Beyond Price: The Currencies That Truly Drive Consumer Behavior

Understandably, I continue to field a myriad of questions from senior leaders across industries on value, affordability, and the role of inflationary pricing. And my response is consistent: while monetary price will always matter, consumer and shopper behavior are hindered by much more than money.

Beyond the tangible price tag, consumers engage with a variety of currencies—time, social, physical, and emotional—each playing a distinct role in the intricate dance of purchasing choices. Understanding and optimizing for these hidden costs is paramount for marketers seeking to create impactful strategies and activation.

Before delving into the exploration of these perceptual currencies, it's essential to recognize the fundamental principle guiding human behavior—a delicate balance between the proverbial carrot and stick. Consumers are willing to endure impediments ('stick') if the reward ('carrot') is enticing enough.

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Therefore, marketers need to not only assess barriers but also focus on enhancing the allure of the reward, a concept we'll delve into in future discussions. For now, let's examine in greater detail the four types of perceptual currencies that extend beyond the monetary realm.

Time: the world’s scarcest commodity

In today's fast-paced world, time has obviously become an increasingly precious resource for consumers and shoppers. Balancing longer work hours and numerous daily responsibilities, individuals find discretionary time more challenging to obtain. Consequently, leisure time emerges as the ultimate luxury, and consumers gravitate towards shopping experiences that respect and optimize their time expenditure.

But this is where consumer decision-making takes an unexpected turn… Picture this scenario…

“Your delivery will be there in 27 minutes”

“Make that 37 minutes”

“Check that, we’re not quite sure – standby”

“Okay, we’ve assigned a new delivery person – 44 minutes away”

It’s easy to misperceive that eComm, delivery, and other progressive forms of shopping are all about the obvious factors of convenience and time. In traditional research, respondents will dutifully report that this is why they favor eComm.

However, we continually see in our data that shoppers who are the most concerned with time pressure actually avoid methods like delivery. Why? Because when one perceives that time REALLY matters, they don’t want to relinquish control over it.

Theoretically, ordering for delivery, purchasing for click-and-collect, and the like, are time-savers: they empower the shopper to do other things and otherwise spend less time shopping, buying, and getting.

However, through the lens of psychology, they’re actually control-takers. And control over time is far more valuable than the actual time itself. So the pursuit is not to promise less time; it’s actually to promise more control over time.

Social Currency: balancing individuality with the wisdom of the tribe

Consumers wear dual hats when making purchasing decisions—expressing their individuality vs. fitting into a larger social context. Purchases become signals of values, status, and personality, influencing how others perceive them – within their own households, and beyond. Striking a delicate balance between standing out and fitting in, consumers navigate a complex calculus of social currency, considering family, peers, co-workers, and cultural norms.

Brands often build their identity around specific social circles. Glossier, for instance, taps into the "cool girl" skincare space by leveraging influencers within desired social circles. Meanwhile, classic brands like Lululemon thrive by signaling aspirational living for busy parents. Social currency can influence pricing decisions, particularly for status symbols like luxury vehicles, premium dining experiences, or seasonal fashion.

To delve deeper into the social dynamics, it's crucial for marketers to understand the evolving nature of social connections and influences. The rise of social media has clearly amplified the impact of peer recommendations and influencer endorsements. Consumers not only seek products that align with their personal values but also ones that resonate with their broader social networks – often most heavily influenced by the people they actually know personally.

Marketers who grasp the nuances of these social dynamics can tailor their strategies to create products and campaigns that not only meet individual preferences but also align with the collective identity of target audiences, reframing social currency to drive strong emotional resonance.

Physical Effort: the precursor to purchase, and product experience

The physical effort involved in a shopping trip or purchase can significantly impact consumer behavior. Traveling to a store and navigating aisles can consume energy before any dollars are spent. Additionally, the ease with which a purchased product can be unpacked, set up, merchandised in the pantry, and integrated into one's life matters.

As the global population ages, there's a growing reluctance towards complex assemblies, heavy appliances, or products requiring technological sophistication – and this spills over even into fast moving consumables categories.

E-commerce experiences that reduce barriers, such as offering free shipping and lenient return policies, appeal to consumers. Companies like Made.com provide AR visualization for furniture, allowing customers to assess aesthetic fit and dimensions in their own space.

Apple's seamless devices, easily set up straight out of the box, contribute to the brand's appeal. Simplifying the pre- and post-transaction physical considerations conserves consumer energy for the essential experience.

Furthermore, the concept of physical effort extends beyond the immediate act of purchase. It encompasses the entire product lifecycle, from the manufacturing process to disposal or recycling.

Sustainable and eco-friendly practices not only appeal to environmentally conscious consumers but also reduce the perceived physical effort associated with the guilt of contributing to environmental harm. By integrating sustainability into their practices, companies can address a growing consumer demand for products that align with their ethical and environmental values.

Emotional Bank Accounts: attentional bandwidth and fear of disappointment

Perhaps the most challenging to detect, emotional currency wields incredible influence over shopper & consumer behavior. Shopping and purchasing involve a spectrum of emotions—from discovery and decision-making to anticipation, unboxing, and product integration into daily life. Heightened emotions at each step deepen customer engagement with brands, creating a more significant investment.

On the flip side, fear of disappointment carries substantial weight. Subscription services curate experiences to consistently "delight" members, while brands like Goumi provide at-home try-ons to alleviate guilt or worry. A myriad of retailers offer generous return policies, providing both financial and emotional reassurance. Recognizing the vulnerability of consumers during shopping journeys and mitigating uncertainty at each step fosters brand loyalty beyond the confines of a reasonable price tag.

The emotional dimension of consumer behavior is an intricate tapestry that marketers must delicately weave into their strategies. Understanding the various emotional touch-points throughout the customer journey allows brands to create more personalized and resonant experiences.

This involves not only meeting basic expectations but also exceeding them to evoke positive emotions (aka keep attention on ‘the carrot’ rather than ‘the stick’). Personalized communication, thoughtful branding, and consistent quality all contribute to the emotional bank account a brand holds with its consumers.

The Next Frontier for Savvy Marketers

While pricing remains a crucial aspect of market expectations and positioning, consumers often make decisions driven by factors beyond rational cost-benefit analyses. Savvy marketers should shift their focus towards understanding and optimizing for the "hidden" costs exchanged in any transaction. Time invested, social signals gained or lost, physical burdens, and emotional energy expended are currencies that shape consumer behavior.

Optimizing for these behind-the-scenes currencies not only fosters brand loyalty but also unlocks consumer psychology. In a landscape where discounted economics might not be enough (nor be desirable boardroom solutions), the most successful marketers will be those who recognize and address the multi-dimensional currencies that truly drive, and hinder, consumer behavior.