Inject Spending Power into Shoppers’ Pockets

This week, Walmart Stores Inc. announced they’re expanding the list of checks they’ll cash. In addition to payroll and government-issued checks which have been accepted for some time, Walmart stores will now accept insurance, pension, and student loan checks. The goal is to encourage shoppers to feel more wealthy while in the store so they’ll spend more. Having cash in your pocket does that.
     According to University of Iowa research, putting cash into shoppers’ pockets works especially well as a purchasing incentive when the cash consists of smaller denomination bills. The increased bulk of five $20 bills makes it subconsciously feel like greater wealth than a single $100 bill does.
     Also, consumers have a measurable resistance to breaking a bill. When the purchase price is $30, they’re a little more likely to use $20 bills than to break the $100 bill. It’s not a monumental effect, but it works. Many retailers catering to lower-income shoppers and/or selling naughty products have an ATM on the premises and give change in small bills.
     Another way the customer can avoid breaking a bill—and even breaking out the wad of cash—is to use a credit or debit card. People feel less pain when paying the same amount by credit card or, to a lesser extent, with a debit card than when paying cash. Walmart is inviting customers who are cashing a check for a large amount to load the funds onto a Walmart MoneyCard.
     Here are two more consumer psychology tips on injecting spending power into shoppers’ pockets:

• When customers are restricted from using a credit or debit card, they expect to get a better price to compensate for the loss of convenience. Meet the expectation. It’s easier for you because you’re avoiding the transaction fees and any statement fees charged by the credit card company. Make a feature of it, saying, “Cash only so we can save you money.”
• Evaluate the spending patterns of people using different types of credit cards. Compared to your average purchaser using a Discover card, does your average purchaser using an American Express card spend more in total and have a higher average item expenditure? Some survey research suggests that they do when it comes to luxury and status items. If you find this to be true, it might be worthwhile for you to accept the American Express card, even with the higher fee structure.

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Ease Customer Pain About Item Prices