It’s Black Friday in America. And in some other places.
On Monday, it will be Cyber Monday.
The stores are already bedecked with their bargain and LOW PRICE and flashy “Only 2 per customer” signs. I have no doubt that the queuing has already begun.
Here’s a fun fact: the reason it’s called “Black” Friday is because it’s the day that stores usually go from being in the red to making a profit (in the black). And yet, here most people are, frothing at the mouth, eager to assist.
Thing 1: We’re Really Bad at Math
Especially when it comes to percentages.
A recent study posed the following scenario:
Starbucks offers two deals on a cup of coffee:
- Get 33% more coffee for free!
- 33% discount on the regular cup!
The participants were asked what the better deal was.
The general response: they’re the same thing.
That would be a no. If you start with a 300ml coffee for $1:
- The first deal offers you 400ml for $1 (ie. $0.25 per 100ml)
- The second deal offers you 300ml for $0.66 (ie. $0.22 per 100ml)
Or: the second deal is equivalent to giving you a 50% more coffee for free.
Further evidence of the problem: I’m pretty sure that almost everyone who read those bullet points had an eye-glaze, I’ll-take-your-word-for-it moment…
Thing 2: We’re completely influenced by random numbers
I wrote about this in my third Heresy post (I do love a religious reference). In the one of the experiments I described, students were asked to write down the last two numbers of their social security number on a page, then bid on a variety of items as they were presented in the room (they had to write down how much they’d be willing to pay for them). The general finding: the higher your last two numbers of your social security number, the more you were willing to pay.
In real life, this plays out something like this:
- They want HOW MUCH for that bottle of 18 year old Chivas Regal?
- *blank speech bubble*
- Oh look at this bottle of Bombay Sapphire gin. It’s only R280.
And suddenly, you’re buying gin, when you only really came in to buy some mixers for a party.
Thing 3: We’re middle-of-the-road people
We don’t order the cheapest bottle of wine on the menu (because we don’t want to look cheap and/or we wonder if there’s something wrong with it that it’s so cheap). Or the most expensive one (because we don’t want to look like an idiot and/or a spendthrift).
Retailers know this.
So they place their high margin items between something much pricier and something cheaper.
Thing 4: We Have No Idea What Things Are Worth
We rely on shorthand.
Example: how on earth do you know what an ice-cream maker is worth? You certainly don’t do a cash flow forecast in your head to try and work out how much you should pay before it makes better sense just to buy your ice-cream.
But we’re capable of seeing that one ice-cream maker is cheaper than another.
So shops place competing models in close proximity, so we don’t have to do the burdensome think – and can just jump straight to “this one seems like a good deal because it’s cheaper than that one, with the same features!”
Thing 5: We Get Tired Quickly
How often do you get to the till with more than you planned on buying?
Once you’re committed to buying a shirt – it’s increasingly likely that you’ll get a tie to match. And another shirt. And look at those jeans.
It’s why we need lists. To give us restraint when the decision fatigue kicks in.