1.Napoleon’s Secret

Napoleon Bonaparte
How did Napoleon Bonaparte Build an Empire?

Napoleon Bonaparte has carved his name in the history books. Some say he was a masterful soldier. Some say he was a very charismatic statesman. Others say he was the best strategist who ever lived. Yes, he is all of that. But he became “Napoleon the Great” only because of one of his tactics. He created and ruled an empire only because of one secret.

Baubles.

He gave away baubles. What are baubles you ask?

Baubles are small ornaments that have little monetary value. But they have great emotional value attached to them. Napoleon gave Baubles to his soldiers when they achieved a notable feat.

Giving baubles as rewards is the single most important tactic that helped Napoleon establish a humongous empire. This tactic achieved 2 things:

1. Made his soldiers fight harder to earn more baubles.

2. Made his soldiers loyal to him.

Give bonuses and rewards to consumers and you‘ll soon build a business empire too. The consumers will buy your products for the bonuses. And they will stay loyal to you if you provide bonus goodies every so often.

Now that you know that baubles = bonuses and rewards, let us see what kind of baubles should we give away and how to give them away for the best results.

2. E. Joseph Cossman reveals the type of baubles you should give away

E Joseph Cossman is a marketing legend. Wall street journal calls him: “The Messiah of the free enterprise system.” He made more than 1 million dollars through mail order. What‘s more, he wrote a book about it (How I made $1,000,000 in mail order – And you can too!), which became a classic. Yet even he sometimes had trouble selling products.

Spud Guns & Potato
How did Cossman Sell These Spud Guns?

One time, Cossman starts selling spud guns. Spud guns are little toy guns that use potatoes as bullets. You simply dig the barrel of the spud gun into the potato and when you pull it out, a small piece of potato would stay in the barrel.

Cossman sells the spud guns through grocery stores with some success. But he wants to make a lot of money fast. He knows from experience that giving bonuses boosts sales. So he convinces the grocery store owners to buy his spud guns in huge quantities at a discount rate. The grocery owners can then give away the spud guns for free as a bonus when people buy a bag of potatoes, driving the sales of potatoes up.

Unfortunately, the bonus tactic doesn’t work. The groceries don’t sell more potatoes. And the owners ae not pleased with Cossman, from whom they had to buy the spud guns that are now sitting in the stock room gathering dust.

So Cossman tries one more tactic. He convinces the owners to reverse the bonus tactic. For every spud gun people buy, they would receive 1 bag of potatoes for free.

The entire “spud guns + potatoes“ package still sells for the same amount of money. But by reversing the product and the bonus, the sales of spud guns and potatoes go through the roof!

Cossman shows that giving a bonus with your product can indeed boost sales because a bonus provides one more reason to people to buy your product.

But the bonus has to be something that people want. People didn’t want the spud guns. So they didn’t buy potatoes for a free spud gun. But they did want potatoes. And they bought lots of spud guns for a free bag of potatoes.

3. Psychologist Priya Raghubir reveals what kind of baubles you should not give away

Green Pearl Bracelet
Does the Value of the Pearls Change when they are a Bonus?

Priya Raghubir is a social psychologist and a published writer. One day, she decides to observe how people value bonuses on products.

She gathers 2 groups of people to take part in an experiment. The people aren’t told what the experiment is about. One group is given a catalog that features liquor as the target product and a pearl bracelet as a bonus gift. And the group members are then asked to evaluate the desirability and the value of the bonus: the pearl bracelet.

The other group is given a catalog that has the main target product as the pearl bracelet. There are no bonuses. The group members are then asked to evaluate the desirability and the value of the bracelet.

The findings reveal some amazing insight. The second group value the bracelet a lot more than the first group. Their desire to get their hands on the bracelet is also more.

Peoples valuation of the bracelet lowers when it is bundled as a bonus!

Even though bonuses might make more people buy your products, people will perceive the bonus product itself to be of low value. So it might be a good idea to not to offer your own products as a bonus and instead offer some one else‘s products as the bonus.

4. Waiters show how to give away baubles

3 Waiters
How Can Waiters Earn More Tips?

Most waiters have it tough. They earn minimum wages. And they would be under the poverty line if they wouldn’t earn enough in tips. Many experiments have been conducted to see what increases the amount of tips a waiter receives.

Cornell University’s hospitality department conducts one such experiment. The researchers try to determine how rewarding the diners at the end of the meal affects the tips.

The researchers findings surprise them:

In both the 2nd and 3rd case, only two candies are given to the diner. But the way they are given increases the tips by an awesome 4%!

The experiment shows that the bigger the reward the better the client response.

And the response can be even better when you surprise the clients with a reward.

Action summary:

If you liked this article, can you please vote for it on Digg & StumbleUpon? Thank You!

November 12, 2012