The Pain of Payment

We all know we feel varying degrees of pain when we buy certain things. But why exactly is this?

Well, to help understand what’s going on here, let’s first look at what science has revealed when it comes to purchasing behaviour. Based on this understanding, we’ll then reveal ways to help you reduce the pain of paying for your customers, to ultimately achieve more sales.

To the science of why we feel the pain of payment…

One landmark study by neuroscientist Brian Knutson and the rest of his colleagues at Stanford University helped shed enormous light on what goes on in people’s brains when they’re faced with a purchasing decision.

Their research began by showing respondents images of products and brands (e.g., a box of chocolates), a few seconds later they were then shown the price, and then shortly after that were asked if they would buy the chocolates or not. Their brain activities were measured the whole time using brain imaging (fMRI).

Here’s what they discovered:

  • The picture of the product or brand led to increased activation of the so-called ‘reward system’ – a part of the brain which is triggered when we value something. The brain, by using previous memories and learnings (and so knowing the expected value the product/brand will deliver) is basically saying, ‘I want this’.

    If the expected value is high, then the ‘reward system’ shows a high level of activity. And of course, if the value is low, then the activation level will also be low.
  • When respondents were shown the price, an entirely different area of the brain (the insula) was activated. This area is normally activated, yep you guessed it when we experience pain. Pain, such as scolding yourself with boiling water (physical pain) or falling out with a friend (social pain). And so, when looking at price, the brain experiences pain.

What this means:

What helps make this even easier to understand, is realising that we have no ‘shopping’ section in the brain. The brain must decide which of its existing parts should deal with brands, products and prices. And how it does this, makes complete sense:

  1. Products and brands ‘reward’ us because they help us to achieve our goals.
  2. Prices imply giving away something we already own, and which is of great value to us – money. And so, the fact that ‘pain’ is attached to this experience, seems fair.

Two clear ways to influence purchase decisions

This leads us to the underlying principle that determines whether a brand or product will be bought, and it’s reassuringly simple and obvious:

Purchase decisions are based on a reward-pain relationship. Simply, the brain calculates a kind of ‘net value’; if the difference between reward and pain is high enough, people will buy. What this then means to your business, is that you have two clear ways to influence purchase decisions – reward and pain. Ultimately, to increase the ‘net value’.

Let’s now look at one of those levers you can pull – pain.

Fortunately, the nature of eCommerce brands means they benefit from a reduced pain of payment because people can’t pay with physical cash. By using cards or simply pressing a button, people feel like they aren’t giving anything away. Cash is physical and salient, it’s hard handing it over to someone else because the loss is tangible.

What else can eCommerce brands do to lessen the pain of payment?

Get people to pay in advance.

It’s like when you’ve already paid for an all-inclusive holiday. Once you’re there it can then be enjoyed as if it were free. Compare this to when you’re on holiday and you must pay for every little thing separately. That’s regular doses of pain.

Understanding this offers other ways to reduce pain:

Get people to pay over longer periods of time.

Instead of asking people to pay every month, ask them to pay once a year. That way they experience the pain of payment only once.

Bundle products together.

Again, instead of getting people to make three separate purchases (three shots of pain) bundle products together so they only make one payment.

The power of free.

The obvious example here is offering free shipping. This can be the final nudge people need to make the purchase. You could even flip this by offering people a free product, but they just need to pay for the shipping. You just need to be mindful of the latter and how people tend to perceive free products as low quality. And people hate paying for something that used to be free, so be careful there too.

There are a few other things that can help reduce the pain of payment but these might not work for all brands.

  • People will feel less pain if the purchase is for someone else.
  • Less pain if the purchase is seen as an investment and not purely for consumption.
  • Less pain if the purchase is perceived as fair.
  • Less pain if consumers feel like they’re in control of their choice.

Finally, assure your customers:

By simply adding a refund policy, free returns, and symbols of trust (e.g security badges) you can reassure customers that paying you is safe, helping to give them peace of mind and further soften the pain of payment.

There you have it, the science on the pain of payment and some useful ways for how you can help reduce it. We’ll be back with more on this subject, as well as some advice on how to pull the other level – reward.

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