How Reference Points can make You Spend More
Recently I read an article on how Royal Caribbean Cruises doubled their earnings in three years. Simply by using the concept of reference points to get people to spend more money on their cruises.
Let me explain how Royal Caribbean Cruises uses reference points to get you to spend more.
What they do is offer the customer the ability to buy say a drinks package at the time they book the cruise. For example you book at $1,500 cruise and they offer a $100 drinks package. Against the reference point of the $1,500 cruise, the $100 drinks package is minor, so people tend to purchase the package.
Then what they found is that once on the cruise, people were less likely to consider the cost of the drink package when buying other items, meaning they were likely to spend more overall.
And that’s how Royal Caribbean Cruises doubled earnings in three years.
And they are not the only one doing it.
Think of the last time you went to buy a TV. What was more prominent in the store? The biggest and most expensive TV. Why, because you use the price of this as your reference point and the rest of the TV’s look cheap in comparison.
Another trick retailer use is how they display prices on sale items. The original price is typically displayed in large print size and the sale price in smaller print size. Why?
By making the pre-sale price the larger print size, you use this as your reference point to compare to the sale price and you are more likely to buy. Even if the pre-sale price was inflated.
So next time you are about to buy something, make sure the amount you are willing to spend is not being influenced by artificial reference points designed by the business for you to spend more.
If you want more tips and tricks to help you improve the health of your wealth, why not join my Meetup group and get access to my live and free events. https://thewealthnavigator.com.au/events/
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Wayne Wanders
The Wealth Navigator
wayne@thewealthnavigator.com.au
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