The first five months of this year have seen an average price of just over USD$100 per barrel of crude oil. Some of the economist boffins are predicting prices of USD$200 a barrel by 2009. Obviously this kind of upward trend puts some nasty pressure on the pockets of consumers.

If we have a spending budget of 100% and the price of gas goes from 20% to 30% of our total spend, the effect can be calamitous. This monetary pressure has a domino effect on people and organizations who are vying for the consumer dollar, pound and peso. Typically the first goods and services to suffer in a time of financial squeeze are luxury goods and travel. Like the airlines aren’t finding it tough enough, they’re hit with the double whammy - oil prices and a cutback in consumer spending.

But what happens when consumers have made those first two cuts? What’s next? First on the agenda might/should be expenses relating to oil. Public transport patronage increases, sales of 4 cylinder cars increase, large cars are used less often, etc.

**As an aside, we’re big into Vespas around here: we love the style, the sound and the “la dolce vita” lifestyle. They’re cool, and miserly on gas to boot.**

Companies targeting consumers directly should keep in mind that the product and service offering now, more than ever, has to add value to the customers’ life. That doesn’t necessarily mean lowering prices, but it does mean that discretionary spending is down and buying for need is up. There is of course emotional purchasing, but that’s different again. Value adding doesn’t equate to giving things away for free either - consider convenience, efficiency and other non-tangible assets that you can include in your sale that adds value but doesn’t necessarily cost you much.

When we release 2Large2Email (our file sharing web app) next month you’ll see it isn’t just a way of moving files. There’s a whole lot more being offered to the customer and that will make the user experience even better. You can check it out now, but remember it’s not live just yet!

You can still succeed in a tight economy but you have to give your customers a reason to stick with you.

I’ve been a salesperson pretty much all of my life. At school I would sell confectionery and drinks to the other kids, earning enough money to supplement my pocket money. Through my college years I worked as a salesperson at my local electrical goods retailer. After graduation my first full-time job was as a software sales representative, and I haven’t really stopped selling since.

Over the years I have used and refined a concept called “The Triplicate of Choice” which is a great way to present pricing options to customers so that the cost of the product doesn’t become an objection which might jeopardize the sale. It’s not a gimmick, or a trick but it does lead the customer to make a decision to pick the product that suits them the best. The problem is, I have no way of replicating this model into the online world because it requires some interaction, and I can’t figure out how to transfer that successfully into the online realm. I’ll detail the model below, and keep working on a way to make it applicable for selling things on the internet.

A word of warning: there’s a lot of generalization that occurs here so bear with me. It’s not an exact science, but it works most of the time. For this example we’ll pretend we’re selling watches, and we have three models:

CP-100 which costs $500, CP-200 at $800 and the deluxe CP-350 which is $1000.

The first thing you have to do is figure out what the customer currently has. I’m just going to summarize the questions here, you can figure out how you want to word them in real life

1) “So Mary, what kind of watch do you currently have?” (determine what she has)

2) “And what do you like most about the Rolex that you have?” (if she likes something, remind her that the model you want to sell her has those points too, if applicable)

3) “Anything you don’t like about the Rolex?” (obviously if your model circumvents or has fixed these issues, mention them)

3a) I almost forgot this bit: “And Mary, the watch is for you, so are you going to be the one making the final decision on the model?” (got to make sure you’re not presenting to the wrong person)

And this is where is gets tricky - you have to know your models and pricing well.

4) Have three models to present which will suit Mary. Start with the model with the least features, then present the medium product and finally the deluxe model.

It doesn’t matter which model your potential customer picks here, it is, afterall, their decision. Let’s just say Mary has picked the CP-100. Invariably Mary will ask how much the CP-100 costs. At this point you have to be sharp and present the options correctly. I say something like “ah, well before I can tell you that Mary, I have to ask a few questions.” Typically the customer will play along, because if you’ve involved them well enough they won’t mind the interaction.

5) Now we know the CP-100 is $500 (as above). Here’s how I present the prices:

* “Mary we get a whole lot of different people inquire about our watches. Many people come in and tell me they’re prepared to spend about $600 on a nice new watch.” (note, $600 is 20% more than my target price)

* “Of course there are some fortunate people who come into the store with a little bit more money and are prepared to spend around the $750 mark on a watch.” (the second price should be 50% more than the target price)

* “And then we get people who are on a limited budget and want a rock-bottom price with no extras and they’re prepared to pay about $500 for a watch.” (this is where you quote your target price)

GENERALLY the customer will choose the middle option - 20% over the target price.

The next bit is quite rewarding because the customer is always happy:

6) “Mary, you mentioned that the model you liked best was the CP-100 and that if you decided to buy a watch you would probably fit into the range of spending approximately $600 on a watch, didn’t you? Well, I’m happy to say that the CP-100 is, in fact, only $500.”

So there you go. That’s the triplicate of choice in qualifying a customer for a price. Closing the sale is different story, but you can see how the steps (if practiced) can lead the customer to make their own decision. And when the customer chooses their own product they are more likely to become emotionally attached and be happy with the sale.