Tuesday, June 21, 2011

Loosen Up Tightwads’ Wallets

Cheapskates—also known as tightwads—are an underappreciated market. When you survey tightwads, they admit to making smaller purchases than they think they should. They generally believe they should be willing to spend more money. And tightwads have the money to spend. Annual income is similar for tightwads compared to spendthrifts, who believe they should be spending less. Tightwads don’t feel poor, and this is not the same motivation as with those who fret about the future because of the worldwide economic difficulties.
     Tightwads aren’t the same as frugal shoppers. Frugality is driven by a pleasure in saving. Tightwads are driven by a pain of paying.
     Women are no more likely to be tightwads than spendthrifts, but men are three times more likely to be tightwads than spendthrifts. Consumers under the age of 30 are only slightly more likely to be tightwads than spendthrifts, but respondents over 70 are five times more likely to be tightwads than spendthrifts.
     Research indicates that the key to having tightwads spend their money with you is to reinforce their sense of responsibility. Here are a few tactics and why they work with tightwads:
  • Congratulate tightwads on how they shop carefully. Tightwads take pride in limiting their spending, but feel more comfortable when loosening up within reason.
  • Remind tightwads that you’ll be responsible in what you sell to them. Then keep your promise by explaining how the products and services you sell give full value. Remember that tightwads suffer emotional pain when spending. Dealing with a responsible retailer eases the pain.
  • Accentuate the small. Based on a survey administered to more than 13,000 adults, researchers at University of Pennsylvania and Carnegie Mellon University identified a group of consumers who said that they hated spending money on items beyond necessities. These people met the definition of tightwad. In the next stage of the study, the tightwads were offered the opportunity to pay extra for overnight shipping of a DVD they wanted. The extra cost was presented to some tightwads as “a $5 fee” and to the rest of the tightwads as “a small $5 fee.” The tightwads hearing the word “small” were 20% more likely to pay the fee than those not hearing that word. In contrast, there was no difference with a “$5” and “small $5” description among people who were spendthrifts—people who indicated on the earlier survey the opposite of tightwad tendencies.
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Sell Spendthrifts with Opportunity Costs
Promise Tightwads Responsibility

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