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Trick or Treat: The Psychology of Discounts · She's On The Money

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  Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud or
• 0:04
  Speaker 1: the Order, Kernie Whoalbury and a waddery woman. And before
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  Speaker 1: we get started on She's on the Money podcast, I
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  Speaker 1: would like to acknowledge the traditional custodians of the land
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  Speaker 1: of which this podcast is recorded on a wondery country,
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  Speaker 1: acknowledging the elders, the ancestors and the next generation coming through.
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  Speaker 1: As this podcast is about connecting, empowering, knowledge sharing and
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  Speaker 1: the storytelling of you to make a difference for today
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  Speaker 1: and lasting impact for tomorrow. Let's get into it.
• 0:34
  Speaker 2: She's on the Money, She's on the Money.
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  Speaker 3: Hello, and welcome to She's on the Money, the pod
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  Speaker 3: that turns your wallet from ghosted to gloat up. I'm
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  Speaker 3: your host, Victoria Devine, and today, in this spookiest week
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  Speaker 3: of the year, Halloween Week, we're diving into one of
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  Speaker 3: the most hauntingly effective traps retailers set for us, which
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  Speaker 3: is the psychology of discounts. And I couldn't think of
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  Speaker 3: a better time to dive into this topic. To be honest,
• 1:21
  Speaker 3: Once spooky season wraps up, we're about to be haunted
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  Speaker 3: by a different kind of monster. Are Black Friday, and
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  Speaker 3: trust me, it's not just Black Friday. Boxing Day sales
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  Speaker 3: are also creeping up right behind it. But don't worry,
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  Speaker 3: because I am here to see you through all of
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  Speaker 3: the tricks and only come away with the real treats.
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  Speaker 3: So let's drump straight in. My trick Number one is
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  Speaker 3: scarcity tactics. Have you ever seen on a website there's
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  Speaker 3: only two left in stockhol this is the last day
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  Speaker 3: for you to say fifty percent and then you get
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  Speaker 3: a little pang of panic. That's what's called a scarcity tactic,
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  Speaker 3: and it's actually a massive psychological trigger that retailers are
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  Speaker 3: you to get hold of your money. And here is
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  Speaker 3: how it works. So a retailer creates what we call
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  Speaker 3: a false sense of urgency to trick your brain into
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  Speaker 3: thinking that you need that thing right now, because otherwise
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  Speaker 3: you'll miss out right. And I'm a fomo girl. Let's
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  Speaker 3: be honest, who hasn't felt fomo when they see it's
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  Speaker 3: a limited time offer? And the truth is a lot
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  Speaker 3: of these and I think this is so sneaky. A
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  Speaker 3: lot of these low stock warnings are actually just purely marketing,
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  Speaker 3: which is designed to rush you into a purchase and
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  Speaker 3: I'm stat scale, so I have another stat for you.
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  Speaker 3: Did you know that forty two percent of Australians admit
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  Speaker 3: to making impulse purchases that they later on regretted because
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  Speaker 3: they fell victim to an urgency tactic. Obviously, that really
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  Speaker 3: sucks and I totally get it because I have fallen
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  Speaker 3: victim to those traps before. But next time you feel
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  Speaker 3: rushed by a limited stock message, have a think about it,
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  Speaker 3: take a deep breath and then wait twenty four hours
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  Speaker 3: before making that purchase. If you still on it tomorrow,
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  Speaker 3: then maybe it is worth it. The next trick that
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  Speaker 3: I want to talk about is called anchoring, and this
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  Speaker 3: is something that I think is relatively funny because anchoring
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  Speaker 3: is something that I actually used to stay on track.
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  Speaker 3: But when it comes to marketing, anchoring is something that
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  Speaker 3: you've probably seen on TikTok on Instagram recently, because in
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  Speaker 3: Australia it has been all over the news because the
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  Speaker 3: big supermarkets have been doing it and they've actually been
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  Speaker 3: called out consistently for it, and I think they should be.
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  Speaker 3: But they've been called out for what's called illusionary discounts,
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  Speaker 3: which is where they inflate the price for a couple
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  Speaker 3: of weeks, only then to slash them back down to
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  Speaker 3: what they actually could be. And if this sounds familiar,
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  Speaker 3: there are a lot of TikTok videos flying around at
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  Speaker 3: the moment where the price of let's say, dishwasher tablets
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  Speaker 3: has gone up over a few weeks, and then they
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  Speaker 3: discount them back to the original price, so it's not
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  Speaker 3: really a discount at all, and you think you're getting
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  Speaker 3: a good deal because when you're walking through the supermarket,
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  Speaker 3: you see the little yellow flag and go, great, this product,
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  Speaker 3: it's on sale. I'll purchase it, but we're not thinking
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  Speaker 3: too deeply about what the actual price is. Well, in psychology,
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  Speaker 3: this is called the anchoring effect, and it's literally everywhere.
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  Speaker 3: It's designed to make you think that you're getting a
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  Speaker 3: really good deal, but in reality, you're just paying the
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  Speaker 3: regular price and it's wrapped up in a shiny discount bow.
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  Speaker 3: And I think that that is trash because your brain
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  Speaker 3: is being tricked into thinking that you're getting a steal
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  Speaker 3: when it's actually just back down to the normal price,
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  Speaker 3: and historically you were getting an even better discount before.
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  Speaker 3: And this trick creates what's called an anchor in your mind.
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  Speaker 3: And that high price makes the sale price look absolutely irresistible,
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  Speaker 3: even though it wasn't really a deal to begin with.
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  Speaker 3: As I said earlier in the show, I'm statscale. I
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  Speaker 3: love to read, I love to do some research. But
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  Speaker 3: there was a study done recently in Dan Ellie's book
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  Speaker 3: Predictively Irrational, and it actually showed that the anchoring effect
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  Speaker 3: is so strong that people will pay up to fifty
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  Speaker 3: percent more for items when they see the original inflated
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  Speaker 3: price tag. It's so rude, it makes me so mad.
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  Speaker 3: So before you get too excited about seeing a discount,
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  Speaker 3: I think it's important to do a little bit of
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  Speaker 3: detective work that, let's be honest, we shouldn't have to
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  Speaker 3: do but check the price history online or better get
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  Speaker 3: see if other stores are offering it cheaper. Sometimes the
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  Speaker 3: sale isn't that much of a treat. It's actually a
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  Speaker 3: massive trick, all right. So we've covered two tricks that
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  Speaker 3: retailers absolutely love to pull on us. But trust me,
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  Speaker 3: the spookiest of ones is still lurking right around the corner.
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  Speaker 3: After the break, I'm going to reveal the trick that
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  Speaker 3: can get you to spend up to one hundred and
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  Speaker 3: fifty percent more how rude, it is frightful, So don't
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  Speaker 3: go anywhere unless you want your wallet to scream Welcome back,
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  Speaker 3: my friends. I hope you've been finding my commentary as
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  Speaker 3: cringe as I have been, but I have been having
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  Speaker 3: the best time with this. So get ready to be
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  Speaker 3: haunted by this next trick because it can have you
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  Speaker 3: spending up to one hundred and fifty percent more than
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  Speaker 3: you planned. And no, it's not a ghost emptying your
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  Speaker 3: bank account. It's the infamous buy one, get one free
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  Speaker 3: deal and it's coming to trick your wallet right about now.
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  Speaker 3: So buy one, get one free sounds like an no brainer,
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  Speaker 3: right because double the goods for the same price. But
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  Speaker 3: my friend, do you actually need two of those things?
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  Speaker 3: This deal actually plays on our fear of missing out.
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  Speaker 3: It goes back to that concept of fomo. If we
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  Speaker 3: don't grab that extra item, we feel like we're losing
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  Speaker 3: something valuable, but in reality, you're just buying more stuff
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  Speaker 3: that you didn't need in the first place. Back to
• 6:32
  Speaker 3: being Statscal, I love to read, and when I was
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  Speaker 3: researching this episode, I was reading the Journal of Retailing
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  Speaker 3: and Consumer Services, and research in that journal showed that
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  Speaker 3: buy one, get one free, promotions can increase sales by
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  Speaker 3: up to one hundred and fifty percent because consumers are
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  Speaker 3: tricked into perceiving that there is more value in receiving
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  Speaker 3: something for free than in receiving a discount of equivalent
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  Speaker 3: monetary value. So here's a quick tip. When it comes
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  Speaker 3: to buy one, get one free deals, Often they're just
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  Speaker 3: a way of retailers to actually clear out additional stock. Like,
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  Speaker 3: think about it, why would you give an additional product
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  Speaker 3: for free when you technically don't have to. It's probably
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  Speaker 3: because they overbought that product, or have too much of
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  Speaker 3: it in stock, or it's going off soon. So before
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  Speaker 3: grabbing that free item, I want you to think to yourself,
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  Speaker 3: would I buy two if they weren't bundled together? Or
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  Speaker 3: am I just helping them clear their shelves and get
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  Speaker 3: rid of some stock. Retailers are genuinely they're banking on
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  Speaker 3: you grabbing items that you don't really need. So don't
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  Speaker 3: let them cash in on that impulse that you are
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  Speaker 3: currently having, because they're tricking you, all right. Another trick
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  Speaker 3: I want to talk about is social proof, and this
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  Speaker 3: one is I would argue one of the most powerful
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  Speaker 3: ones ever. Have you ever noticed down the bottom of
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  Speaker 3: a website, like when you're shopping online there's a little
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  Speaker 3: pop up that says Beck just brought this, or ten
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  Speaker 3: people are viewing this right now, or maybe you've scrolled
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  Speaker 3: through a sea of glowing product reviews online and thought, well,
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  Speaker 3: everyone loves it like this. This is validating the fact
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  Speaker 3: that I wanted it. It must be great. I need
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  Speaker 3: it too, my friend. Welcome to the world of social proof,
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  Speaker 3: where retailers are using the power of the crowd to
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  Speaker 3: get you to purchase their products. So, my friend, how
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  Speaker 3: does it work social proof? It actually taps into our
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  Speaker 3: instinct to follow the herd. So, whether it's those little
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  Speaker 3: pop ups on the website that show us that other
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  Speaker 3: people are buying this or a flood of five star reviews,
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  Speaker 3: retailers are playing on our fear of missing out again
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  Speaker 3: and our natural tendency to just trust what other people
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  Speaker 3: are doing. I mean, if everyone's doing it, it can't be.
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  Speaker 1: That bad, right.
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  Speaker 3: They know that we assume that if something is popular,
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  Speaker 3: it must be worth it. Those best seller tags or
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  Speaker 3: those tags that say as seen on TikTok, or maybe
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  Speaker 3: notifications that say Jane in Sydney just bought this they're
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  Speaker 3: actually all designed to make us feel like we need
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  Speaker 3: to join in on the purchasing. So again, research that
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  Speaker 3: we were doing while making this episode led me to
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  Speaker 3: a study from bright Local which found that eighty eight
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  Speaker 3: percent of consumers trust online reviews as much as they
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  Speaker 3: trust personal recommendations. And I think that that's really dangerous
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  Speaker 3: because sometimes they're paid, sometimes they aren't disclosed that they
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  Speaker 3: might even be made up. So next time you're tempted
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  Speaker 3: by glowing reviews that you see online, or you're seeing
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  Speaker 3: a pop up notification, I need you to ask yourself,
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  Speaker 3: do I actually want this? Or am I just starting
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  Speaker 3: to fall for the hype because everybody else is doing it.
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  Speaker 3: Everybody else seems to have it, so it must be good.
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  Speaker 3: Just because something's popular doesn't mean it's the right fit
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  Speaker 3: for you. So, my friend, do not let Fomo control
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  Speaker 3: your spending.
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  Speaker 1: All right?
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  Speaker 3: One last one before I let you have your Saturday back.
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  Speaker 3: My friend's free shipping thresholds. We've all been there. The
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  Speaker 3: cart it's just under the free shipping threshold and they're
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  Speaker 3: smart about it, right, So you add a few extra
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  Speaker 3: items just to hit the magical numbers so that you
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  Speaker 3: don't have to pay like ten or fifteen dollars in shipping.
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  Speaker 3: But are those extra purchases worth there? For real? My friend?
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  Speaker 3: Are you adding a forty dollars product to your cart
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  Speaker 3: to save ten dollars?
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  Speaker 1: No.
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  Speaker 3: Retailers often offer free shipping when you spend a certain amount,
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  Speaker 3: which often nudges you to add a few more things
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  Speaker 3: to your cart than originally planned. This then taps into
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  Speaker 3: your desire to avoid what feels like a penalty like
• 10:19
  Speaker 3: I don't want to pay for my shipping, by making
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  Speaker 3: you overspend on products that you don't actually need just
• 10:24
  Speaker 3: so that you can avoid the fee. And it's actually insane,
• 10:27
  Speaker 3: and there's so much research that goes into this, right, Like,
• 10:29
  Speaker 3: go on your favorite dress website and have a look
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  Speaker 3: at what the average price of addresses. I can almost
• 10:34
  Speaker 3: guarantee that average price is let's call it, like one
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  Speaker 3: hundred and nineteen dollars. But the sign up the top
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  Speaker 3: of the website that says spend over one hundred and
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  Speaker 3: twenty dollars and you get free shipping. I see what
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  Speaker 3: you're doing there, and so do you? Now, my friend? Again,
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  Speaker 3: we were doing some research when putting this episode together,
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  Speaker 3: and according to a study by Commscore, fifty eight percent
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  Speaker 3: of online shoppers add additional items to their cart just
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  Speaker 3: to qualify for free shipping, which means that they are
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  Speaker 3: often spending more than they would on the shipping itself.
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  Speaker 3: So before you decide to add a few extra items
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  Speaker 3: to your carts so that you don't have to pay
• 11:10
  Speaker 3: for shipping, what I would do is compare the cost
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  Speaker 3: of paying for shipping versus buying things that you literally
• 11:17
  Speaker 3: do not need. Often paying the small shipping free is
• 11:20
  Speaker 3: a more budget friendly option, even though in the moment
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  Speaker 3: it feels like the wrong decision. All right, I feel
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  Speaker 3: like we have taken an arguably terrifying tour through some
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  Speaker 3: of the spookiest tricks that retailers are using to spook
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  Speaker 3: your wallet, from scarcity tactics, to anchoring buy one, get
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  Speaker 3: one free deals, social proof, and even free shipping threshold.
• 11:41
  Speaker 3: But here's the real trick to stay safe during sales season.
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  Speaker 3: I want you to have a plan. I want you
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  Speaker 3: to stick to it, and, as I've said a million
• 11:50
  Speaker 3: times before, I sound like a broken record and I
• 11:52
  Speaker 3: am not sorry, put twenty four hours between you and
• 11:56
  Speaker 3: your purchase. Maybe I'm saying this because I need that
• 11:59
  Speaker 3: advice and how you sometimes tell your friends things that
• 12:02
  Speaker 3: you actually need to hear yourself. That's me because it
• 12:04
  Speaker 3: is so easy to be distracted by all of the
• 12:07
  Speaker 3: shiny things and feel like you are scoring a win
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  Speaker 3: when you see a sign that says it's a limited
• 12:12
  Speaker 3: stock or there's free shipping, or this sale ends on Monday.
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  Speaker 3: But if you don't need it, or it wasn't on
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  Speaker 3: your shopping list to begin with, my friend, it's not
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  Speaker 3: a treat. It's just a trick, and it's another way
• 12:23
  Speaker 3: if your retailer is to be luring you in. So
• 12:26
  Speaker 3: having a budget and knowing exactly what you want before
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  Speaker 3: you go shopping is going to help you avoid falling
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  Speaker 3: for these tricks. The other thing I want you to
• 12:35
  Speaker 3: do is just take a breather. If you're in this
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  Speaker 3: situation that I have found myself in a million times,
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  Speaker 3: where I've got this urge to buy something because it's
• 12:43
  Speaker 3: on sale, or I'm feeling really stressed because I don't
• 12:46
  Speaker 3: want to miss out. Back to that twenty four hour
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  Speaker 3: trick right, put it on your notes app, take a
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  Speaker 3: screenshot of it, don't forget it. You don't have to
• 12:55
  Speaker 3: forget it at all. But if you then still want
• 12:57
  Speaker 3: it tomorrow. It might be worth it. If you've already
• 13:00
  Speaker 3: forgotten about it. Oh, you've probably dodged a trick. And
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  Speaker 3: how many screenshots have you taken my friend that you've
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  Speaker 3: completely forgotten about. I am so guilty of doing that.
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  Speaker 3: I always go, oh, I'll just screenshot that because I
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  Speaker 3: need to save it for later. I don't need it later.
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  Speaker 3: I've just got fomo. I have literally a graveyard of
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  Speaker 3: screenshots in my phone. So before we wrap things up,
• 13:22
  Speaker 3: if you've been loving these episodes and want to stay
• 13:25
  Speaker 3: ahead of the money game, don't forget to hit subscribe
• 13:28
  Speaker 3: to She's on the Money. We've got heaps more tips
• 13:30
  Speaker 3: coming your way to help you navigate sales spending in
• 13:33
  Speaker 3: all things money. Well, I'm off to make my Halloween
• 13:36
  Speaker 3: costume because miss jessic Ricci is expecting nothing less. I
• 13:40
  Speaker 3: think I'm going to go as a gender pay gap
• 13:42
  Speaker 3: because I think that's really scary, because what is scarier
• 13:45
  Speaker 3: than women earning twenty two percent less than a man
• 13:48
  Speaker 3: for the same job. Anyway, me having a little bit
• 13:51
  Speaker 3: of a round about the gender pay gap again. Anyway,
• 13:53
  Speaker 3: Wishing you a fantastic weekend, and for those of you
• 13:56
  Speaker 3: who do celebrate, have a spectacular Halloween, my friends. The
• 14:05
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• 14:08
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• 14:12
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• 14:15
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