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Lead Your Team Strategy

Power Shopping: Why Babying Your Customers Isn't Always Wise

At first blush, it might seem that empowering your customers with knowledge or by treating them with kid gloves would encourage them to spend more. In reality, though, your customers’ feelings of empowerment have a more nuanced impact on how much they choose to spend based on who they are shopping for, a new study in the Journal of Commerce shows.

Researchers at the Kellogg School at Northwestern University conducted five experiments where they manipulated participants’ states of power and then examined how much they spent on themselves or others . To control the relative levels of power, they assigned people to be either a boss or an employee in a task, had participants recall a time in the past when they felt they had power or lacked it, or showed them ads designed to make them feel powerful or powerless.

“We ask whether the powerful and powerless differentially value the self versus others, and whether this, in turn, translates into observable differences in their behavior,” study authors Dereck Rucker, David DuBois and Adam Galinsky wrote.

After completing the power-related tasks, study participants took part in an auction where they bid for a T-shirt and a mug. One group was told to bid on the product for themselves while the members of the other group were told to bid on the objects to get them for a person of their choosing.

When they thought the product was for them, the participants in the high-power group bid $12.08 on average; the low-power participants only bid $6.49, an astonishing difference of more than 46 percent, the authors wrote. The opposite occurred when the participants were asked to bid on a product for someone else — the low-power people bid $10.81 on average, while the high-power participants bid $7.10.

The same pattern emerged across all five experiments.

“Low-power people spend more on others because they depend on others,” Rucker explained in a video on the Northwestern University website. “High-power people spend more on themselves than others because they view themselves as more important.”

Although the high-power participants spent more money on themselves, the authors found, they were happier when they spent money on others.

•    Shoppers Spend More When Told They Don’t Have To
•    The Psychology of Financial Risk Taking
•    Customers Easily Frustrated Learning New Things, Study Finds

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com.  Follow him on twitter @nedbsmith .

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.