Imagine a common scenario in suburbs across America: two entrepreneurial kids set up a lemonade stand. Borrowing some of Mom’s lemonade mix, they grab a few pitchers, some ice, and sugar. They mix that lemonade, grab some cups, set up a table in the park, and quickly scribble a sign to sell their tasty beverage. The kids excitedly get to work selling.
The sale begins and ends. Everyone considers it a success. But there is a catch – this an experiment.
Researchers are testing to discover if different styles of messaging on the sign will influence sales. They use three different signs, one stressing “spending time”, another stressing “spending money”, and a control that just instructs passing people to enjoy their lemonade. Customers are told that they could choose how much they would spend – anywhere from $1 to $3. Afterwards, researchers would step in and survey customers about their experience.
The experiment was about investigating the relationship between time and money. But the results of this experiment point to some concepts that have a massive effect on customers – in both the physical and digital marketplaces.
“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
― Maya Angelou
Feelings, Experiences, and Goods
Behavioral economics has taught us that people value experiences over material goods. However, we know that this is not rational behavior. For example, buying a computer has a much greater utility than a beach vacation, no matter how stunning the scenery.
We also know that humans have a negativity bias. They remember negative experiences more strongly than positive experiences. For example, getting laid off from a job may provoke a response equal to that of a promotion. But it’s expected that one’s future self would remember them quite differently, as one scenario provokes a negative emotion and the other, a positive emotion. In the future, we would expect that person to recall in vivid detail the situation surrounding being laid off of a job, much more so than the situation surrounding their promotion.
We also know that humans experience called positive reinterpretation, or, remembering something with “rose colored glasses.” So, the person who was laid off will recall the situation and will generally look on the bright side on things. The key to positive reinterpretation lies in the brain. Our memory does not work like a video recording. The brain divides and stores events in different regions of our brain, based on sensory input. So you might remember a visual very clearly, but remember spoken words only vaguely, by their intent. And, because of this, memories are not accurate. They are altered by all sorts of things, both biologically and physiologically. They are subject to biases, other experiences, and even future events that are impossible to predict.
Real World Applications
Have you recently asked a friend what they did over the weekend? Or, have you asked them what they bought?
While you likely have asked someone what they did, you almost certainly did not ask them about their purchases. You might think it’s strange, even creepy, to ask – grill – people about their purchasing habits. You might think that it would make that person uncomfortable.
You’d probably be correct.
But have you ever asked yourself why? Why would asking a friend questions about their purchases make them uncomfortable? The answer is actually quite simple.
It’s jealousy.
Talking about an experience creates rapport and is relatable, even if the conversation itself is not necessarily positive (see: gossip, complaining). Yet, it’s also very abstract. It’s very difficult to compare someone’s experience to your own because there is so much subjectivity involved. But, talking about material goods is much easier to compare. It’s easy to become competitive and to measure oneself against another when you talk about your possessions. Everyone knows someone who has to tell you how awesome their massive TV is, how fast their car is, or how high their salary is. You might know he or she as “that guy” or “the one-upper”.
There is one other benefit to talking to friends about experiences. And it’s a pretty big benefit – experiences make us happier. This is partially because we remember things with a positive reinterpretation and partially because building rapport with others makes us happier. When you’re eagerly anticipating an experience, those effects are amplified. It’s why traveling for spring break is a tradition for college students. It rolls these behaviors up into a big ball of happiness.
Experiences and Memory In Business
Now that we know people remember negative experiences strongly, but not necessarily accurately and potentially more positively than in the moment, we are left with a question. How can we apply that to a business?
Here’s an easy way to do so. Try to think about it from a frame of satisfaction and regret. It’s easy to regret a purchase when you think of it in terms of price or features. Again, use the example of a TV. Because of continuous advances in technology (Moore’s Law), features improve and prices decrease each year. The TV you have probably sells for half of what you bought it for. Or think about the computer, tablet, or smartphone that you’re reading this article on. Unless you bought it this week, there is someone out there who has something with the same features for a lesser price. If some time has passed, it’s likely that many people have a similar device that has many more features – and it was cheaper. Prices always go down and features always improve.
But, before you get jealous of the new MacBook line – think about the pictures you’ve seen on your device. Think about the videos you’ve watched, the music you’ve listened to, the work you’ve completed, the games you’ve played, and the communication you’ve had with colleagues, friends, and relatives. Chances are – you now feel like you’ve gotten a better value from your machine. The key is that you’re now focusing on experiences – not prices or features.
If you think of material goods in terms of the experiences they offer will lead to demonstrably higher customer satisfaction.
Lessons From a Lemonade Stand
The researchers running the children’s lemonade stand found that people were willing to spend significantly more money on lemonade when presented with a sign asking them to “spend time” to enjoy the lemonade. They spent about twice as much money, even in a situation where they could choose what to pay. But the time-focused sign also attracted about twice as many customers, service as a better lead generator.
If you’re designing a product, don’t focus on packing in more features than your competitors. Focus on making your users feel awesome. It’s simple, but it’s not easy.
If you’re building a team, focus on the great experience the team provides. Focus on how stimulating, challenging, rewarding, and fun your team is. Don’t focus on the features of the office – I’m talking to you Mr. Ping-Pong table and arcade machine from 1980.
If you want to sell more, market the experience your product will offer. Think about how your product or service will improve the life of your user. Then take it a step further. Think about how your product or service makes your user awesome. How it makes them amazing. Then market that feeling.
It’s simple, but it’s not easy.
