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, thinking ‘Really, 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 shop on a budget. 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 marketing industry, but after asking a few friends, who work in all different types of industries, I realized that this concept was quite boggling to most. And seeing as how this was not the first time Everlane used this marketing technique, it must have been successful? I had to find out.
In case you didn’t know, Everlane is a clothing company based out of San Francisco, California, who up until recently, operated solely online. This was one of the ways they were able to minimize their overhead costs and remain competitive in a predominantly ecommerce world.
What really set Everlane apart from other retail companies, though, was their practice of ‘Radical Transparency’.
This is the concept of showing their consumers exactly how much each article of clothing costs to produce and distribute, and how much they would mark them up, in order to cover overhead. Things like employees’ salaries, at their, now, two brick and mortar stores.
And 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 salespeople 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 really, what they 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 what you’re paying for.
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 to 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 ‘Name Your Price’ initiative showed that approximately 10% chose either the mid- or highest price points. So, I guess were not as generous as we like to think.
Preysman did convey, however, that the sale is still effective, even if everyone chooses the cheapest price — as it is an perfect opportunity to show consumers the cost structure of the company, and how it works. For 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 their ‘Name Your Price’ campaign while they continue to grow, were led to believe that ‘radical transparency’ really does payoff.
In the end, 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 campaign like this one, by actually challenging your customer to name their price allows you to better understand your target market, their likes and dislikes, and to connect with them on a more personal level.
