Monday, July 28, 2014

Hang ’Em High for Power Deposits

When your shoppers feel more powerful they’re more likely to put away money for the future, according to researchers at Stanford University and Tilburg University.
     It makes sense. Confidence springs from power, and those with confidence worry less about short-term financial shortfalls, so are willing to deposit dollars. This works best when the monetary deposits are framed as themselves adding to the individual’s power rather than as only generating reserves for a rainy day.
     The Stanford/Tilburg researchers made some study participants feel relatively powerful and others relatively powerless. Compared to those with perceptions of powerlessness, those with perceptions of power expressed greater interest in saving money for the future when told the objective would be to keep the money indefinitely. In a follow-up, there was no difference between the powerful and powerless in willingness to save money when the participants were asked to think about specific ways they’d be spending their savings later.
     Other retailers are usually more interested in having customers spend money now rather than deposit it for later, and here, too, perceptions of power matter. If you make shoppers feel more powerful, they’re likely to increase the amounts spent on purchases for themselves. If you make them feel less powerful, they’re likely to increase the amounts on purchases intended for others.
     Participants in a study at Northwestern University placed bids on items like a T-shirt and a mug. Some of the participants had been exposed to a manipulation to build a sense of greater power, while the manipulation for the other participants was designed to lessen the sense of power.
     When purchasing the item for themselves, those feeling greater power bid about 86% more for an item, on average, than those feeling lower power. When purchasing the item for someone else, those feeling less powerful bid about 52% more for an item, on average, than those feeling higher power.
     How to influence your shopper’s sense of power? Show ads and signage which emphasize the power possessed by the shopper (“At our store, you’re the boss”) or deemphasize the power (“At our store, we take care of you”). Then treat the shopper with deference or with authority.
     The Stanford/Tilburg researchers had participants sat on either a tall chair or a low ottoman. This recalls research showing how consumers with a higher-level perspective plan for the future.
     Hanging out high, in power or in perspective, produces a difference.

Click below for more: 
Assess Shoppers’ Cloaks of Confidence 
Manipulate the Shopper’s Sense of Power 
Enrich Clients’ Savings Deposits

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