Leadership

Kelly the Intern: Social networking and the number 99

Written by ProfitGuide

Should I block my employees from accessing Facebook? I see them using it, and it kills me that they’re wasting time all day. — Mike D., Oakville, Ont.

Mike, you certainly wouldn’t be the first employer to ban Facebook from the workplace. The Ontario government made big news in 2007, when it prohibited its staff from using the addictive social-networking site at work, arguing that it simply isn’t necessary for most public servants to do their job. A study released in August by ScanSafe, a Web security firm, revealed that 76% of its customers are blocking social-media sites — a 20% increase from six months prior. Last year, one of my friends actually got demoted and eventually let go from her job at a pharmaceutical company for using Facebook against company orders. I can definitely imagine how irritating it must be, as a business owner, to pay your employees to post holiday pictures and “poke” their friends all day.

That said, the idea that Facebook usage is hurting productivity at your company, while logical, isn’t necessarily true. A study by U.K.-based consultancy MindLab International last year found that taking short breaks to goof around on the Internet reduces stress and actually increases productivity. And then there’s research that came out of the University of Western Ontario’s Richard Ivey School of Business this summer, that concluded that online activities such as Facebooking result in “virtual competence,” which is increasingly valuable in the workplace. Among other things, it helps with knowledge-sharing, can predict success in e-learning courses and even has a positive correlation with job satisfaction and job performance.

Of course, it’s all about moderation. According to Toronto-based employment lawyer Daniel Lublin, employees spending an inordinate amount of time on Facebook while at work is tantamount to theft of your time, which can be cause for dismissal — as my friend found out the hard way.

Why do so many product prices end in 99? Is there actual research that proves that I’ll sell more if I price my product at $129.99 instead of $130? — Jill S., Victoria

Interesting question, Jill! The answer is yes, the practice does, indeed, sell more — it has been proven over and over by academics around the world. Robert Schindler, a professor of marketing at Rutgers Business School in New Jersey, has published 14 studies about the “99 effect” (also referred to as “the 9 fixation”) over the past 25 years. One of his studies involved testing sales response to different versions of a direct-mail catalogue for women’s clothing, identical except for the price endings (e.g., $29.99 versus $30.00). The result: the 99-ending version produced 8% more sales volume than the 00-ending catalogue. And just this past year, French researchers discovered that lowering the price of a slice of pizza from 8.00 euros to 7.99 euros increased sales by 15%.

Academics argue over exactly why this works. Some say it’s because we tend to focus on the big denomination instead of the smaller one; others say that the difference is perceived to be bigger than it really is, like when a 39-year-old turns 40. (It’s still just one year older, yet somehow feels like a big deal.) But I think you’ll agree that, all these years since the practice was invented, it’s pretty shocking that it still works on us. Are we consumers so stupid to believe that $7.99 is a bargain when $8 is not? Apparently, yes.

Originally appeared on PROFITguide.com