Most people will tell you that they only buy necessities and stuff that makes them a better person (books, travel, etc). In fact, this is only an observation, but the types of things people are happy sharing on their Facebook wall tend to be purchases that fit into the SELF-ENLIGHTENMENT box above. It's hard to admit that we often shop to feel better about ourselves and to feel accepted, but we do. Fundamentally, consumer culture feeds into our deepest desires to be recognized and loved. Logically, we all know that buying stuff won't get us real recognition or true love, but the fleeting shots of pseudo recognition and love we receive from being in first class or bonding over having the same Celine bag (we both know we paid $1800 for it even though we don't explicitly say it), etc is often enough to get us through our days.
Don't get me wrong. I do it myself (there is nothing better than feeling treated like a human being while traveling and it really only happens in first class). I'm not making mockery of it. I'm merely calling a spade a spade. We aren't going to change this in our lifetime and I suspect it is deeply rooted in human nature. And as a marketer and an entrepreneur, understanding people's motivations around what they pay for and what they don't is a brilliant insight to have.
So if you are about to embark on creating a product to sell to North American men and/or women, take heed. You want to appear in the upper two or three categories above or else you are going to be struggling for a very long time.
The hierarchy of what people will pay for is as follows:
- Status - "I buy to feel better about myself."
- Convenience - "I buy to save time."
- Self-Enlightenment - "I buy to become a better person."
- Necessity - "I buy because I need to."
- Obligation - "I buy because I have to."
The hierarchy cuts across income lines, cultures, gender, sexuality and education levels. It is most hyperbolized in the Western world, but exists on some level in every culture around the world. Religions, laws and social pressure have always tried to circumvent it and correct it (do not covet, buddhist minimalism, etc) because left unchecked, this hierarchy can be very unhealthy. And as evidenced in rampant consumerist cultures like America, the desire to curb these tendencies may not be such a bad thing after all. [See: The Story of Stuff]
However, once again, this isn't a post about changing our consumer ways. It's a post about human behavior and rethinking how an entrepreneur would reframe a product in order to make it more desirable to purchase. First, I'll break down the hierarchy a little more so that you understand each category and what products do a good job of communicating their roles. Overall, what I hope you get from this article is the ability to move from the lowest priority on the human desire to buy scale to the highest.
Is business class really worth that much more than economy class? Absolutely. You are paying for more than a better meal and more legroom. You are paying for a higher place in the pecking order. Why do you think they let you board the airplane first? Why do you think they march all of the poor saps from economy past you once you have settled with your prosecco and duvet? Because that's the best damned part.
Paying for STATUS comes in many forms, but what it is communicating more than anything is that the buyer has differentiated him or herself as superior to the unwashed masses. I think the best parable I've ever read is the Dr. Seuss story, "The Sneeches":
Now, the Star-Bell Sneetches had bellies with stars.
The Plain-Belly Sneetches had none upon thars.
Those stars weren’t so big. They were really so small.
You might think such a thing wouldn’t matter at all.
But, because they had stars, all the Star-Belly Sneetches
Would brag, “We’re the best kind of Sneetch on the beaches.”
With their snoots in the air, they would sniff and they’d snort
“We’ll have nothing to do with the Plain-Belly sort!”
As the story progresses, the Plain-Belly Sneeches get the opportunity to gain status by having stars put on their bellies -which fits into the next category, ACCESS- but the Star-Belly Sneeches decide that the new kind of status will come from being Plain-Bellied. And so it goes, both sets of Sneeches spend their entire fortune on an insignificant symbol to try and gain status over one another until all of their money is gone and they are left to come to realize that Star-Belly or Plain-Belly, they are really no different.
Dr. Seuss was incredibly wise, but our version of having a Star-Belly comes in many forms and, in a dog-eat-dog world, it's incredibly difficult to ignore. From the red sole of the Louboutin shoes to a Birkin Bag with its distinct shape to buying the Lexus instead of a Honda SUV and beyond, we are constantly flaunting our Star-Bellies to others as if to say, "We're the best kind of Sneetch on the beaches." And the awful truth of it all is that, because we are busy and need to make decisions quickly, we will see those shoes, that bag, that car and that first class ticket and make a quick decision about the owner. Don't lie. You've done it.
If not for shoes, for something else. And if your values see designer bags as low status, you have your own symbols. Though STATUS usually corresponds with luxury and expensive, it doesn't always have to be that way. You just have to signal to others that the user of your product is smarter, sexier, handsomer, more beautiful, richer or otherwise better than them in a not so subtle way.
Which is why buying for STATUS isn't such a silly, frivolous thing after all. And if you were smart, your product would be positioned as a STATUS purchase.
CONVENIENCE is the big, dirty secret behind iTunes. There are dozens of ways in which we can download music for free, but iTunes has changed that behavior for many. It's not just guilt, either. It's that they put it right there in front of us so that with a quick click of a button, we have any artist's latest album loaded on all of our devices. It's really brilliant.
And the networks are starting to catch onto this, too. The season premiere of Breaking Bad was Sunday night and we don't have cable in our household, but less than 24 hours later, we were able to watch it on iTunes. $2.99? Sure. We even bought the season's pass so we would know the instance it was available. Could have we downloaded it for free? Absolutely. But it's more convenient to do it this way.
We also pay for CONVENIENCE when we want to jump a line or skip having to watch ads. In gaming, people pay for the ability to skip levels and get more powers to catch up with other players. LinkedIN relies on convenience for their upsell. I can contact people quicker with a pro account. Their details are right there and I can usually google an email address to connect, but if I upgrade, I can save time.
CONVENIENCE allows us to save time, skip lines, avoid annoyances and just have a more seamless experience overall. You can't charge near as much for CONVENIENCE as you can for STATUS, but you can still charge and people will pay for it readily.
It's no secret that during my startup bootstrapping, I took many a Greyhound bus between Montreal and New York. That was über inconvenient, but cheap (see NECESSITY below). My little treat to myself was to buy the 'jump the line' pass. For an extra $15 (the ticket was only $65 return) on each side, I got to board the bus first and not wait in line. Keep in mind that every seat on the bus is equally cramped and there are no 'classes'. But I paid a premium in comparison to the ticket price in order to just board the bus ahead of everyone else. For me it wasn't about STATUS at all. It was about CONVENIENCE. I could arrive at the bus station 5 minutes before the bus left and sit down right away. Totally worth it.
But add STATUS to your CONVENIENCE? You have gold.
The cruel joke behind this one is that the truly self-enlightened don't have to buy anything at all, so often what people often mistake for SELF-ENLIGHTENED spending is actually STATUS spending. Think books, travel, further education, gym memberships, etc. These are all expenditures towards making us better human beings: smarter, better traveled, more fit and more spiritual. But what we choose to read, where we travel, which school we take classes at and what gym membership we buy splits the difference between SELF-ENLIGHTENMENT and STATUS.
Years ago while working a pretty decent job in Toronto, Canada, I joined a gym that cost me $120/month because I knew the cool kids from the ad world worked out there. I had at least 3 gyms in a 5 block radius that cost around $20/month that I could have chosen, but I went for the further, more expensive option. I justified it with the free towel service, but free towel service doesn't cost $100/month. What the extra expense gave me was access -part of STATUS- and an added incentive to go more often to get my money's worth.
But a personal story doesn't make for a generalized statement. There are no studies I could find that spending more money on a gym resulted in higher commitment to getting in shape. Most gyms have the same equipment and similar classes and those $20/month gyms (I'm part of one now) usually gives you access to their entire chain of gyms with classes.
Lots of companies position their products in the realm of SELF-ENLIGHTENMENT, but those who position themselves as SELF-ENLIGHTENMENT with STATUS will do much better. You will get a lot of press for selling something in this category. People will congratulate you and celebrate you, but you probably won't sell much.
One of my favorite new companies is Warby Parker, the online glasses retailer. Glasses could actually be a NECESSITY, but in their case, they move them up a wrung on the hierarchy to SELF-ENLIGHTENMENT by making them one of those Buy-One-Give-One type companies. But even Warby Parker realized that this wasn't ambitious enough of a climb. So they positioned themselves as a fashion company and I've heard them repeat that they are a fashion company first over and over. Why? Because they are learning from the limitations of Tom's Shoes, who got lots of press and love, but their sales stalled at some point. People bought a pair or two when they came out and felt great for doing it, but the next time they went and bought shoes? They went for the STATUS pair. By being a fashion eyewear company, they position themselves with their customers to be the place where they'll go time and time again to buy fashionable, hot glasses that will get all of the right attention. Smart.
This is a pretty solid, yet unsexy category. It includes stuff like rent, toilet paper, toothpaste, gas and the other stuff we need to survive. Lots of people will tell you to build a company or a product that fits into this category. Those people have no clue. Yes, while creating something that people need will generate sales and a steady income, it also puts you in the category of being a commodity. Nobody is excited about buying the necessities. And, if someone comes along and produces that necessity cheaper, you are screwed.
Wal-mart talks about their own hierarchy of customer buying decisions: function, reliability, convenience and price. Does it solve what I need to have solved? Yep. Does it do it reliably? Uh-huh. Can I buy it now? Yes. Is it a good price? Yup. Good. Done. A customer will take all of the options in this category and line them up against one another and, quite often, suffer some sort of paradox of choice before they buy. Unless the product they buy is heads and hands above the competition, there will be very little loyalty in this category. The next time she or he goes to buy a refill, the comparison will be made once again.
It sucks to be in this category, but there IS a way out of it. It's about jumping up the hierarchy and moving from NECESSITY all the way to STATUS if you can. Don't compete on the Wal-mart customer buying hierarchy when you can blow all of the competition away and make a category of your own. Luxury toothpaste?
One of my favorite examples of this in my own kitchen is Olive Oil. I use it in much of my cooking and it comes in a variety of prices and levels of virgin-ness. However, because I display my olive oil and consider myself to be a foodie, I buy the high end brands. Does it taste better? Sure. Nominally. But in most cases, it doesn't make that much of a difference because of how I cook with it. But I'll pay for the fancy olive oil because I get comments.
In the song, "If I Had a Million Dollars" by the Bare Naked Ladies, they allude to buying fancier condiments with their new wealth:
If I had a million dollars
We wouldn’t have to eat Kraft dinner
But we would eat Kraft dinner
Of course we would, we’d just eat more
And buy really expensive ketchups with it
That’s right, all the fanciest Dijon ketchups
Whether you are poor or wealthy, certain foods still taste great, but being wealthy affords you the ability to buy that pricy ketchup. That's a luxury. That is taking the necessity and turning into a symbol of STATUS.
Oh OBLIGATION, you poor category, you. Donations fall into this category. So do gifts. The worst part of this category is that most non-profits struggle to get out of it. Between skinny, dying babies with flies on them to photos of abandoned dogs and beyond, these campaigns are meant to tug at our heartstrings so that we feel the urge to give money. And we do, but begrudgingly, and when it comes time to give again? We avoid the people with the clipboards on the street asking, "Do you have time for the environment?" Yes, I always have time for the environment, but I don't have time to stop and commit to donating money to it.
Guilt is not a good method of marketing. It's the worst. It makes people look away and pretend they don't see you. It does the EXACT opposite of STATUS: it makes us feel bad about ourselves. It reminds us that we could have taken the $600 we just spent on a pair of Louboutins we can hardly walk in and made a real difference in someone's life. Of course, we want to convince people to spend money on feeding children and cleaning our air -I agree that is more pressing than adding another pair of pumps to my collection- but doing it through guilt and OBLIGATION is not the right way to approach it.
Move the message up the hierarchy and win. AIDS research did this with aligning itself with fashion and parties and galas and all sorts of sexiness. Breast Cancer research does a pretty decent job with the pink ribbon everything, the runs, the community and the survival stories. If people getting involved in your cause and giving time and money helps them achieve SELF-ENLIGHTENMENT and gives them STATUS, you will achieve your goals and then some.
People want to be altruistic and they do care, but nobody wants to be a downer or feel bad or guilty or in the least bit OBLIGATED to contribute. Involve them in a way that makes them feel better, not worse.
At the end of the day, we all want to believe that we are more self-aware than those status-seeking, shallow, selfish types that spend too much on items that temporarily make them feel good. We vilify the Snookis of this world and point fingers laughing, saying, "So glad that's not me," but face it, we all have an element of that in our nature and that is why we find it funny in the first place.
Yes, we should consider to fight these urges as individuals and vote with our dollars to promote a better, more charitable, more community friendly world, but in the meantime, those who are building products that are doing that should learn from the masters that tapping into the STATUS-seeking human behavior is a darn good way to get your point across. You don't have to mark up your products to achieve it, either. You just need to convey to your potential customers that buying your product or giving money to your charity or being involved in your cause is going to make them feel great and look great to others.
Human nature is human nature. Let's use our knowledge of it for good.