Human beings have difficulty keeping two opposing thoughts in their head at once, so when you sell a slice of pizza for $5, your brain justifies the $5 slice of pizza as truly being a better pizza than the $1.50 slice. Cognitive dissonance at work! What happens is that while your mouth is saying, “I can’t tell the difference,” your brain is justifying the higher cost.
It’s saying, “Of course it costs more; it’s a better pizza” – better ingredients, better cooks, more expensive (and hence better) methods of preparation. It doesn’t hurt that the $5 pizza is probably served on better tableware. Anything eaten on real dishes with cloth napkins tastes better than the same thing served on a school cafeteria tray.
It’s the same reason that water that says “Bottled at a pristine, snow-capped mountaintop spring” will taste better to you than the same water that says “Bottled at my kitchen sink, Missouri.”
Do people who pay more expect more?
So that’s why I’m going to post a hypothesis in this column. It seems stunningly simple and eminently easy to prove. And even if the theory is disproved, the concept behind it is an important enough lesson that your reading time would certainly not have been wasted.
My hypothesis is that the brain likes to think more expensive is better, but the brain also justifies the right to complain more when you pay more. On one extreme, those who pay a lot for something (the way a midweek hop for a business trip can cost $2,200 in coach class!) would also find a less-than-desirable trip worth complaining about.
When we perceive we are overpaying compared to the average person on the flight, the annoyances are magnified along with the price, and we feel entitled to complain more as well. We hold our experience or product to higher standards because we paid more. That makes sense of course.
I’ve never done any work for a major airline, but surely some readers of this column have the ability to take this hypothesis to the next level and help prove or disprove that higher prices mean more unhappy customers – but only if the price is too high. There is a push-back point at which customers will push back and refuse to buy your product or service. If you are the only one offering it, at higher rates, they will complain more, which devalues your product and causes you to lower your rates because no one is buying.
Don’t worry too much about this. Raise your prices where you can – because your customer will appreciate the experience more – but keep your rates at the high end of reasonable. When you go above the high end of reasonable, and the customer’s expectations are not exceeded or even met, there’s a potential for disappointment that’s not worth facing.
Then again, if you can command a high price and then deliver the goods and truly prove you are worth it, you will find that you have tremendous repeat business and referrals, more business than you can handle. You can cherry- pick who you want to work with instead of having to deal with clients who stress you and act somewhat less than (okay, way much less than) reasonable. You fire the clients who make you pull your remaining hair out) and focus on developing deeper relationships with your current clients, so they use you more and refer you other business.
Do people who pay less expect less?
Of course, the opposite might be true as well. What do you think? Do people who pay less expect less? If they expect less, are they less likely to contact the airline for compensation for their disappointment during their travel experience? If they know they are getting the cheapest airfare at any airline, are they going to complain that they weren’t served soda and peanuts for a snack? This would be easy to investigate and could have interesting implications for the way airlines price fares.
But whether you’re paying too much or got a great deal and are paying way less than you expected, it would be very helpful data for any airline to have about the patterns and links between who pays what, and how it affects complaints afterward. If lower prices for tickets lower the number of complaints, then aren’t you actually saving more money by not having to compensate complainers with tickets and discounts? Whether you run an airline or a nonprofit organization, manage a hundred employees or are a lone shoemaker...
knowing and identifying customer patterns can be a major “aha.” When you think about it, that’s what companies like Google are all about. There’s nothing stopping you from using the same powerful analytical techniques in your own business. Get out there and make it happen! firstname.lastname@example.org Issamar Ginzberg is a business adviser, marketer, professional speaker and rabbi.
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