This past month, our Neuromarketing Consultant, Trevor Thomas, conducted research into how we can help our clients increase their profits and sales. Our marketing tactics are designed to help our clients grow. Understanding the science behind increasing their profits helps our teams get better and never be complacent. Below are his findings.
The Neuroscience of Buyer’s Remorse – Trevor Thomas, EC Consulting, Inc.
How we promote sticky sales by looking at studies of cognitive dissonance
Last month, I investigated how consumer psychology can help our firm boost rates of customer retention and yield stickier sales for our clients. Buyer’s remorse (or buyer’s regret) is the sense of regret after having made a purchase. It may stem from fear of making the wrong choice, guilt over extravagance, or a suspicion of having been overly influenced by the seller. These feelings are thought to stem from cognitive dissonance, specifically post-decision dissonance, that arises when a person must make a difficult decision, such as a heavily invested purchase between two similarly appealing alternatives. Cognitive dissonance is the mental discomfort or psychological stress experienced by a person who simultaneously holds two or more contradictory beliefs, ideas, or values. Increased activity in right-inferior frontal gyrus, medial fronto-parietal regions and ventral striatum, and decreased activity in anterior insula are often associated with post-decision cognitive dissonance. Factors that affect buyer’s remorse include resources invested, the involvement of the purchaser, whether the purchase is compatible with the purchaser’s goals, and what positive or negative evidence the purchaser encounters post-purchase that confirms or denies the purchase as a good idea.
In the phase before purchasing, a prospective buyer often feels positive emotions associated with a purchase (desire, a sense of heightened possibilities, an anticipation of the enjoyment that will accompany using the product, and so on). These are what we, as professionals in the marketing industry, attempt to capitalize on with our marketing strategy. We aim to build these positive emotions in a consumer, hoping to elicit a purchasing decision. Afterwards, having made the purchase, consumers are more fully able to experience the negative aspects of their decision: all the opportunity costs of the purchase and a reduction in their purchasing power. Also, before the purchase, the buyer has a full array of options, including not purchasing; afterwards, their options have been reduced to either continuing with the purchase or renouncing the purchase.
Like I said earlier, the phenomenon of buyer’s remorse has been generally associated with the psychological theory of cognitive dissonance, a state of psychological discomfort when at least two elements of cognition are in opposition, which motivates the person to appease it by changing how they think about the situation. Buyer’s remorse is an example of post decision dissonance, where a person is stressed by a made decision and seeks to decrease their discomfort. The buyer may change their behavior, their feelings, their knowledge about the world, or even their knowledge of themselves in order to reduce the psychological discomfort caused by cognitive dissonance. The more resources such as money, time, and cognitive resources that are invested into making a purchase, the more likely the buyer will experience buyer’s remorse or psychological discomfort.
Psychologists have focused on three main elements that are related to cognitive dissonance and buyer’s remorse. They are effort, responsibility, and commitment. Effort is the resources invested by a consumer (material, intellectual, psychological, and otherwise) when purchasing. Effort is directly related to the importance of the purchase. Purchases that require high amounts of effort but do not bear high rewards are likely to lead to buyer’s remorse. Responsibility refers to the fact that the purchase is done out of free will. Buyers that have no choice on the purchase will be less likely to feel dissonance because it was not of their own volition. For example, a consumer doesn’t feel buyer’s remorse when he or she makes a student loan payment or pays rent. And lastly, commitment refers to the continuity of a purchasing action. The purchase of an automobile has high commitment because the car must usually be driven for a long duration. Purchases with higher commitment will lead to more buyer’s remorse.
Low rewards matched with these three conditions – effort, responsibility, and commitment – will most likely result in buyer’s remorse via cognitive dissonance. The buyer feels anxiety and psychological discomfort because their behavior (the purchase of the item) does not match their attitude (their expectation of the purchased item). According to cognitive dissonance theory, there is a tendency for individuals to seek consistency among their cognitions (i.e., beliefs, opinions). When there is an inconsistency between attitudes or behaviors, a consumer will almost always do something to reduce this dissonance – to reduce this psychological discomfort. Dissonance can be reduced in one of two ways: first, individuals can change one or more of the attitudes, behavior, beliefs etc. so as to make the relationship between the two elements a consonant one. When one of the dissonant elements is a behavior, the individual can change or eliminate the behavior. For us as marketing professionals, this way of resolving dissonance is a big problem because, in the context of buyer’s remorse, this translates to the customer returning, cancelling, or otherwise renouncing the purchase that triggered the dissonance.
A second cognitive method of reducing dissonance is to acquire new information that outweighs the dissonant beliefs. Our team identified this as the preferable dissonance-reducing alternative. Instead of renouncing their purchasing decision, the customers we generate for our clients can also gain more information that revives the positive emotions associated with the purchase and reminds the consumer why the opportunity costs of that purchase were worthwhile and sensible. After the strategy meeting I led on the topic, our firm witnessed a significant increase in rates of customer retention as a result of our front-line executives taking advantage of this approach.