MEET KEVIN: If you’ve ever watched Meet Kevin, you’re
well aware of his infinitely running coupon codes.
In basically every video, he’ll tell you that he’s running a massive coupon code
for his programs on building wealth.
And if you wanna take advantage of this coupon code, you should buy as soon as possible because
the coupon code is expiring momentarily.
But, the reality is that the second that the current coupon code expires, he’ll have
another one in it’s place.
It’ll probably be for his grandmother’s birthday or for Leif Erikson day.
At this point, his subscribers have become well aware of this tactic and it’s pretty
much become a meme.
You can basically go to any of his videos, and you’ll see a bunch of comments making
fun of his coupon codes.
It’s basically like the boy who cried wolf.
When you constantly have coupon codes running, no one’s gonna take them seriously.
You might as well just price your product lower permanently and have no coupon codes
right?
Well, it turns out that there’s actually some truth behind Kevin’s strategy.
You see, Kevin is by no means the only one using this strategy.
Likely the biggest culprit is big box retailers.
If you search for Jeans on Kohls for example, you’ll see that virtually every offering
is 30 to 50% off.
You can see a similar trend with Macy’s, JCPenny, Dillards, and basically any mall
outlet that you can think of.
It’s not just these normal people stores that employ this strategy either.
Higher end stores like Hugo Boss are even more guilty of this.
Take this regular fit suit for example.
Apparently, the original price is $895, but you can it for 50% off for no reason in the
middle of February.
Must be a Valentines Day sale.
As you can see, the retail industry is full of this crap whether you look low or high.
And, while it’s easy to write off Kevin as a flip flopping salesman, writing off these
retailers is not as easy.
Hugo Boss, for example, spent 80 million euros on marketing within the first quarter of 2022
alone.
So, they know exactly what they’re doing.
They’ve made the conscious decision that running these infinite sales are worth the
reputational hit that comes along with them.
In fact, one of these retailers even tried pricing their products more honestly and they’re
revenue ended up going down.
So, here’s why this pesky sales strategy is so effective and why it’s in Kevin’s
best interest to continue running these coupon codes despite the public backlash.
THE ORIGIN: Taking a look back, the origin of modern pricing
startegies can be tracked back to the mid 1800s.
The industrial revolution was in full swing and cookie cutter department stores were replacing
mom and pop shops across the western world.
Unlike the mom and pop shops, these department stores carried hundred if not thousands of
different products.
Trying to do the good old barter with each every customer was not only inefficient but
also unreliable.
After all, one bad cashier could destroy your profit margins.
So, retailers decided to start implementing fixed prices across all of their locations.
In our modern, non confrontational world, this would be seen as a blessing.
You no longer had to haggle with the cashier everytime you went grocery shopping.
But, back in the day, fixed pricing was seen in a much more negative light as people felt
that it took away their bargaining power.
Nonetheless, as these department stores became ubiquitous, fixed pricing became the standard.
At first, this was great for retailers.
They didn’t have to worry about training staff in marketing and they could pull out
the fairness card against any customer who wanted a deal.
They could simply say: Sir, if we gave you a deal, it would be unfair to all of our other
customers, so in good consciences, we can’t do that.
In reality, a good conscience had nothing to do with it, but this was a great scapegoat
for dealing with tough customers.
The golden days didn’t last forever though.
While these retailers were able to simply steam rollover family businesses, they couldn’t
do the same against other retail giants.
They all had massive budgets, marketing campaigns, and identical pricing.
So, it became extremely difficult to stick out.
Enter coupons.
If JC Penny couldn’t stick out with their shopping experience, maybe they could stick
out with their prices.
There was two fatal flaws with this idea though.
First of all, retailers didn’t actually have very big margins to begin with.
Macy’s, for example, has a net margin of 3-5%.
So, there was no way that they could run the massive 30 to 50% discounts to get people
in the door.
And even if they could, why should they have to sell their products for a cheaper price
when Sears across town was charging MSRP.
So, retailers decided, why decrease the sale price when you could increase the MSRP.
Consumer protection laws meant that they couldn’t just outright lie or mislead customers about
the MSRP.
So, retailers had to come up with some pretty clever strategies to cover their butts.
For example, they might offer a pair of jeans for a $100 in some remote location in Montana.
And now they could advertise in New York that $50 for those same jeans is 50% off.
This strategy tapped into our inner FOMO and our deep desire to feel special and exclusive.
And before you knew it, customers were lining up outside these stores trying to take advantage
of these great one time discounts.
JC PENNY EXPERIMENT: These constant flash sales did wonders when
it came to getting people in the door, but people would eventually start to notice right?
And when they did, their opinion of said retailer would just go down right?
Well, yes and no.
People did begin to notice very quickly actually, but their reaction wasn’t what you might
expect.
On one side, yes people did become numb to sales and they started feeling: why don’t
these retailers just put up more honest pricing to begin with.
But, this numbness led to another, much stronger feeling as well.
Given that everyone is doing deals all the time, it’s not worth buying products that
are notorious for this like clothing and kitchen items for MSRP.
It’s probably just a week or two until that product goes on sale itself, and they could
just buy it then.
In other words, sales had indeed lost all meaning, but a lack of a sale very much had
meaning.
A lack of a sale meant that the given price was a ripoff.
And given that this strategy has been engrained in our culture for several decades now, all
of us feel this way to a certain a degree.
I mean, it’s no coincidence that black friday sales have grown to encompass the entirety
of the 4th quarter.
And it’s not random that Amazon suddenly has two Prime days per year.
The reality is that, though seemingly useless, these arbitrary discounts drive sales, and
a lack of them drives losses.
And this isn’t just some sort of marketing theory either.
Ron Johnson’s disastrous reign at JCPenny has given us real world data.
You’re probably not familiar with Ron himself, but I’m sure you’re familiar with his
work.
Ron is the architect of the Apple store.
He joined Apple in January of 2000 as Senior Vice President of retail operations.
And by the time he left, he had propelled Apple stores to $4,032 per square foot annually.
So, clearly, this guy knew what he was doing, and that’s why JCPenny would hire him as
CEO in late 2011.
Ron was given that task of transforming JCPenny, and almost immediately, he was drawn towards
their constant markdowns.
Like most of us, he felt that this was the 21st century.
The internet is a thing.
People can price check on the go.
So, why keep up these braindead list prices.
Well, the answer is seemingly no reason at all, so Ron went ahead and eliminated all
markdowns across the entire company.
Instead, he introduced “fair and square” pricing which is exactly what it sounds like.
He also eliminated the use of 99 in price tags.
Surely, none of us are stupid enough to base our purchasing decision on these arbitrary
deals or 1 cent right.
If anything, consumers should appreciate the transparent pricing.
Oh, how wrong he was.
Within just 12 months, same store sales would decline 25% and the company would end up losing
$1 billion.
Ron’s performance was so bad that it was literally the worst performance of any retail
CEO ever.
And, this blunder would put JCPenny on the track towards bankruptcy.
I don’t think you’d be surprised to hear that Ron would be fired just 4 months later.
So, what went wrong?
THE TAKEAWAY: The main factor that Ron had failed to consider
was the radically different objectives of Apple stores and JCPenny outlets.
Here’s the thing, Apple stores don’t need to sell you on their products.
iPhones sell themselves, and people who go to Apple stores have usually already made
up their mind.
They’re there to buy or to browse.
There’s not very many people who are on the fence.
So, the entire point of Apple stores is to simply create an enjoyable shopping experience.
Meanwhile, JCPenny is trying to sell extraordinarily oversaturated products in massive upscale
locations.
Shoppers at JCPenny aren’t usually there with intention.
Many of them are just strolling around the mall and decided to stop by.
So, JCPenny has to work very hard to get these strollers to become customers.
The same case could be said about iPhones as well outside of Apple stores.
If you go into AT&T, Verizon, or TMobile, you’ll see dozens of deals, trade in discounts,
and of course aggressive salesmen.
Selling YouTube courses is much closer to JCPenny than it is to Apple.
People are watching YouTube videos in their leisure time.
They just want to be entertained and maybe informed.
But, they’re definitely not jumping up and down about the prospect of buying a $1,700
course.
We should also mention that basically every finance YouTuber has their own money course
and their own YouTube course.
So, Kevin not only has to coninvce a casual viewer to buy an expensive product, but he
also has to convince them to buy his product over someone elses.
Enter coupon codes.
Offering a quote on quote $1700 course for $500 accomplishes two things.
First of all, it creates a sense of urgency.
People who watch Kevin regularly know that another coupon is just around the corner,
but new viewers will naturally feel that they have a limited time to take advantage of this
opportunity.
We should also mention that out of his regular viewers, the people who are willing to buy
his course have probably already bought it.
So, a coupon code or a lack of a coupon code wouldn’t really sway his regular viewers,
but it does wonders with new viewers.
Aside from creating urgency, the listing price also creates a high price anchor.
If you were judging the course based on just it’s content, you might feel that it’s
only worth $50.
But, since you’re given this initial price of $1700, $500 seems a lot more reasonable.
Even if you were looking for a more aggressive deal, you’d likely be aiming for $400 or
$300, not $50.
And let’s just say, this strategy has worked extraordinarily well for Kevin.
THE AFTERMATH: You can argue all you want about marketing
strategies and brand perception, but something you can’t argue with is results, and Kevin’s
got the best results in the space period.
Graham Stephan for example is the largest finance YouTuber with over 4 million subscribers.
And in 2021, he made $6.1 million which is an extraordinary amount of money.
Meet Kevin, however, has less than half of Graham’s subscriber count, yet he was making
$3 million per month in 2021.
Not to mention he now owns a private jet.
Now, let me be clear, this is not an endorsement of Meet Kevin or his courses.
Rather, it’s simply a discussion about how effective his coupon code strategy is despite
the fact that he’s always offering them.
The bottom line is that while annoying, it’s effective, and the only thing we can blame
is our own psychology.
At the end of the day, Kevin is just using the psychology of money to sell a course about
the psychology of money.
Along those lines, I have a question for you.
Would you buy jeans that aren’t on sale?
Comment that down below.
Also, drop a like if you would like to help my psychology.
And of course, consider checking out our discord community to suggest future video ideas and
consider subscribing to see more questions logically answered.