One thing any swashbuckling sailor needs is a good anchor.
Anchors are tricky things. Sure, they keep you from getting blown off course. But drop them at the wrong time and they can be a real drag.
It’s not just those sailing the seven seas who have trouble with anchors. In fact, knowing when and how to use an anchor effectively is a critical part of good copywriting.
So what’s a copywriting anchor?
When a potential customer comes to your site, they’ve already got an idea of how much they’re willing to pay for your product or service. This is their anchor.
Oh, and by the way, it’s totally irrational.
And just like a pirate ship trying to drag an anchor across an unforgiving sea floor, you’re not going to get any momentum going if the anchor gets dropped in the wrong spot.
My Dad’s T-Shirt Anchor
I didn’t realize it at the time, but my dad was the first person who taught me about anchor pricing.
I’d get back from shopping and without fail he’d bark something like “12 bucks for a t-shirt! You’ve gotta be kidding me.” He had a particular tone of voice that he reserved for situations where prices had grown out of proportion.
What was going on?
When my dad was a kid, the first t-shirt he ever paid for cost $1. That set his “t-shirt anchor” at $1. Now my dad’s not a totally inflexible guy. His t-shirt anchor has gone up since I was a child. It started at just $1, then $2, and over time it’s grown to the current $5 as the right price to pay for a t-shirt.
His t-shirt anchor has changed, but my crack team of economists confirms that it has emphatically not kept up with the pace of inflation. So he’s shocked by prices that most people would call heavily discounted.
How Anchors Get Set
An anchor is the value that we assign the first time we pay for a new product or service. And unless you can creatively re-set it, it’s going to inform all further encounters.
If an anchor is set low (the client looked at Craigslist to figure out the value of your service before coming to your site), then they perceive the product to have less value and aren’t willing to pay much.
If an anchor is set high (the client looked at the Tiffany’s catalog to figure out the value of your product before coming to your site), they perceive the product to be of a much higher value and are willing to pay more.
Anchors aren’t set until the customer considers actually buying the product or service.
What the Research Has to Say
Anchors aren’t an invention created by marketers trying to sell books. Actually, they’re an invention created by researchers trying to sell books.
Dan Ariely’s Predictably Irrational describes a number of experiments that show how anchors work.
In one experiment, Dan starts by handing out a form listing a number of items being auctioned. Each buyer enters the last 2 digits of their social security number at the top of the form, and again next to each item in the form of a price.
The students then decided how much they would bid for various items on the auction form.
Students with low (00-19) final digits in their social security numbers bid significantly less than those with high (80-99) numbers: 2.5 – 4 times as much. In other words, when they associated that “anchor price” with an item, even though they knew it was completely arbitrary, it still informed how much they’d be willing to pay.
Predictably Irrational contains about half-a-dozen experiments showing how anchors work, as well as all kinds of other fascinating insights for the smart marketer, and I’d recommend it highly.
Setting New Anchors
You’re probably shaking your head thinking “what’s the point? If I can’t do anything about anchors then how does knowing about them help me?”
I learned another lesson about anchor pricing when I spent six weeks with my guitar as a street performer in Japan.
I watched two competing guitarists busking weekends in Fukuoka. Both were of similar ability. Both took donations, and also sold CDs. (If you ever plan on becoming a street performer yourself, cut a CD first. It really gets attention and enhances your credibility.)
One musician sold his CD for $20. The other sold his for $6.
Here’s the thing—neither one of them sold very many CDs.
But the musician selling CDs for about the going rate was signaling that his music was worth listening to. The performer selling CDs at way below market value was signaling that his music was junk.
The $20 CD performer got lots of attention. He’d consistently draw crowds of 20-40 people at a time, getting a modest donation from nearly every listener.
The $6 CD guy, about as good as the first, usually only got 2 or 3 people at a time and was clearly busking for love and not money.
And there’s another factor. Street performers fall into two categories: those who get change and those who get bills.
You guessed it. The $20 CD guy not only drew a larger crowd, but that crowd felt he was worth some folding money as a tip. The $6 CD guy heard nothing but the clink of spare change.
The successful busker didn’t accept the existing anchor for street performers, which is a couple of coins.
Instead, he created a new anchor with his $20 CD. That CD created a new context and a new marketing message, and that let him drop a new anchor that was more favorable to him.
Make Anchors Work with You, Not Against You
Copyblogger readers aren’t the sort to let an existing anchor drag them down.
Obviously, when you’re resetting an anchor, you always want to go up. Anchoring your e-book to your fat speaking fee is going to let you charge more for that e-book and make more sales. Anchoring your $1600 coaching program to your $15 e-book isn’t. Make sure your highest-price item can be seen by your customer, so she can set her anchor appropriately.
It’s easier for specialists to set new anchors than it is for generalists. When your offer is specialized, you have the opportunity to decide what the new anchor should be for that specialty.
Often you can re-set an anchor by appealing to strong feelings. The faith of thousands of Apple fans shows how dramatically anchors can be re-set with the addition of a little fanatic loyalty.
Let me know in the comments where you’re currently anchored, and how you’ll tweak your anchor to find new riches.