Is Buying Logical?
   by James Dion, Founder and President, DionCo Inc.

Are human beings logical or emotional? Clearly this is not an either or question, as both are components of our personalities. The question is how much of our behavior, especially as it relates to shopping and buying, is about logic and clear rational thought and how much is about emotional, non-logical or even irrational behavior.
 
Nowhere is this split of logic and emotion more clearly seen than in the issue of pricing, how much we are willing to pay, when we feel that we have paid too much (gotten ripped off) or when we feel we have scored a great deal.

Price is just a number but it has the power to cause us to act illogically. For example, for many consumers, it is okay to drive five miles to save $5 on a tank of gas (even though we most likely spent the same $5 we thought we would save just getting there). It is also okay to drive twenty miles to get $20 off a $100 item at an outlet store but it is not okay to drive to the same outlet store to get $20 off an $800 item, yet the dollar savings is the same!

Low price and savings are psychologically appealing to us because they stimulate an area of our brain that gives us pleasure, and that pleasure is the feeling that we are winning. Low price and savings are an end and a victory in themselves. It is not logic that is involved in this feeling, it is the pure emotion of feeling that we have won.

Price promotions such as “carpet three rooms and get one free” are designed to seduce customers to buy more just to ‘score’ the free room, whether they need that third room carpeted or not. ‘Smart shopping’ then becomes about getting the best deal, but if you look at the pure economics of the deal (logic), the third room, which in many cases is not necessary to carpet, is really a waste of money. Logic would make us ask the store for a simple 33% discount on each of the two rooms and forego the free room entirely, but this promotion is not about appealing to our logical mind, it is an emotional appeal.

So, how should a retailer speak to the emotional side of the consumer’s mind?  Sell low quality products at rock bottom prices to get the customer excited, or even worse, inflate the regular price to show a larger savings? Neither is a good strategy.

An appeal to both the logical and emotional mind is ultimately the best and most honest way to communicate with our customers. Explaining to customers the truth that “there’s no such thing as a free lunch” in a way that involves both emotion as well as logic is the way to go.

We know that psychologically we are even more concerned about not losing than we are about winning. We will often spend more time, energy and effort making sure that we don’t lose than we spend trying to win. So, a smart store will always frame their communication to customers in a way that reassures the customer that they are not making a mistake. The word ‘guarantee’ has more power than ‘save’ in the consumer’s mind and also has an emotionally comforting aspect to it. Applying this logic to your flooring store is simple, in every communication with your customers and prospective customers remind them that doing business with you has no risk and they simply ‘cannot loose’ in selecting your store.

As John Ruskin, a British social critic wrote almost 100 years ago “It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money—that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.”

James E. Dion, founder and president of Dionco Inc., Chicago, IL, is an internationally known consultant, keynote speaker, trainer, author and one of North America's leading experts on consumer trends, retail technology, selling and service, retail merchandising and operations.