Imagine this …
It’s January 4th and you’re four days into your New Year’s resolution.
This year you’ve committed to finally losing the extra weight you gained during the pandemic.
You’ve tried before but this time is different—this time you have a deadline.
A friend invited you to their destination wedding on a tropical resort. You’re thrilled to have a sunny vacation to look forward to, but…
You haven’t worn a swimsuit in 2+ years. And it shows 😳
The wedding is four months away. That gives you four months to reach your weight loss goal.
Later that evening, you’re trying to decide what to have for dinner. Your options are leftover pizza or skinless chicken breast and veggies.
What do you choose?
In today’s edition of Why We Buy, we’re taking a look at Hyperbolic Discounting – why people often choose smaller, immediate rewards rather than larger rewards later.
Let’s get into it.
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The Psychology of Hyperbolic Discounting 🧠
If you’ve ever promised yourself that you’ll “start your diet tomorrow” and opted for pizza tonight, you’ve fallen victim to Hyperbolic Discounting.
Hyperbolic discounting is a cognitive bias where people are likely to choose smaller, instant rewards over delayed gratification—and this occurs more when the delay is closer to the present than the future.
In a classic experiment, people were given the option of getting $100 today or $120 in a week’s time. Most people chose $100 today. But when offered $100 in a year or $120 in a year and one week, people opted to wait the week for the extra $20.
Inside Your Buyer’S Mind🧐
Your buyers are impatient. They’ll prefer immediate rewards today over greater rewards in the near future, even when it’s not the rational choice. That said, when the future reward is delayed—like saving for retirement—people are more patient.
Helping buyers to better evaluate short-term and long-term trade-offs will go a long way in encouraging them to take action.
How To Apply This 🤑
Alright, so how can we apply this right now to sell more?
Offer Instant Discounts
Offering an instant 10% discount on a purchase made today is a greater incentive than offering 20% off on the next purchase. If you want to up the ante, you can add an element of gamification, like the classic “Spin to Win” wheel used on so many e-commerce sites.
Get Precommitments for Big Goals
If it takes time and effort to get value from your product, you can convince people to take action now by offering them an immediate incentive to pre-commit. For example, many gyms include a free personal training session and extra swag with a year-long membership. This encourages people to pre-commit to the bigger goal of losing weight.
Knowing that buyers want instant gratification, you can often beat out competitors simply by getting them what they want sooner. If a competitor offers standard 3-day shipping while you offer same-day delivery, you can often win by default—even if you charge a premium.
The Short of It 💥
Use instant gratification to convince buyers to take action now. And if your product takes time to get value from—like a gym membership—look for opportunities to break big goals into small wins so that your buyers are motivated to stick with it.
Until next time, happy selling!
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