Aug 2, 2019
Buying things isn’t all fun and games – and the process of
paying for things can actually cause pain for many people. In fact,
neuroeconomics has found that when scanning subjects’ brains in an
fMRI machine while they are going through the process of buying
things, there is activity in the insula, which is a pain center in
the brain. In many ways, it is just like physical pain, and the
emotional pain can be very real.
It doesn’t impact everyone on every single purchase, and there
are some times when it is more impactful, and some people it is
more impactful for. In many cases in business, you want to do what
you can to reduce the pain of a payment so people are more likely
to go through with a purchase, but there are times when it is
important to keep those pains in place…I will give examples of
these and what to do when the pain can’t be reduced.
In this episode, I will let you know how this concept works
including twelve different conditions where it is most likely to
occur, some unexpected mechanisms that can cause pain when you
wouldn’t even realize it, and (of course) tips for how to use this
concept to your benefit in any type of business.
- [04:08] The process of paying for things can actually cause
pain for many people.
- [06:16] Context is incredibly important when it comes to the
pain felt by making a payment.
- [10:06] Paying and consuming have sort of a reciprocal
relationship…because making a payment reduces the joy of
consumption, but consumption reduces the pain of paying.
- [11:48] The way you talk about the price impacts the pain felt
in paying more than the amount. Everything that comes before the
price matters much more than the price itself.
- [12:42] The more a transaction is perceived as: fair, an
investment, immediate, for the sake of another person, under one’s
own control and has payment before consumption…the WEAKER the pain
- [13:45] When the pain of paying is too much – so that people do
not buy things that they need or want because it is too difficult
to give up money…they are called tightwads. Those who spend too
much, too easily and do not feel an appropriate amount of pain
before or during the spending process…we call them
- [16:43] Tightwads and spendthrifts don't change their ways even
when their income fluctuates.
- [19:45] Tightwads are most sensitive to framing adjustments, so
that is where you can make a difference. Adding the word “small”
before a fee, or framing the purchase as an investment made it so
tightwads were more likely to buy and feel less pain in
- [22:25] When people feel good about themselves (as when
purchasing a virtuous product) there is less pain felt and
associated with the payment across the board.
- [23:35] One of the big issues for spendthrifts is they do not
account for or intuitively understand the opportunity cost in the
moment when they are getting ready to buy or wanting to buy
- [25:38] Everyone will feel some sort of pain when paying. It is
your job to figure out what the buyer needs, what would benefit
them the most, and then present it to them in a way that will have
the least pain felt.
- [27:27] Think about how people interpret what they are getting.
Did they choose the circumstance or was it thrust upon them? If it
was not their choice, are there some other areas where you can help
them feel like they did make a choice?
- [31:14] When the pain of paying isn’t felt as much, it doesn’t
impact the experience.
- [33:29] Loss aversion is a big contributing factor to having
the meter running and the pain of paying.
- [36:30] Sometimes, people are willing to pay money to reduce
the pain of lost time and they enjoy the experience more because it
was their choice.
- [37:15] Consumption can reduce the pain felt by paying, but
paying can reduce the joy felt during consumption. This is a
concept called coupling.
- [39:56] Think about yourself as a consumer and how you would
feel if you got the bill for your product or service after the
- [40:43] Are there any points in your business where you could
use coupons or tokens or chips or beads instead of cash?
- [41:28] The biggest thing is to make sure that people feel they
are really gaining something when they spend money, and that it is
not just being thrown away.
- [43:11] Classifying your product or service as a gift really
helps overcome the pain.
- [44:34] Reminder: the more a transaction is perceived as: fair,
an investment, immediate, for the sake of another person, under
one’s own control and has payment before consumption…the WEAKER the
pain of paying.
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