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My Digital Farmer Podcast
316 Why Your Middle-Priced Product Sells Best: The Compromise Effect Explained
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Corinna Bench
Have you ever noticed how your mid tier product seems to sell the best? That's not an accident. There's a fascinating bit of sales psychology called the Compromise Effect and today we're going to unpack what it is, why it works, and how you can use it to increase sales on your farm. Let's get started. Hey there, this is Corinna Bench and welcome to the My Digital Farmer Podcast. In today's market, it's not enough to just grow your product, you've got to know how to sell it too. Welcome to the My Digital Farmer Podcast where we reveal online marketing strategies and tips to help farmers like you get better and more confident at marketing, learn how to find more customers, increase your sales, and build a strong brand for your farm. Let's start the show Foreign welcome to episode 316 of the My Digital Farmer Podcast. I am your host Corinna Bench, one of the farmers at Shared Legacy Farms out in Elmore, Ohio. I'm also the founder of mydigitalfarmer.com which is all about trying to help other farmers like you get more confident in your marketing and sales strategy so that you can grow a profitable business. How's everyone doing today? Welcome back to the show. Big shout out to all of my regular listeners if you are new to the podcast. I'm really glad you're here today. Thanks for checking it out. Make sure you subscribe to the show, especially if you like it, and go check out my first 10 episodes. They were designed to be an on ramp into the marketing lingo and they're going to help you a ton, especially if you're kind of green when it comes to marketing. Another place to learn the ropes is to get onto my email list. That's free, just go to mydigitalfarmer.com subscribe when you do, I'm going to put you onto an onboarding email sequence. It lasts about three months. You'll get an email maybe every five days and it's going to give you the rundown on the key principles of marketing that you'll need to have to shape your strategy, resources that are going to be helpful, tools you should have in your toolkit, free trainings, all kinds of good stuff. So again, you can get that by going to mydigitalfarmer.com sales subscribe. Today's podcast is sponsored by my friends @localline. If managing orders, customers and inventory feels chaotic this season, it might be time for a better system. Localline is the all in one sales platform built for farms and food hubs. Whether you're selling direct to consumer or managing wholesale buyers, or running a CSA with tools like E commerce, automated inventory management, subscriptions, barcode scanning, box builder and pos, localline helps you simplify operations and grow your sales. In fact, farmers using localline increase their annual sales by 23% and boost their average order size by 9.5%. Switching is easy. No setup fees, no sales commissions, and your onboarding manager will migrate your storefront for free. No joke, so that you can get started without missing a beat. As a podcast listener, you'll also get one premium feature for free for a full year when you use my code MDF2025 at checkout. So head to mydigitalfarmer.com localline use that coupon code and you'll be on your way. Start selling smarter this season with localline. And now back to the show. What's up everyone? So glad to be back. I just got back from a pickleball class. That's right, I am now paying someone to teach me pickleball lessons. I am so into this sport. Is anyone else out there really geeked out about pickleball? I'm one of those people now. I have a friend named Bri who is just as psycho about it as I am. She's a better player and we are now playing doubles together. We played in our first tournament last week. We got third place and we're just having so much fun. And now that the summer season has started and I have less time to play pickleball, I'm sad. I'm trying to find ways to squeeze it in anyway. And one of the things that we're thinking about doing actually is joining the Toledo Pickleball Club. And so this is a new facility that was built right along the lake in Toledo on the waterfront I should say, in what was once a run down part of Toledo. And they've revitalized it and they've put this Toledo Pickleball court club there instead and it's gorgeous and we are just hunting around for places to play pickleball. And one of the things that we're running into is that a lot of times when we go the courts are full and we can't. We have to wait a long time or sometimes we end up having to leave because we don't want to wait. So we're actually now feeling that pain point and thinking about actually spending money on getting a dedicated membership so that we can reserve the court at no cost and we'll know that it's there, and then she and I can go and play and we can meet up with some of our other buddies who are also members there. But one of the things that I noticed as I was exploring this option is actually what inspired today's episode. And so we're going to talk about something called the compromise effect that I noticed was working on me as I was comparing different packages and different product offers within a specific brand. So I'm not going to go into the super big weeds here, but if you were to go to the Toledo Pickleball website in their membership section, they start out by leading with the most expensive option, which is the platinum Pickler. That's $129 a month, and it has a whole slew of features that come with that. Then the Gold Pickler, which is $99 a month plus an initiation fee. Then there's the silver Pickler at $59 a month. And then they added something called the Midday Membership, where you can only play afternoon, which is when it's really hot outside. And that's $49 a month. That has a lot fewer options as part of their offer stack. And as I was looking at these different possibilities, I, of course, am trying to figure out how can I get the best bang for my buck. $129 a month felt like a big leap for me at this point. I'm not a super amazing player yet, and I just wasn't sure if I would actually take advantage of going out there and playing all the time, especially now that the summer started. As a farmer, I probably don't have a ton of time to be able to do that. And I was drawn to the, you know, the cheapest one of all. But then I'm like, well, midday membership, like 49 bucks a month. Like, there's not as many things underneath the. The features of that membership and some of those other elements in the middle tiers look really attractive. And maybe I can just suck it up and have like, you know, a couple more $10 more a month, and I can get some of these other features. I found myself not wanting to get the cheapest one. I was sort of drawn to the offers in the middle and being forced to choose between the Gold Pickler or the Silver Pickler. And as that was happening to me, I actually became aware of it and I was like, oh, this is so smart. Somebody created these offers in this order. They created four of them. Normally I only see three, but in this case there were actually four. And this Midday Membership, the one that's at the bottom was not there like two weeks ago. So this has been recently added. And I wonder if the compromise effect is happening for this business, if they're noticing that more people are taking the middle offer. So what is the compromise effect? That's what we're going to talk about today. I want to tell you another story, another example based on an actual, like real life business where this is, this is a story that you kind of hear about when you study this concept in the marketing space. A number of years ago, Williams Sonoma, you know, the fancy kitchen retailer, they had a decent selling bread maker on their shelves. It was doing fine, people were buying it every now and then. But then one day they decided to add a second bread making model to the mix. But this one was fancier, it had more features, it had better materials, it was, I don't know, sleeker design and of course it had a higher price tag. And that's the important point here. And here's what happened. Instead of that new high end bread maker becoming the big seller, which is what they were expecting, something weird happened. Sales of the original, now cheaper bread maker almost doubled. Doubled. So the big question is why? And the reason is because suddenly that first bread maker didn't seem expensive anymore. It became the middle option. It was the compromise choice. Psychologists, they call this the compromise effect. And it shows up in buyer behavior all the time. I want you to be aware of it because we can harness that principle and use that to help us pitch our offers to our own customers and steer them towards the offers that we know are going to be really good for them. So when customers are faced with only two options, let's say a cheap model and a more expensive one, they will often default to the cheaper one. Test this on yourself. I know that I do this if I'm shopping. Wherever I'm shopping, if there's only two options, I will tend to go with the cheaper one, especially if there's a dramatic difference in price. But when a third, even more expensive option is added to the mix, it shifts the psychology, and I think this is so fascinating, but they see it over and over again. That middle option starts to feel like the smartest buy. It's not too cheap and it's not too indulgent. It's just right. It's kind of like the Goldilocks zone. And in the case of the Williams Sonoma bread maker, it worked beautifully. And I would argue that this is working on me. When I'm looking at the Toledo pickleball membership options, I'm being drawn to the middle option. Now, this is probably already happening in your farm store, your online store. Maybe you have a physical location and you may not even realize it. That $22 steak next to that $12 sausage pack next to that $68 ribeye bundle are likely behaving this way for you right now. Or if you're at the farmer's market, customers might skip the $25 flower bouquet. Maybe they also are avoiding the $10 mini bunch. But that $18 medium bouquet, it's flying. Or if you have an online store, that $45 vegetable sampler box might feel reasonable next to the $30 or the $69 option. So this is why just having one product tier is risky and frankly a bad idea. Because you lose the price anchor, you lose that contrast that comes when you have three different tiers staged next to each other. So how do we use this to our advantage as sellers? Well, the simplest way to do this is to make sure that you add a third option to increase the appeal of your compromised product. So you want to know in your mind which product you want them to buy. Out of all of these three, which is the one you really want them to get? And you want to position that one in the middle, if that means you have to add something to bundle it and make the average order value a little bit bigger. Or figure out how you need to stack your offer. But you need to know what's the thing. I actually want to move the other two items on either end. You're not going to sell as many of those, and you need to be okay with that. Their job is to position their own price so that it points to the compromise choice in the middle. So position those products in your online store visually in the price order. Okay? So you can use tiered pricing for different bundles. For example, you want to have your small grill box, say that's 55 bucks listed first. Then your medium grill box might be 75 bucks, and then your deluxe grill box might be 95 bucks. I'm making up prices here. I have no idea what your premium price should be for your meat products because I'm not a meat producer, but I'm just kind of showing you that there are three different levels. Okay. So the goal isn't to sell the high end item. I want to make sure I say that. I mean, that's great when it happens and it will happen, but a smaller percentage of the time. The goal is to make the middle tier feel like a smart buy. Today's podcast is sponsored By Farm Marketing School. All right, farmer, let me ask you something. Is marketing your farm something you actually enjoy, or does it feel like a constant struggle? If you are like most farmers that I talk to, you are wearing all the hats and marketing always seems to slip through the cracks. Can I get an amen? That's exactly why I created Farm Marketing School. It's an online membership designed to help farmers like you build a simple, repeatable marketing system that actually works. Inside, you'll get bite sized, step by step projects that make marketing easier. Each month you pick what to work on, like writing better sales emails or improving your website copy or or setting up your online store. And I walk you through exactly how you should be doing it, and you're not doing this alone. Every month we have a live zoom meetup where you can ask me questions, meet other members of Farm Marketing School, get coaching, and hear what's working for other farmers. It's like having a farm marketing mentor in your back pocket. This isn't some long, overwhelming course. The projects are designed to be completed in under 30 days. So you're making steady progress without it taking over your life. So if you're ready to stop winging it and finally build a marketing system that brings in steady sales, come join Farm Marketing School today. Sign up for your first month and see what a difference it makes. Go to mydigitalfarmer.com fms to get started. And now back to the show. Now, how do you actually physically position products if you're at the farmer's market? Be thinking about this as well, right? You've got customers that are walking into your space sometimes. I've seen markets where it's just, you know, one or two tables, you are literally standing right behind it and they walk up to the table. But I have seen more larger markets where you might have a more expansive space where they can actually step into it and it's maybe an L shape or you got a giant section, a huge area, and they're walking within this large area or corner of the market. You want to pay attention to how you are physically positioning some of those products on the tables. Okay? The same psychology is working at a farm stand. And you want to make that compromise effect work for you in that physical space. So group products in pricing tiers. So your basic option, you know, your sausage pack is on the left, your premium option, maybe it's the charcuterie kit is on the right. And the compromise option, I don't know, the $17 bacon or whatever is in the middle. Got it you can also use signage to help you highlight the value and trigger the compromise effect. So using words like best seller under the middle priced item is going to make more people feel like that's the one that social proof wise the rest of the world is buying and so therefore it's a safe bet for them too. You could have a sign that says try our premium cut listed on the high end product that triggers a signal to them when you use the word premium that this is the more expensive cut. This is the thing that the elite buyers buy and great starter pack might be the signage you use on your basic item which is over on the left. Okay, so sometimes paying attention to the words on your signage, the copywriting can go a long way. You also could play around with this by grouping your products by use case. So don't just throw all of the meat into one cooler or into one freezer. You could group it into different kinds of use case categories. I'm just brainstorming here. But like stir fry packs could be over on the left in the middle grill night favorites because they're at a middle compromise price point. And then weeknight staples might be over on the right. It sort of depends. Maybe for you the grill night favorites is the more premium and that should be on the right. I'm not sure how you price things but also play around with this in the topic of use case scenarios. So creating a collection with three price points within a theme that can make comparing easier for your buyer. And like I said, it primes them to choose the middle. I just am curious if you test this out for a couple of weekends at the farmer's market if you notice more sales you should totally beta test this. Just give it a shot. Maybe it doesn't work, but the science says that it should and I think it would be a fun experiment for you to play with. I wouldn't go crazy with it with all of your products. Maybe you pick out a few things that you want to test it on or a few places in your booth area where you're doing it and just see if you notice things moving. Now I want to go back to online store placement strategy. If you are using an online store like localline to get your customers to pre order the product prepay which if you're not doing that yet, I really want to encourage you to go that route is been a game changer for us. Your online store is just as important. The compromise effect works digitally as well so you can manually control the product order in a lot of these E commerce platforms. And you should, whenever possible, so put three price tiers of similar products side by side. For example, you could have your small ground beef pack over on the left, you could have the grill night variety pack in the middle, and you could have the mega freezer fill on the right. And that middle bundle is going to feel just right. It's going to be in the Goldilocks zone. Okay? If you are selling things in your online store, lead with your ideal seller, your gateway product. So let's just say you have a bundle priced at 45 bucks, okay? And you want to push that $45 bundle, list it first in the section and let's just even back up like within the categories that you have in your online store. Make a decision about what's the top most category. When we were auditing the websites of some of the members of Farm Marketing School last month, this was a common mistake that I saw. When we would click over and actually look in their online store. There was just, you know, a set of categories like pork, chicken, beef, whatever. But then the items that appeared within those categories were sort of like either alphabetical or just almost appeared like random or in the order in which they'd been loaded. There wasn't a lot of thought about which product appeared first within that category, but also which category was sitting on top. And there were a few times where I suggested, hey, try putting your best selling category near the top. Don't make it hard for someone to look for this product and find it in your store, especially if you have a lot of things. So identify what your gateway product is, that ideal seller, and that should be positioned as the middle tier. And then stick the high end and the low end options around it as alternatives. And just see if you don't move more of that ideal seller in that week within that category. You can test that on all of the categories, not just the topmost one that's sitting at the top of your online store. Do it within beef. Do it within chicken. Do it within pork. And I don't know if you listened to the episode that I did where I interviewed Stacy Edwards from Edwards Family Farms, but she has this brilliant strategy of putting the same product in multiple places in her online store. She has created so many different categories and that product can show up in lots of different categories. So you have the possibility of playing around with this compromise effect in multiple places. So don't just pitch that one item in the beef section. Maybe you have a category called grilling favorites and it shows up there as well. And you could play around with putting it in one of the top three slots as well. I'll link up that episode in the show notes because it's one of my favorite interviews I've ever done. And she had so many great ideas for how she is selling her premium cuts of meat at a very high price and making some good money. So go look for that in the show notes, which will be@mydigitalfarmer.com 316 Another tip is to use words like best value or customer favorite or best seller next to your compromise priced item, the one that's in the middle. That just signals, it's another signal coming to your customer that this is the one you want them to buy. It's almost like the neon sign pointing at this middle offer. Okay, so here's my challenge. I want you to test this in the next two weeks. Just the spirit of the beta test. Okay? Have some fun with this. Where can you add a premium or a basic tier to guide your buyers to the middle? Because some of you who are listening today, you don't have. You've only got one product, you don't even have two, much less three. You're just pitching this one thing. And so today your challenge might be to come up with two other offers that you can put around that compromise offer. Right? A basic tier and a premium tier. So figure out what those could be. Again, remember, the goal is not to actually sell a lot of those things on either end. You're trying to sell more of the stuff in the middle and you will simply by having three options. So where are you missing a higher priced anchor item to help position the others? Ask yourself that question and play around with what that premium priced offer might be. And then try that. Try it in your store, try it at your market booth, try it in an email promotion or on your social media and just see what happens. See what happens and report back to me. I suspect that you will experience what Williams Sonoma experienced and I think it would be really fun for you to discover this and it's going to open up a whole new world. Now you'll know how to get more people to buy what you want. It's all about the positioning and the compromise effect. Well, there's other things involved too, right? But this is a key factor and when you play with it and you discover it, it's really exciting. All right, that wraps up today's episode. It's a little bit shorter than normal. I want to make sure you know that this month, June 2020, 5. I am running a live Social Media Strategy challenge inside of Farm Marketing School. This is a 14 day challenge. It is a hands on project where I am guiding the farmers inside Farm Marketing School through how to build a simple, repeatable system for planning social media posts every month. And part of this is a daily prompt where I encourage you to go play in the sandbox. I give you a suggestion for what style of post to put on your social media platform. I share the process for how do you get strategic about what your goals are for social media, what you should be posting on a regular basis so that you meet those goals and how can you build that content engine and that system so that it's kind of on autopilot and you're not wasting a lot of time winging it with your posts. So if you want to feel more confident about your content plan and your system, then come join us inside of Farm Marketing School. It is happening right now. We are having a blast. It's practical, it's totally doable and you can sign up by going to mydigitalfarmer.com FMS even if you just come in for this month or maybe you want to join next month and that project will be archived, you can go through it on your own pace, but it's a really strong project that has been long in the making. It's finally showing up inside of Farm Marketing School along with over 15 other projects that are in there to help you build your marketing system strong. All right, well today's show notes can be found@mydigitalfarmer.com 3316 if you like today's episode, please leave me a rating or a review or go share this with a farmer friend. You can just copy the link and text it to them. Don't forget, if you want to get onto my email list, I have some free stuff to send your way that's going to make your marketing even better and you can get that by subscribing@mydigitalfarmer.com subscribe I'm also on Instagram ydigital farmer. I like to show up there with a marketing tip or mindset coaching moment as I go through my own marketing journey with Shared Legacy Farms, which is my business. My farm business. I'd love to connect with you there so you can follow me at my Digital Farmer. Thanks for joining me today everyone. Have an awesome week and remember, I believe in you. I'll catch you next time. Bye bye.