerships)

Brand of the Week🔥

Top Reads📚

HTE Job Board- Get Your Dream Job With a Click✨💼

The Power of Mental Accounting 💡💰

You might not be a money expert, but you likely split your cash into different pots—for eating out, holidays, and other expenses. It's a sensible way to handle money. But did you know how we label our money affects how we spend it?

🔍 Research shows:

  • We're more likely to splash out on a vacation if it's paid for with gift money rather than a work bonus.

  • We tend to spend more when using a credit card rather than cash.

  • When we get a refund, we often blow it on things we didn't plan to buy.

This is called "mental accounting," where our feelings influence our spending more than logic.

We see this in action even in video games like Grand Theft Auto. Players treat in-game money as totally separate from real cash. For example, spending $10 for a bunch of in-game dollars might seem like a bargain, even though it's not real money.

So, what does this mean for your business?

It means customers don't always make smart money decisions. You can use this knowledge to set prices and run promotions as a business owner. But be careful not to trick people.

Understanding mental accounting helps you sell stuff better, but remember to keep things fair and honest. 😊

How To Apply This

Alright, so how can you apply this right now to sell more?

E-commerce

Let customers pay in instalments

  • If you've been shopping online lately, you might have noticed more options to pay for things over time instead of all at once. This means you can spread your payments over a few months or even years.

  • Businesses do this because it makes it easier for people to buy stuff. When we can pay a little bit at a time, it feels less like we're losing a lot of money all at once. It's kind of like when you buy a big ice cream cone, and you're allowed to pay for it one lick at a time!

  • These payment plans are especially helpful for buying expensive things because they make it less scary to spend a lot of money all at once. So, it's like having a friend who says, "Hey, don't worry, you can pay me back later!" 🛒💳👍

​

Subscription

Emphasize long-term savings in your pricing tiers.

  • Just like some games that let you play for free but offer extra stuff if you pay, Ludwig, a writing tool, also has different payment options. 📝

  • You can either pay $14.99 monthly or $59.88 for a whole year.

  • If you go for the yearly plan, it's like paying around $5 every month. 💰📆

That's a big discount of 67% compared to paying monthly! 🎉 It's like getting a good deal on something you always use. And you don't have to do any tricky maths to figure out how much you're saving. 🧮

​

Retail & Services

Entice customers to return with cash vouchers.

If you've ever been to a casino, you've probably received free goodies—like drinks, food, and other nice things—just for being there. 🍹🍔🎁 Casinos do this to encourage people to keep playing.

But to keep the big spenders coming back, casinos offer even fancier rewards. 

But to keep high rollers coming back, casinos use even bigger incentives.

For instance, check out this letter from one of Princess Cruises' casinos: they're not just offering a free room but also giving away $700 to play with! 💰🚢

The offer feels too good to pass up, even if you don't have plans to hit the casinos anytime soon. It's like free moola landed in your mailbox.

Of course, it doesn't take a PhD to know that coupons can help get more sales. The trick here is how you present them.

Percent discounts like "15% off" aren't very tangible. But vouchers that name a specific dollar amount feel like getting handed cash—they're a separate mental account from the rest of your money.

💰 Where Should Your Next Marketing Dollar Be Spent, And Why Is It Amazon?

The golden question for any omnichannel DTC brand is: Where should your next marketing dollar go to get the best return?

Every digital platform has its perks. Directing customers to your DTC site lets you capture that critical email address for future marketing. Plus, Amazon charges a hefty 15% referral fee on every sale! 😡

So, why on earth would you spend your precious marketing dollars there?

1. Unmatched Purchase Intent and Conversion Rates

Here’s why: Amazon has insane purchase intent and conversion rates. For an established brand in the CPG space, advertising at the top of a relevant, high-volume keyword can net a 15-25% conversion rate! That’s not a typo. Across multiple CPG brands, about 1 in 5 shoppers typically convert on prospecting campaigns. However, CPCs to land those top-of-search positions on those keywords often exceed $3-5 at a minimum. 😳

For many CPG brands, prospecting on Amazon Sponsored Ads will net the best new customer ROAS of any channel – and typically by enough margin to overcome the loss of customer email + referral fee – especially when pushing them to subscribe and save.

2. Success Beyond CPG Brands

But what about non-CPG brands or higher-ticket items? Higher-priced products usually have a lower CVR, but even $60-80+ items can see a 15-20% CVR if competitively priced. Products less likely to be repeat purchases often have lower click costs. For electronics, home goods, and other high-ticket items, Amazon’s platform can still deliver a high return, particularly when your pricing strategy is on point.

3. The Power of Amazon Organic

Still, acquiring new customers via DTC seems better since you can remarket to them, right? True, from a risk mitigation standpoint. But 👏 don’t 👏 sleep 👏 on 👏 Amazon 👏 organic. Ranking high for your prospecting terms on Amazon can lead to significant returns without additional spending. In some niches, brands even take heavy losses to gain that precious ranking, knowing the long-term benefits of organic traffic and visibility on Amazon far outweigh the initial costs.

4. Leveraging Amazon's Ecosystem

Moreover, Amazon’s ecosystem offers unique advantages like Prime eligibility, which can significantly boost conversion rates due to the free shipping and faster delivery times. Additionally, being part of Amazon’s marketplace increases brand visibility through customer reviews, cross-promotion, and algorithmic recommendations.

5. Long-Term Customer Acquisition Strategy

Lastly, consider Amazon as part of a long-term customer acquisition strategy. While you might not capture the customer’s email immediately, the trust Amazon has built with its vast customer base can ease the purchase decision, especially for first-time buyers of your brand. Over time, these customers may seek out your DTC site for repeat purchases, especially if you integrate effective follow-up strategies post-purchase.

In conclusion, while Amazon might seem like an expensive route due to fees and the lack of direct customer data, the platform’s unparalleled purchase intent, organic growth potential, and overall ROI make it a vital component of any robust marketing strategy.

6 Places to Find Influencers or Creators for Your Marketing Campaign (and 4 Best Practices for Partnerships)

Influencer marketing has become a cornerstone for brands aiming to reach large, engaged audiences. With 55% of TikTok users trusting brands more when endorsed by creators, according to CreatorIQ, it's clear that influencer marketing is a powerful strategy across various platforms.

Where to Find Influencers:

  1. Social Media Search 🔍 Start your search directly on social media platforms. Use industry-related hashtags or campaign-specific themes to discover relevant influencers. Explore Instagram's "Explore" page and TikTok's "For You" page, where trending content and creators are highlighted. Also, leverage platform-specific directories that often categorize influencers by niche and follower count.

  2. Influencer Marketing Platforms 💻 Specialized platforms like HashtagPaid and Passionfroot streamline the process of finding and connecting with influencers. These tools often provide advanced search filters, audience analytics, and campaign management features, making it easier to find influencers who align with your brand.

  3. Industry Media Platforms 📰 Regularly follow podcasts, newsletters, and websites within your niche. These media outlets frequently feature or interview influencers, providing a curated list of potential partners. For instance, marketing-focused podcasts or industry blogs may regularly highlight creators who excel in your sector.

  4. Competitor Analysis 🕵️‍♂️ Analyzing your competitors’ influencer strategies can offer valuable insights. Identify which influencers your competitors are working with and assess the success of these collaborations. This can reveal both opportunities to engage with effective influencers and gaps in your competitors' strategies that you can exploit.

  5. Industry Events and Conferences 🎤 Attend both online and offline industry events, such as conferences, webinars, or virtual summits. Influencers often participate in these events as speakers or panelists. Platforms like LinkedIn Audio Events and X Spaces (formerly Twitter Spaces) can also be gold mines for finding influencers actively engaging with your industry.

  6. Leverage Your Community 🤝 Engage directly with your existing audience through social media or email newsletters, asking them to recommend their favorite influencers. Often, your most engaged community members are also content creators themselves, making them potential micro-influencers who are already aligned with your brand values.

Best Practices for Influencer Partnerships:

  1. Define the Type of Influencer 🎯 Choose the right level of influencer for your campaign — nano (1K-10K followers), micro (10K-100K), macro (100K-1M), or mega (1M+). Nano and micro-influencers often have more engaged audiences, while macro and mega-influencers offer broader reach.

  2. Set Clear Goals and Audience Persona 🧩 Clearly define your campaign goals and develop a detailed audience persona. Consider demographics, interests, pain points, and social media habits. This will help you choose influencers whose audience aligns closely with your target market.

  3. Budget and Compensation Planning 💰 Determine a budget that reflects the scope of your campaign and aligns with the influencer’s reach and engagement. Compensation can vary widely depending on the influencer’s size and the content requirements. Some influencers may also accept products or experiences in exchange for promotion, depending on your brand and their preferences.

  4. Content Format and Deliverables 📦 Decide on the content formats you want — be it product reviews, unboxings, tutorials, sponsored posts, or live streams. Clearly outline deliverables in your agreement, ensuring both parties are aligned on expectations, timelines, and content guidelines.

Long-Term Partnerships Over One-Off Collaborations 🔄

Prioritize building long-term relationships with influencers. An ongoing partnership, characterized by fair compensation and exclusive opportunities, fosters greater authenticity and trust with their audience. Over time, this approach will yield better results than one-off collaborations, as consistent endorsement builds a deeper connection between the influencer, their audience, and your brand.

Brand of the Week 🔥

Juliet is a female-founded brand created by a group of longtime friends with a shared commitment to sustainability and a love for great wine. With backgrounds in sales, marketing, and the wine & spirits industry, they were inspired to take action when they discovered the significantly lower carbon footprint of boxed wine compared to traditional bottled wine. 🌿

Driven by a desire to make a positive impact, they launched Juliet—an eco-friendly wine brand that delivers the taste and quality of bottled wines while advancing sustainability in the wine industry. Juliet is on a mission to shift the culture of wine drinking, encouraging consumers to embrace more sustainable choices without sacrificing the experience. 🍷

Juliet wines are crafted at a Certified California Sustainable Winery in the Santa Barbara Region. Using a low-intervention approach, the wines are handmade without artificial additives, ensuring a clean, fruit-forward product that highlights the exceptional quality of the grapes. 🍇🍷

Top Reads📚

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How to E-commerce