What do people prefer when they are shopping? An instant bargain, right now, or longer term savings?
This year, ASDA has pulled out of the annual “Black Friday” event, which provides bargains to High Street shoppers for one-day only, on a first-come, first-served basis. If the bargains are gone, they are gone. That is why last year we witnessed mayhem in some shops as people clambered over each other to grab the bargains before they disappeared.
You can see almost the same thing happening on “Cyber Monday”, which this year takes place on 30th November. It is a one-day bargain-fest for online retailers. A limited supply of bargain items goes on sale at various online stores, and millions of people attempt to get something, sometimes bringing websites to their knees as they fail to cope with the traffic.
So, are such bargain days a good idea? Do they offer something of value to your shoppers, or is ASDA onto something when it says that customers prefer longer term savings throughout the run-up to Christmas?
The answer is that both of these things are true. If you ask people do they want a bargain right now, or would they prefer to have longer-term savings on a wider array of goods, they will tell you that they are prepared to wait. We all like a bargain, but when pushed for an answer, we will say that we prefer to wait for our reward because it is likely to be bigger, as a result of savings on more items.
However, experimental studies show that what we say we want and what we do are entirely different things. If you put people in a situation where they have to decide between getting a small reward now, or a bigger reward later, they almost always choose the smaller reward now. It appears that we understand the logic of waiting for the larger reward, but our emotions drive us to get the reward right now, instead of having to wait.
That is why both Black Friday and Cyber Monday succeed. They trigger that emotional desire for instant reward. The bonus of saving £10 now is more emotionally stimulating for people than waiting a week or two and getting £20 savings.
So what does this mean for your online business? It means that if you sell things online you need to play both games. Offering instant savings will allow you to cash-in on the emotional desire for instant reward. However, if you also offer long-term savings, such as in the case of loyalty points, you tap into the logical part of people’s brains, meaning they will also like that.
If you are busy trying to organise things for Cyber Monday, you are bound to gain some sales because of the emotional desire for instant reward amongst your customers. However, what about the people who will also respond logically to longer-term reward. Are you doing enough for them?
You could, for instance, have a membership club offering discounts throughout the year exclusively to those people. Alternatively, you could have an online loyalty card that has points added to it each time someone buys from your website, allowing them to cash in those points for a discount later in the year. An alternative would be to provide a constant discount of a few percentage points below the Recommended Retail Price, thereby showing you are always cheaper. In other words, as well as cashing in on the clear impact of Cyber Monday, don’t ignore the possibilities of longer-term discounts – they also appeal to people, but for a different reason; logic, not emotion.