Are you scientifically managing customer PAIN for business GAIN?

Should I buy that expensive pair of headphones or pick the cheaper version? Should take the subscription or pay-as-I-use?

All decisions leading to a purchase are to either avoid pain or gain pleasure! Yes. At the base level, it’s as simple as that.

The pain pleasure principle, developed by Sigmund Freud, suggests that people make choices to avoid or decrease pain or make choices that create or increase pleasure. This is in fact the core of all decisions we make. All decisions have an impact on short-term and long-term pain and pleasure. And, the level of discomfort/ pain or pleasure, determines the driving force behind each decision.

This explains why I, like many others, put my body through hours of excruciating pain when training for endurance races! It’s because there is a certain pleasure associated with competing and finishing a race. If the pleasure associated is higher than the pain endured, one will continue, else quit. It is important to note this equation, and the fact that avoiding pain and gaining pleasure is the basic trigger on which every other trigger is based.

At its root, if we can understand intimately what our customers' pains and pleasures are, we can direct our sales and marketing efforts more effectively. Also, what is important to note is the fact that, pain hurts more than pleasure feels good! Think about this for a minute… if you have 50% chance of gaining Rs. 500 and 50% chance of losing Rs. 400, would you take the gamble? Mathematically, you should! But the brain doesn’t intuitively think this way. As it turns out, the pain of losing is much more pronounced and potential losses are weighted much heavier than potential gains.

Following are some psychological concepts based on ‘pain’ that are interesting to understand for marketers.

1.     Loss aversion- This concept was first identified and studied in 1979 by cognitive mathematical psychologist Amos Tversky and Daniel Kahneman. The pain of losing something that we already have, drives us to take decisions that can avoid this outcome. Loss aversion is particularly prominent when we deal with financial decisions. Eg- An individual is less likely to invest in a stock if it is seen as risky with potential for loss, even though the reward potential is high.

 2.    Framing effect- This is a cognitive bias that impacts our decision-making based on how a certain fact or question is presented. Any given product can be framed either in terms of potential gains or potential losses. Eg- Using pain frame – ‘Last chances to save/ Only a few items left’. The aim is to create urgency. The ‘gain frames’ are typically used where the subject needs to be convinced. Eg- a patient is more likely to agree to an operation if you say – ‘90% chances of success’ rather than saying ‘only 10% chances of failure’. 

3.    Zero risk bias- This is a tendency to prefer the complete elimination of a risk even when alternative options produce greater reduction in risk overall. Zero-risk bias plays on human fear of the uncertain. Eg- one will tend to pick the option that reduces risk from 5% to 0% as compared to the option that reduces it from 50% to 25% even though decrease in risk in the former is nowhere near as significant. This is the same reason why shoppers are ok to purchase more expensive items that have refund policies as it helps avoid the purchasing risk attached.

4.  Purchase pain- Finding a product that we want sets of the brain’s pleasure center and releases endorphins but unfortunately, paying for that same product can have the opposite effect! Parting with money is painful. The act of paying activates brain regions associated with pain. Literally. But the severity of pain is different when it comes to different paying options. Paying with cash has been found more painful than with a credit card! Have you noticed how easier it has become to spend ever since we moved from cash transactions to cards, to online, to mobile wallets? This is because, the more distant we feel from the act of handing over hard-earned cash, the less price-sensitive we become.

There is so much more to this... next article I will cover the ways in which one can reduce pain of purchase for better conversions!