MISTAKE #62: You don’t consider how shoppers can afford to buy your product

Lots of companies do lots of work to understand the product selection process.  They understand what features and benefits people are looking for.  They figure out what education is necessary to command a premium price or greater loyalty.  They craft and recraft their value proposition to get it just right.

Products (particularly bigger-ticket items) may also want to consider the value of understanding how shoppers acquire the funds to be able to make the purchase in the first place.

What is the time gap between recognizing the desire to buy something and actually being able to acquire it?

Do shoppers actually save up money over time until they can afford to pay cash to buy your item or do they put it on credit and pay it off over time? 

What do shoppers do to earn that extra money?  Do they work extra shifts? Cut out extra discretionary spending?  Sell unused items to consignment stores or on eBay?

Do shoppers just shift existing dollars spent on other items in the category?

Are there unrelated products they stop buying or start buying less of?

Is the item viewed as a basic necessity they buy no matter what?  (You might be surprised to see what different groups view as necessities)

Is it a product worthy of being a birthday gift or Christmas present?

A lot of this has to do with two factors:  How expensive your product is and how affluent your shopper is.

ICE TEA TO TVS

A household making 6-figures probably don’t think much about a $2.00 20-ounce bottle of iced tea.  That same $2.00 purchase is bought at a higher opportunity cost to someone living on minimum wage. 

However, there are still 6-figure households that have structured budgets that can interfere with that unplanned $2.00 purchase and there are impulsive lower-income shoppers that will buy it without thinking about the fact that they’ll have to work for about 15 minutes to earn enough after-tax dollars to pay for it.

A 50-inch HDTV has different dynamics, with few people viewing it as an impulsive buy.  Most shoppers will have a gap of time between deciding they want the TV, perhaps realizing they need or deserve it, and finally going through the action of buying it.  During this time, they will determine if the basic $400 no-name model is acceptable or if the $1400 premium web-enabled 4K TV is worth the price tag.

And they will go through different funding rituals with a spectrum that ranges from someone quickly buying the TV on a high-interest credit card to others saving up the full purchase price in $5 or $10 increments and then still waiting for a promotion or sale before they actually buy.

For some, the delayed gratification and sacrifices made will only increase the anticipation and satisfaction of ownership.  For others, the process will be too tedious or painful, making them question their interest in buying the TV in the first place.

These examples are intended to represent extremes to make the point easier to see.  In reality, I’m guessing most readers are selling products in a more moderate price range, where isn’t so clear whether the item can qualify as an impulse purchase or if there is a “saving enough to afford” component to the purchase process.

If you’re a 50-cent item, the funding process probably isn’t very elaborate or even conscious for most.  It is a very small part of the shopper experience.

If you’re a $50.00 item, the approach to funding the purchase becomes more important to understand so it doesn’t become a barrier.  The shopper probably has much higher expectations to meet and is considering more tradeoffs when deciding whether to buy your item or not.

And if you’re a $500.00 item, funding becomes a critical part of the shopper experience.  You need to not only understand but help frame and facilitate the process to make sure shoppers are willing to part with so much money when closing the sale. 

Because this is actually a critical part of the shopper experience for most products, and it is rarely studied, understood, or tapped into, it could also be an interesting source of competitive advantage for certain categories where it has been neglected.

Have you ever seen companies talk about the sales leakage from buyers lost between the time they realized their desire for their product and they were able to buy it?  I haven’t. 

But this is probably a hidden step between awareness and trial that has been overlooked simply because it might be somewhat more difficult to measure. 

While sellers of most lower-priced products are probably quick to purge this concept from their mind palace as irrelevant information, I’d suggest spending a little more time lingering on the topic.

We’d love to help uncover opportunities to get more of your shoppers through the funding phase and to the “I can afford this” phase.  It will probably reveal new messages, new content, and new locations where you can build a better, long-term friendships with prospective buyers.