Why Sales Make Us Irrational Spenders

Buy One, Get One!  Get 50% Off!  Save $20 Instantly!  Huge New Years Sale!

Did I make you want to got out and purchase what I am selling?  Well…..Did I?

Being in marketing, I understand that if you want to get something to sell, you need to discount it or at least perceive that you are providing a discount.  Oops, I said it.  Not all sales are actually discounted prices or true sales.  I might be thrown out of a few marketing associations, but hopefully people knew that.  Did you know that? On top of creating a perceived value to the consumer, you also have to create a notion the value is going to go away. Some of the best marketing tactics include “scarcity,” which is when you tell people they only have a few hours, days, or a certain time-frame to get their sale. Same goes if they only allow “x” people into their paid group. You want to be one of those people and you want to make sure you’re getting the value the sales person is promoting. These are tried and true tactics in marketing, both online and off.

Well, after thinking about it a little more, I don’t think a lot of people actually know about this practice.  So, why do you think sales make us irrational?

Why Most Sales Are BS

Not that my opinion really matters, but here is my take on why we become irrational when it comes to a sale.  Sales are typically either a percentage off or a dollar amount off.  They also usually have an expiration date.  When we see that we can save money on a purchase that we might have made and then see that the savings has an expiration date, we tend to throw rational thoughts out the window.

If you were doing regular shopping, then you might think if the purchase is necessary, see if there is an alternative, find coupons, or do some comparison shopping.  We take our time with the purchase, especially if it is a large purchase.  I did all of these when I made my couch purchase.  I wasn’t in a hurry when picking out a couch, so I took my time to make a rational decision for our needs (turns out the coach was a piece of crap in the end, but oh well).

My Personal Testing

One example of when we throw common sense out the window is when the “Buy X amount and get X” sales come about.  When I ran my ecommerce business, I would do a few tests to see which sales would work the best and how people would react.  I love analytics and following how people respond, so that was fun for me.

When I would place up a “Spend $100, Get 10% Off” sale alongside a “Spend $100 and Get Free Shipping” sale, I would see some crazy results.  People were allowed to choose which sale they wanted to use for their purchase.  7 times out of 10, people would select the “Spend $100 and Get Free Shipping” sale.  The funny thing was that if they looked, they would save more money with the 10% off sale because ground shipping only cost $5.99!

They would have saved at least $10 when purchasing something $100 or more.

This just shows how people perceive sales.  People love free shipping (or free anything for that matter) and many won’t do the calculation to find out which sale is technically better.  Instead of using common sense, they have thrown it out of the window and went with the sale that pleased them more.  They perceive a better value with regards to free shipping.  Why do we do this?

I think we stop being rational when we have deadlines and we think we are saving money.  We all want to save money, but we fail to do the appropriate research to see which deal is best and which one saves us the most.  We turn completely into emotional buyers and a sale just makes us feel better for spending the money.  We probably planned to make that purchase anyway, but now we have the extra push to pull the trigger.

The sad thing is we all have cell phones these days and it’s easier than ever to research if that sale is even a good one. I’m sure some people might do the research, but others probably will not. Cap that with our desire for instant gratification. If we have something we want that is perceived to be on sale right in front of us, we will most likely purchase it. We want that product/item now and even if another store has a better deal, we don’t want to wait.

Major Retailers Have Been Playing Us

I knew this for some time since I worked in retail and we had to “create” sales often to make it look like the deal was much bigger than it was. This happens with so many stores and is especially bad during the holiday shopping season. NBC actually wrote about it in a study and what they found was pretty bad.

The funny thing about this is I realized this was going on at Kohl’s for some time. I used to buy all of my shorts there and over the course of a few years, those shorts were always on sale. Well, as MyPillow found out recently, you can’t have an ongoing sale that lasts for longer than the products are sold at regular price. That’s not a sale, that’s the price of the item.

This “evergreen” sales cycle is a big hit at large retailers because they make their shoppers feel they are getting a deal, when in fact, they aren’t. Comparing prices to other stores would fix this issue, but our emotions get the best of us and our rational decision making ability. Our fear of missing out takes over and forces us to be irrational with our money.

So, What’s Your Take on Sales?

The purpose of this post was not to make you think that everyone is irrational when it comes to sales.  I don’t think that is the case, but I do think we forget about rationale and make the purchase decision based off of a perceived sale/value.  I really want to hear what you think about this.  Do you think we become irrational around sales?  I mean, if you have shopped during Black Friday, Cyber Monday, or even Green Monday, then you know what I mean.

Our huge expectation as shoppes has made retailers always pursue having sales going on. If we don’t see a sale, we won’t  purchase it. We don’t want to buy things at full-price, but this thinking and the resulting actions by retailers has caused a vacuum of fake price dropping and discount increases that never really existed. We have to do a better job at recognizing a good deal from one that might be just be a sales trick.

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