The Shocking Truth about high school math class: you actually DO use it later in life!

Source: http://rinielsmusings.wordpress.com/2010/06/25/funny-stuff/

What you’re about to learn is not illegal, immoral, or shady. It just seems that way. This technique makes the most of a demographic fact: most people are extremely poor at mental calculations.

For those of you that have worked in retail, you know what I’m talking about.

Ø  How many times has someone asked you “How much is this?” when standing in front of a huge “50%” or “1/2 off” sign?

Ø  How about those that have worked in the restaurant industry who were accidently stiffed by very nice customers who thought $ 5.00 was 20% of $50.00?

Ø  How about people who are shocked by their high total after handing you a huge pile of expensive clothing to ring out?

Where were these people in high school math? Can’t they do basic % off calculations? Can’t they add? Can’t they subtract? Can’t they prorate?

Answer: Let’s test that out.

Let’s do 20% off $62.89.

 It’s so easy…round up the price to the nearest whole number, then divisible- by- five number ( $62.89 becomes $63.00 becomes $65.00) then take the % off (let’s say 20% off) and break that out of 100%. (It’s 1/5—20 is 1/5 of 100). What’s 1/5 of $65.00? (Answer is $13.00). Then you simply subtract $13.00 from $65.00.

 How hard is that? Okay, it’s a little hard.

You’re about to make that work for you.

There are 3 main areas that lend themselves easily to creative math: Retention, collections, and sales.

Let’s talk retention:

When you’re making retention offers, it’s usually a discount in either a lump sum or a timed pay out over a fixed time frame—$30.00 off now, or $100.00 off your next 6 months,  $17.00 a month.

It’s not hard to sell discounts—most people can do a quickie calculation and realize that $72.89 minus $30.00 is around $40.00 Substantial savings. Retention customers aren’t most people, however. They’re upset, and ready to cancel.

We’ve got to bump it up a notch.  

Pitch your discount in 3 ways:

·         Total amount

·         % off

·         New bill amount with savings deducted

So it would sound like this “Well, we’re authorized to take a total of $30.00 off your bill, which is a savings of almost 25% off. Your new bill would be around $42.00 a month for next month. How does that sound for you?”
If the discount is for a fixed time frame, say $10.00 off for 6 months, do the calculations for them:

·         Total savings

·         Immediate discount with bill calculation

·         % off

“I can offer you $10.00 off your bill for the next six months. That’s a total of $60.00 off, a savings of 20% each month, and that will take your bill from $50.00 to $40.00. How’s that sound?”

Rounding the bases:

·         Round UP when talking about discounts or savings

·         Round DOWN when talking about the new bill

Let’s talk sales:

Have you ever seen those heart-rending commercials where “for just pennies a day” you can save little Juanita from rickets? That’s creative math.

Cosmopolitan magazine does the same thing, just with a sprinkle of glitter on it: They compare your “weekly cappuccino habit” with what you could have bought in a year with the savings instead-- “3 iPads loaded with all the True Blood eps you could watch!” It’s putting money into context.

In this case, let’s say you’re selling an internet upgrade package for an extra $20.00 a month. Now let’s get creative:

Divide the extra cost by 30 days and then round DOWN: If it’s 98 cents a day, it’s “pennies” (anything less than $1.00 is pennies). If it’s $1.00-4.00 it’s “the cost of a cup of coffee”.

If you’re selling a package that is a lump sum-- say a year- long warranty for $120.00-- divide that by 12 months, and put that in context: “For $10.00 a month, you can have the security of knowing that….”

Let’s say you’re selling a co-pay repair service protection plan (which many companies offer). You’ll want to compare the in-context cost to the highest possible costs of a no-coverage repair.

“Well, for just $3.00 a month, you could stand to save up to $150.00 on future repairs.”

You can also take advantage of most people’s absolute terror of doing math involving %, and say things like “Well, for only 8% more a month, you can save yourself about $300.00 of possible repair costs.” Do this for low %, those less than 10%.

Let’s talk Collections:

This is the best place to use creative math. It takes nerves of steel and a genuine liking for bargaining, but if you’re in collections, you’ve got both. Here are some creative math tricks to use:

Breaking up payments:

You want $500.00 from your debtor. Sure, it would be great to have $500.00 now, green money. But let’s face it, if they had $500.00, they probably wouldn’t be on the receiving end of your call. So use the start high, go low method to break up the payments.

Start high, go low:

Start with your highest bid: “Do you have$500.00 today so we can make this go away?” No, they don’t. Then go to a lower one or a settlement or buy-out: “Well, I can shave off $200.00 if we have $300.00 to make this disappear.” Nope. They’re on WIC and SNAP. Okay, fine. It’s payment plan time.

How’s$100.00 a month for 5 months? That’s $25.00 a week (context!) It’s about a tank of gas or so.

No? How about $50.00 a month for the next 6 months, and we see where we are in 3?

Cool. All along you wanted that $50.00. Welcome to creative math.

General tips:

·         When dealing with contracts, don’t use “years”, use “months”. Reverse when dealing with discounts, down to six months: “Half a year!”

·         Jot down a list of “contexts” in which to put money—a cup of coffee, the morning paper, a tank of gas, a magazine… thing that people buy almost every day or week and don’t think twice about.

·         It’s okay for YOU to use a calculator when you’re on the phone, and even in person--show the customer with your use of a calculator that a) you’re just like them and b) you’re willing to “work” for them. (Evil mustache twirls here).

·         Use terms like “double” or “half” for 50% off. You can also use “savings context”—“that’s a savings of almost 50%, just about half off!” for 40-49% off.

·         Use action words like “cut” or “slash” to indicate the dramatic lengths you’re going to with your 8% off savings. (Slight sarcasm here.)

Remember, with great power, comes great responsibility. Don’t use creative math to bamboozle or cheat your customers- only to sell them items that they will use, or to explain the benefits of your offers in a way that will be appealing to them. Now go forth and dazzle!