The Everlane Effect
I was recently purging my email inbox when I came across an ad for Everlane’s ‘Name your Price’ sale.
Now this isn’t the first time I’ve seen this ad, but it is the first time it really caught my eye.
In the past, I assumed there must be some sort of catch, as I thought what type of company would allow their consumer to ‘name their own price’? Wouldn’t everyone choose the cheapest price, if given the option?
I mean, if my mother taught me anything, it was to always look for the best deal. And for a company like Everlane, when are you ever going to get a Cashmere sweater for less than $100?
The answer is — you’re not.
I thought this concept only boggled me, being in the Sales and Marketing industry, but after bringing it up amongst friends, who work in all different types of industries, I realized that this concept was boggling to most people. And seeing as how this was not the first time Everlane used this marketing technique, it must be somewhat successful, and if so, is this a concept that other industries could implement and find success in?
A quick recap of Everlane; they are a clothing company based out of San Francisco, California, who up until recently, only operated online. This was one of the ways in which they minimized their overhead costs and remained competitive in a predominantly ecommerce world.
What really sets Everlane apart from other retail companies is their practice of ‘Radical Transparency’.
This is the concept in which they allow their consumers to see exactly how much each article of clothing costs them to produce and distribute and how much they mark up to cover overhead, such as employees’ salaries, and now, their two standing stores.
As if Everlane couldn’t get any more transparent, they’ve created their ‘Name your Price’ sale, and this is what brings us back to the leading question….
What success have they found after implementing this technique?
And what, can we, as salesmen and marketers in different industries learn from their success?
In an article from Buzzfeed, back in December of 2015, they break down the sale by going into detail about the price differences and what they really mean. For the ‘Choose What You Pay’, there are three options, that represent three different discounts. These typically range between 10%-30% off the original price.
When you go to click which price you would like to pay, they explain just where your money is going.
For example, if you choose the cheapest option, you are paying solely for the production and shipping of the item. If you decide to pay the next highest price, you are also paying some of the overheard, such as employees salaries, while the most expensive price is what they ideally would sell the item for, to cover maximum overhead, but also allow for growth.
Talk about transparent.
Taking inspiration from other similar, ‘radical’ sales, Founder and CEO Michael Preysman, shared that it really is all about building trust with your consumers.
Michael is quoted as staying “It’s the affinity … If you’re honest and transparent with people, then they’ll sort of treat you with decency in return.”
This idea sounds nice and all, but is it really true, or just what we want to believe?
Does being this honest and ‘transparent’ with consumers really build trust and payoff?
Results from the 2015 sale did show that approximately 10% chose either the mid- or highest price points.
Preysman also conveyed that the sale is still effective, even if everyone chose the cheapest price, as it is an opportunity to show consumers how the cost structure of the company works. And with a transparent company like Everlane, this is most important for their culture and their brand.
We can assume that this still holds true, as Everlane is going into their third year of running the sale and continuing to grow, which leads us to believe that giving the power over to the consumer to ‘Choose What You Pay’ really does payoff.
Overall, this experiment shows that as marketers, we can always find ways to innovate our industry and that we shouldn’t hold baseline assumptions about our customer’s purchasing decisions. Running a sale like this by actually challenging your customer to name their price allows you to really see how your target market values your products and overall values your business philosophy.