Imagine you are an owner of a small antique shop on Main street of a tourist town called ‘Bing’. You are doing your business just fine, the sales are not great but enough to make ends meet. Now imagine the township announces new initiative targeted to bring more visitors to the town, they call it ‘Cashback’. Should you accept, you will get your front door remodeled for free and the village will advertise your business. However there is a catch - you are required to pay back each customer who buys something at your store a percentage of the sale. The idea is that as customers see the cash flowing back to their wallets they will tell about ‘Bing Cashback’ to their friends who will want to take a tour of the town as well. ‘Bing’ of course has more than antique shops on Main street, but this is besides the point.
Now imagine that your shop has a backdoor which wasn’t remodeled, and by the way, this was the door that all your regulars have used all the time before you got on ‘Bing Cashback’, and they still do.
Two things can happen in this imaginary world:
- If you keep your prices low (at the level before you joined ‘Bing Cashback’) you will hurt your bottom line
- If you raise your prices to compensate for the lost revenue, you will hurt your regulars, who still use the backdoor and don’t get cash back
It sure feels like your business is doomed either way, that is unless you have a magician friend, ‘Marketer’, who comes up with a ‘genius’ solution. He invents special glasses that when used will make the price on all your merchandise look higher, and he then suggests to give out the glasses to everyone who comes in the store through the ‘Bing’ remodeled frontdoor. You take on the advice, your business is booming until one day an ‘unforeseeable disaster’ happens - one of your customers takes off the glasses and sees the lower prices!
This is what in essence happened today with a New Jersey based electronics seller Butterfly Photo when Meghani, a blogger at search engine startup Bountii, exposed their ‘magic glasses’ practices to the world.
Butterfly Photo set a three month cookie on my computer to indicate that I came from Bing. Any product I look at for the next three months may show a different price than I’d get by going there directly.
Meghani claims he knows ‘more than a few instances’ of this kind of ‘magic marketing’, but he unfortunately doesn’t name the specific stores.
On one hand, the online world has opened new unimaginable before marketing opportunities as well as new ‘creative’ ways for businesses to scam their customers. On the other hand, thanks to social media, ‘business failures’ like this have become more costly for business owners which to some extend counter balances the situation. Overall I feel excited to live at the time I do and be a part of this ‘online revolution’.
What is your experience with Bing? Have you ever been a target of the dual price ‘magic marketing’? Do you think Bing Cashback will bring Microsoft success in a similar way the banks have benefited by hooking their customers to the cash back rewards credit cards?