Sell Spendthrifts with Opportunity Costs

Spendthrifts have fewer hesitations about buying than tightwads do. As you might expect, spendthrifts find more joy in shopping. According to researchers at University of Pennsylvania and Carnegie Mellon University, younger shoppers are more likely to be spendthrifts than are older shoppers.

      Tightwads aren’t the same as frugal shoppers. The researchers found that frugality is driven by a pleasure of saving, but tightwads are driven by a pain of paying. When you survey tightwads, they admit to making smaller purchases than they think they should. And spendthrifts are not the same as people with Compulsive Shopping Disorder (CSD). People with CSD experience a painful struggle to keep from excessive buying, but spendthrifts enjoy buying.

      As retailing professionals, we’ve an ethical obligation to keep from intentionally driving spendthrifts into destructive levels of debt. When store staff members see an opportunity for a customer to meet the customer's needs by purchasing a product that costs less, we build advocacy and repeat business by pointing out the lower-priced alternative. That’s true whether the purchaser is a tightwad, a spendthrift, or somebody in-between. But at the same time, we want to profit from the spendthrift’s enjoyment of buying. We’d like to make add-on sales.

      According to research from Yale University, Singapore Management University, and Arizona State University, an effective method for doing this with spendthrifts is to point out what are called “opportunity costs.” We say something like, “This model has plenty of machine power to do all the tasks you’ve told me you’d like to get done. If you choose the higher-powered model, it will cost you $30 more that you could have otherwise put toward buying the carrying case.” When your sales staff spot a spendthrift, talking about opportunity costs is supercharging add-on sales by talking about savings from a different angle.