The Irrational Consumer

There is a seduction scene in the Hitchcock movie North by Northwest with Eva Marie Saint and Cary Grant. Exactly who is seducing who depends on your point of view. It is during this scene when Saint whispers to Grant that as an advertising man, he gets people to buy things they don’t really need and do things they shouldn’t do.

Although Saint states it a little strongly, the fact is that advertising is about persuasion. The more persuasive the message the better the advertising works.

To be really persuasive requires an understanding of how we manage our emotions. The only place for logic in great advertising is to justify the emotional decision that’s already been made.

Nowhere is this explained so well and in so many different examples as in the book Predictably Irrational by Dan Ariely. With a copyright of 2008, the book is a current and fascinating study of the way humans rationalize, justify, and contort information or circumstances to please themselves.

It is a book worth owning or, at the very least, checking out of the library.

Most of the advertising consumers see day after day is all about the product or service being sold. It is boring, mundane and uninspired. It makes no emotional connection of any kind. Yet as Ariely shows over and over, if humans reacted logically they would never make the decisions they make. Here are just a few of the ways we put emotion ahead of logic.

Ignoring the Facts. Many people are afraid of flying. Few are afraid of driving. Yet statistically the number of incidences of death from both, when balanced with the amount of time the average person spends flying or driving, are statistically the same. So there is no basis for why one should be more frightening than the other.

Consumers frequently avoid facts and rely on their perceptions. Perceptions are the emotional reaction; facts are the logic. This is what makes fear such a powerful motivator. Fear of loss, fear of failure, fear of rejection and fear of danger are strong emotions. Anyone with a product or service that can eliminate any of those fears should be tapping into those emotions with their advertising.

Spending to Save. Do some online shopping and you’re bound to run into an offer that gives you free shipping if your order is $50 or more. That’s great for you if you were already planning to buy an item worth more than $50. But how this offer really works, is that it guarantees the company that their minimum sale will be $50.

Consumers will add a $15.99 item to an order to push it over the $50 threshold in order to save paying the $7.95 shipping cost without ever stopping to think that financially they would be better off just paying the $7.95.

In his book, Ariely uses the example of Amazon.com who offered the free shipping if the purchase was for two books instead of one. The free shipping is so persuasive that shoppers will buy a second book just to get it.

Cellular service providers also do this. For a slightly higher monthly fee you can get unlimited calling. So consumers opt for the higher priced plan to get the unlimited offer. But most consumers never change their calling behavior because of this and really don’t need the unlimited minutes.

The point as a marketer is that if you offer something that sounds really good to consumers (i.e. really persuasive), they’ll pay a bit more to get it.

Equating Cost with Value. Most consumers have credit cards. And most credit cards are available for free – no fee is charged. Yet consumers will spend up to $150 a year to get an American Express credit card. Why would someone pay so much for a credit card when there are free ones everywhere?

The answer is prestige. American Express has done an excellent job of convincing the public that American Express is the crème de la crème of credit cards. That same psychology is why consumers still hand over $4 and more for a cup of coffee at Starbucks when they can buy a cup of coffee elsewhere for just $1.

If you’re positioned as the premium brand, or as delivering a premium experience, you can charge more without consumer resistance.

Comparing Incorrectly. Consumers rarely know the true worth of the products and services they buy. I see this all the time when I talk with people about advertising. They may be considering three different magazines in which to run ads, and invariably they will choose the one with the lowest rate thinking this is the best deal.

They don’t know that they have to compare those rates based on the number of readers each magazine will reach. Frequently the higher priced magazine is actually the less expensive buy because the advertiser spends less per reader.

The same is true of merchandise in stores, food in restaurants, and even in subscription plans such as Net Flix. When Net Flix first started they offered a choice of plans. The lowest rate got consumers one movie at a time with limits on how many movies you could get per month. The highest rate had unlimited movies per month. It was the middle rate that became the most popular so now Net Flix has one rate – unlimited movies per month for $8.99.

When consumers compare prices, they most often take the middle price. They feel it is the better value and a safer decision. As a marketer you can actually sell more if you know how to present the pricing decision.

The Value of Time. A customer forced to stand in line for 5 minutes at his or her bank gets angry that it takes so long to get waited on. That same customer, however, will happily stand in line for 30 minutes at that same bank if this time the line is to get free tickets to a concert the bank is sponsoring.

Why the difference? Customers don’t like to wait when they are giving you something (their transaction). They don’t mind waiting, however, if you are giving them something.

Ariely demonstrates this with the example of free admission days at museums. Although the cost of going to the museum may only be $7, people will opt to go to the museum on a free admission day even though they have to wait in line and fight through crowds at every exhibit. The free admission is more persuasive than the reality that the experience would be much better on another day.

Illogical as it seems, consumers will put up with all kinds of inconveniences that would normally cause stress, anger and frustration, as long as they get something for free.

Because we make decisions with emotions instead of logic, advertising that makes the consumer feel something produces results. Advertising legend David Ogilvy says it this way, “If you are trying to persuade people to buy something or do something, you should use the language in which they think.” That’s with their emotions.

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