The Psychology of the Sale

I’m a big reader but that wasn’t always the case. In fact, as strange at this sounds, as a kid I hated reading and writing. I say it’s strange because now I write all the time and I read about a book a week. For me, part of a great weekend is spending time at Barnes and Noble with Jane, Abigail and a cup of Starbucks coffee (Venti coffee of the day, cream and sugar). And if there happens to be a sale I’m the kind that will use the coupon no matter what.

In January I received an email with what I thought was a unique coupon from Barnes and Noble. What I thought was unique may not be to some of you more “professional” shoppers, but nonetheless it prompted me to want to write about the psychology of the sale this week.

There was the standard expiration date on the coupon, 1/30/11. That’s no big deal because we’re all used to seeing that. The expiration date incorporates scarcity, the principle of influence that tells us people tend to value things more when they believe they are rare or diminishing. The simple fact that the sale has an end date will prompt many people to stop by the store if for no other reason than to just look. Of course, a good percentage of people will end up using the coupon and buying when they might not have otherwise. This isn’t unique but it is part of the psychology of the sale.

What I found unique was the potential savings. Most of the time we simply see a percentage we can save when we get a coupon. It may be 10% off an entire purchase, 20% off of one item, or buy two and get one free. I could go on for quite some time with all the variations but you get the point. What was unique about this coupon was that it said I could save 10%, 15%, 20%, 30%, or possibly 50% off one item! The catch was; I wouldn’t know until I got to the register.

So now scarcity becomes a little more important because what if I miss out on saving 50%? That would really stink, especially for a book lover so I might as well go and see how much I could save.

Would you have gone to the store to save 10%? Maybe or maybe not. Sometimes I do, sometimes I don’t. How about 15%? Perhaps you go. I always give it strong consideration. At 20% you might start think it could be too good to pass up, so the odds that you visit the store are pretty good. It’s not too often I miss a 20% off sale on books. When you get the 30% coupon you can imagine loads of people make it a point to stop by the bookstore. I know I'll go out of my way to drop by. With a 50% coupon nearly every book lover will stop by because there’s always something worthwhile still on the reading list and it’s easy to justify buying a book for half price. I am definitely in that group!

But still, you don’t know how much you’ll save. You know at 30%, and certainly at 50% off, you can find that book you’ve been wanting to read -- the hardback edition because you like hardback books -- and you can justify the additional cost because of the extra savings you’ll get…even if you’re not sure how much you’ll save.

You get to the front of the line and eagerly anticipate your savings as you hand the cashier your coupon. She scans it and bingo, you saved 50%! Life is good! But wait, you know there will be very few people who get 50% off. The truth is most people will save only 10% and as the percentage of savings goes up the odds that your coupon will be one of those big winners goes down.

Are you going to tell the cashier you don’t want the book after all and return that $25 or $35 book because you only saved 10%? I bet the vast majority of people won’t. First reason I bet you won’t is consistency. This principle of influence tells us people like to be consistent. Driving to the store to buy a book then not buying it feels wrong to most people. After all, you’ve spent gas money driving there and at $3.15 a gallon people are changing driving habits so you don't want to waste that trip. In addition to the gas, you invested time driving there and browsing in the store so you convince yourself saving 10% isn’t too bad…even if knowing that ahead of time might not have gotten you out the door.

The other factor that comes into play is compare and contrast. I see this happening two ways. First was the structure of the coupon. When you start by reading the 10%, 15% and so on, by the time you get to 30% and 50% the savings seems even larger by comparison and that gets your hopes up. Compare and contrast also comes into play when you save 10%, let’s say $2.50, and you rationalize that saving another $2.50 would have been nice but not necessary, especially after your time and effort are taken into consideration.

So there you have it, a little bit of the psychology of the sale. There are quite a few things going on in the mind of the potential customer and the reality is, most people are completely unaware of how those outside influences are impacting their behavior. Martin Lindstrom, author of Buy-ology, says 85% of our actions are driven by non-conscious thinking. Most people don't really know why they do what they do but having a little more insight can hopefully help you make the right decision when it comes to a sale.

Brian, CMCT
influencepeople
Helping You Learn to Hear “Yes”.