Why We Buy Services: The Psychology of Consumption - It's All SAVVY

Why We Buy Services: The Psychology of Consumption

We purchase services every day of our lives, whether we realize it or not. We pay people to fix our cars, cook our food, clean our homes, and do countless other things to make our lives more comfortable and enjoyable. And yet we often fail to realize the psychology behind these transactions. Even if you don’t know much about economics or marketing, this guide can help you better understand why we buy services, how we decide what to buy and how much to pay for it, and how companies can best advertise their services in order to maximize profit and customer satisfaction.

Purchase Problem
Most people don’t like to admit it, but we’re all susceptible to purchase problems. We buy things we don’t need, services we don’t use, and items we can’t afford simply because they’re available and we want them. So what’s going on behind the scenes? Why do we do this? Well, it turns out that our brains are wired for instant gratification. When you think about buying something online or in-store you get a small hit of dopamine which makes you feel good about your decision.

Essentially, as time goes by the memory of that hit fades away so more purchases are needed to get the same level of happiness. In essence, we’re addicted to the idea of getting that happy feeling. Furthermore, research shows that customers who invest in services are less prone to regret than those who buy products; instead of feeling remorseful after an expenditure, they tend to enjoy their experience and will even defend their decision more vigorously than those who purchased goods! This is all good news for our Savvy small business owners, delivering great services to their clients.

Examine Alternatives
When we’re considering a purchase, we usually weigh our options by looking at the pros and cons. But when it comes to services, we often don’t take the time to do this. Instead, we focus on the service itself and how it will make us feel. For example, if you go for dinner with your friends and enjoy yourself, you may go back again. Even if you know there are other restaurants that offer comparable food for less money or more convenience, your decision might still be based on whether or not you enjoyed yourself during your first visit.

So why is it so hard to think about alternatives? Well, we care about experiences and feelings more than material things like cars or clothes because those things can be easily replaced. So customers are often buying with their hearts, not their heads. They come to you as a groomer because they love their dog and only trust you to care for them, they come to you as a photographer because of that feeling they got when they saw those baby pictures for the first time they want to experience again and again, they come to you as a hairstylists because all the compliments they got afterwards made they feel awesome!

Finalize Your Choice
We buy services for a variety of reasons, but often it boils down to the feeling that we are making the best possible choice. When we purchase a service, we are placing our trust in the provider to fulfill their end of the bargain. This decision is based on numerous factors, including our past experiences, what we have heard from others, and our own research.

Ultimately, we want to feel confident that we are making a wise decision that will meet our needs. There is an additional level of trust with services because they typically require more time and commitment than buying goods. Once we make a purchase, there is no opportunity to return or exchange the product if we change our mind or find out it doesn’t work as advertised. From a marketing perspective, building confidence, emphasising trustworthiness and focusing on the emotional side of the purchase and how it well make them feel is a wise route!

Decision making isn’t always rational
When it comes to business, we like to think that we’re rational consumers. We evaluate products and services based on their quality, price, and utility. But the truth is that our decision-making is often influenced by psychological factors that we’re not even aware of. Here are some of the ways that our psychology affects our spending habits. Inconsistent Preferences – One of the most basic principles in economics is that people will buy more when prices fall, but this isn’t always true. People are actually more likely to buy when prices go up! A study from Stanford University found that a 10% increase in coffee prices led to a 12% increase in coffee sales because people wanted a higher quality product. In other words, people may say they prefer lower prices but their actions show otherwise. They want better quality at a higher price.

Mental Accounting
Consumers are always looking for a good deal, and businesses know this. They will advertise services as being on sale or discounted in order to get customers in the door. But what’s really going on when we make these purchase decisions? It all boils down to mental accounting.

Some psychologists believe that consumers have an aversion to spending money on services because they are not tangible goods- but it is actually more likely that they feel like they have less control over their spending because they don’t know exactly how much they’re spending. When we buy a service, such as a haircut, our brain has no way of calculating the cost- so instead we tend to use other factors such as time spent and subjective value.

Instead of thinking about how much the service would cost if you were buying a product with comparable features, you might instead think about the time and money you save by cutting your dogs hair yourself at home. You might also think about how convenient it is to do it yourself at home compared to traveling somewhere else for your appointment. Of course what you are paying for in a salon is absolutely not the same as what you get if you do it yourself at home, but for some people this will be the mental accounting they are doing.

This psychology is something to think about in all the communication you have with your clients. Understanding what they may be thinking allows you to sell your service and the benefits more clearly.

Evaluate Yourself
Do you ever stop to think about why you buy the services that you do? Whether it’s a gym membership, a dating app, or a subscription to a streaming service, we all have our reasons for why we consume the services we do. But what psychological factors are at play when we make these decisions? Actually thinking about your own purchasing pattern is a useful exercise when trying to understand what your clients are thinking about when booking in you. Why do you choose one hairdresser over another? Why do you always go to one particular nail artist, why are you happy to pay for Netfix everymonth when there are free options out there? What is governing your own buying decisions?

Get What You Want
So we have established that buying a particular service satisfys a deep-seated psychological need. When we understand what drives our consumption, we can make more conscious choices about the things we buy. For example, people who want to feel accomplished may be drawn to experiences like golfing and painting classes, while people who crave social connection might be attracted to events like cooking classes.

Understanding these motivations can help us to connect with our clients and understand what need we are fulfilling and make sure our branding matches that. Are our clients wanting to feel good by doing their bit for the envirnment – if so make sure you shout about the ethical and natural sides of your business. Are they social climbers? Then you might want to make sure your branding is luxury, prices are high and offer something for them to aspire to. Are they pet crazy and treat their pooches as babies? Then all you groomers out there might want to push the puppy universities, cute pictures and warm and cozy and cuddly feel in your services and branding. This way you can attract the clients that you want and meet their own psychological needs, then both you and your clients get what you want!

Book a demo
To find out more about branding and how to recognise the buying patterns of your clients using Savvy. Book a demo today or start a free trial at www.savvypetspa.com