Bottom-dollar effect

Theory explained by Sander Volbeda

We all have had that day when our pocket was really not that heavy. Just assume that on such a day you were supposed to buy a pair of shoes for an evening party which was to be held the next week. You go online to your favorite shoe-store to witness that you have nothing much left in your pocket to obtain that favorite pair of shoes. What exactly would you feel? It is a big dissatisfaction it is. This is the result of the bottom dollar effect in human psychology. The bottom-dollar effect can be commonly seen among people with earning difficulties.

According to the bottom dollar effect, we transfer negative emotions when a certain product or service exhausts our remaining budget. Due to this negative association of emotions, perhaps we may transfer negative ratings for a particular product or service. Yes! This is a dangerous situation for the businesses. This tendency of human psychology was greatly proven by a research in 2014. According to the consumer research, two sets of people were asked to buy tickets for three online movies; each costs $10. The first group was given 30 credits for the purpose and the other group was given 50 credits for the same purpose. Once the movies were over, feedback was taken from both the groups. Remember that all of them watched exactly the same movies. The outcome was fascinating. The group who was given 30 credits for the purpose was less satisfied with the movies while the other group who got 50 credits was well satisfied about the movies. The researchers used this outcome to prove that being exhausted on the budget caused the first group to be less satisfied and such a problem was not there for the second group.

To get rid of the bad impact of the bottom dollar effect, every business must stay vicious about this behavior of people. Bottom dollar effect can do a great harm to your online business. That is why we took extra measures to help you on how to be safe from the bottom dollar effect in your online store for Conversion Rate Optimization (CRO). Stay tuned!

Top tips to be safe from the bottom dollar effect

Pay absolute attention on timing for e-marketing

Timing is the key. Think of the time when your target consumers’ budgets are less likely to be exhausted. For example marketing your product the service at the beginning of a month is ideal rather than marketing it at the end of the month. Generally, people have money in hand during the months’ beginning. If you market your brand when people have money, the bad consequences of the bottom dollar effect can be minimized. Just similarly, if you market your brand when people are exhausted with budget, the consequences of the bottom dollar effect on your business will be terrifying.

Pay days matter

Embed promotional offers and discounts towards the end of the month. Studies in the similar subject have shown that the discounts and promotional offers most likely to become effective when the budgets of your target consumers are likely to be exhausted. In such a situation if you step front with such concessions, not only your customers will be happy but also it will help you towards Conversion Rate Optimization (CRO) a great deal.

Understand the behavior of your target segment/s

Understand the behavior of your target audience. Many people tend to do online shopping or physical shopping to fulfill their requirement right before their budgets are to be replenished. The key is to promote your offers in your website right before this time. According to many experts in the field, this can still increase sales. But remember not to wait until the moment when their budgets are exhausted to promote your offerings. After all, knowing your target consumers and their behavior are great tools to act wisely towards CRO.

Make your target audience feel valued at the right time

Let's hop back to the example in the introduction. You go online for shoe shopping when you are really tight on budget. You visit a few online stores to find that your favorite choice is still too expensive for the time being. Then you come across this website who offers some discount on your favorite item which is sufficient enough for you to buy the shoes. In such a situation you will create a great bond with the last shop and at the same time the impression of the previous shops where there were no discounts won't definitely be a very pleasant one. Isn't this the ideal moment to outsmart the competition in online business? And also, there is a great chance that such customers will pay you back with great reviews.

Identify the most expensive months and offer concessions

Know the Seasons in which your target audience tends to spend more and treat them with offers or discounts during such periods. For example, let us assume that you have an online store of snowboarding equipment. You consumers come to you in different time intervals from September to March. This of course varies based on your geographical location. Let's take September to March. During this period of time which months would be the most expensive months for your people? If we consider the majority, they would be the month of December and January. If you are keen enough to recognize this change and provide them with concessions for their purchases, it will help you a great deal to boost up sales as well as for Conversion Rate Optimization.

Conclusion

The human tendency to act negatively towards the businesses especially when they are exhausted with the budget known as the bottom dollar effect can be rapidly seen among customers. It is something that no business can avoid, you will have to face it whether you like it or not. But, you can of course reduce the negative impact of the bottom dollar effect if you act timely when doing business promotions online, providing offers and discounts. This vicious act will help you ultimately for Conversion Rate Optimization (CRO) towards boosted profits.

Sources

Don't believe us? This is where we've found our data.

Get your account
Start Your Free Trail
CTA Block

Do you think you know enough about CRO?

Join our monthly mailing to continue learning more and more about CRO and psychology.