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Monday, October 03, 2005

What is the role of Price in Behavior Change?

Salespeople (particularly brokers) will tell you that discounts are what customers want in order to try new products - and you can't fault them for thinking it's true. When asked "Which do you prefer? Cash or merchandise?" respondents overwhelmingly choose "cash." However, when studied, actions speak louder than words.

This authoritative article documents why cash incentives fail to change behavior. In addition to the behavioral implications:

1) Rebates cause your salespeople to lead with price
2) DSR's fill out rebate forms rather than introduce new products
3) Rebates teach your customers to wait for "sale prices"

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