There is a vital lesson buried in the August 19, 2009 Jet Blue announcement that they were suspending sales of the $599.00 “All You Can Jet” promotion they’d debuted only seven days before. Any student of Behavioral Economics could have predicted that an “all you can eat” approach would inspire vastly different behavior than if Jet Blue had charged a lower fixed fee plus $1 per mile. Similarly, over a decade ago when AOL switched to a usage-independent flat price, connection time increased four times more than they anticipated.

“All you can eat” is an entirely different price than “very, very cheap.”

Traditional economics says that lowering the marginal price from $2 to $1 should have a similar effect to lowering it from $1 to $0 — but experience and experiments have both shown that the traditional demand curve acts in an odd manner when we reach $0 marginal cost. Jet Blue’s executives should have known better. But the Jet Blue management team is not alone.

Many executives assume their customers are more rational than they really are. For example, most leaders believe in enhancing the options given to customers, but increased choice can actually freeze decision-making by overwhelming the shopper. Excessive options is a key reason that an average of 60% of all online shoppers abandon their purchases mid-stream.

When it comes to direct mail, success can be measured in a variety of ways besides straight ROI — although raising response is, of course, the bottom line. For instance, did the piece grab attention? Did its design help it get past the gatekeepers? Or, was the mailing particularly cost-efficient? Did it help increase customer loyalty? These are the factors that came into play for the following three successful direct mail campaigns.

I recently received an e-mail that had me riveted from start to finish. It contained a true story about two men aboard US Airways flight 1549—the one that crash-landed into the Hudson River. Both passengers had regularly backed up their critical computer data. One did this by transferring info from his hard drive to a second computer, but he had taken both laptops on the plane. The other passenger had used an online backup service called Mozy (owned by EMC)…

As the economy began to deteriorate in early 2008, a few things became clear to Gary Gottenbusch, owner of Servatii Pastry Shop & Deli Inc. in Cincinnati: Customers were purchasing smaller items in an effort to be frugal, and soaring prices for flour and other commodities were threatening to eat into his profits. A trained baker whose family has been in the bakery business for decades, Mr. Gottenbusch knew the danger the situation posed to his small business…

Inventor Michael Boehm’s instincts told him the concept he had been shopping to various manufacturers—-a portable contact grill that cooks food items faster and more healthfully-—had great promise. So why couldn’t he find a corporate partner to help take the product to market? It was 1993, and Boehm had spent a year fruitlessly searching for someone to buy into his idea. Rather than back-burner the grill, he decided what the concept needed–not only to land corporate backing but to resonate with consumers–was some star power. The rest, as they say, is history.

Tempted to cut prices? You’re not alone. With slumping sales, many businesses have been quick to offer discounts. “Cutting prices is by far the easiest marketing technique you can use,” says Frank Luby, a partner in Simon-Kucher & Partners, a pricing and marketing consultancy. But price cuts raise some tough questions: Will deep discounts cheapen your brand? Once you cut prices, can you raise them again? How do you deal with narrower margins? Says Luby: “I try to get my clients to think about where they want to be as …

In 2008, entrepreneurs Chris DiMambo and Keith Dupuis sought to upscale the Main Street Grille, a sports bar and family style restaurant in Weymouth, Massachusetts. Their $48,000 risk–in seemingly positive changes that included an expanded menu, flowers on the table, linen napkins, and even new salt and pepper shakers–so angered local customers that, after 9 months, the pair had to acknowlege a flop. Disheartened by the empty seats, angry customer letters, and a 15 percent drop in revenue, the two look back in this MSNBC video to what went wrong.

Give a pop quiz to most direct marketers on postal list testing and you’ll find an incredibly knowledgeable group of professionals. Give a similar quiz to the same group on e-mail list testing, and the score may be entirely different.
Just like the proverbial apples and oranges, postal lists and e-mail lists are just not the same when it comes to testing.
Individual knowledge about the nuances of each type of file is essential to a successful outcome. While it’s impossible to cover everything that separates these two direct marketing list tactics, …

THIS time of year, advertising is filled with religious imagery. But typically, little of it is actually sponsored by religious organizations. That is starting to change as churches seek to take advantage of the seasonal opportunity to communicate with prospective members.
The change comes as anecdotal evidence suggests that the worsening economy may be sending more people to churches, synagogues and other houses of worship as financial setbacks bring some to their knees — at least figuratively.
Denominations like the United Church of Christ have tried advertising before, running campaigns that play …

Press releases can be targeted directly to consumers, without the media filter. Here are 4 new ways to use press releases to win sales.
n a tough economy, with businesses and consumers cutting back on spending, even the best advertising may not be enough to sway shoppers. Right now, PR is an indispensable part of a campaign thanks to its influence over consumers’ buying decisions. When asked to rank the factors that sway them to buy a product or service, many Americans cite reading about it or seeing a recommendation. …