The 5 secrets to keeping your customers truly happy

Marketing / 01.12.14
Mark Vaesen

In the late summer of 2010, two young entrepreneurs called Hayley Barna and Katie Beauchamp came up with the idea of making money from selling small sample-size cosmetics – mini-tubes of mascara and baubles of liquid blush – often tossed in to beauty store shopping bags as freebies.

Today Birchbox has over 400,000 customers paying £10 each month to receive a goodie bag of samples in the post – and the customers don’t even get to choose what they get.

That’s a nice business model, but how does it work? Why would people pay for something usually given away for free?

How to make people happy

Birchbox cleverly uses one of the principles explored in a book called Happy Money by Elizabeth Dunn & Michael Norton.

This beautifully written book looks at the science of smart spending and uncovers what purchases make us truly happy.

By adopting the principles of Happy Money, you can uncover secrets to keep your customers and employees truly happy – and increase your profits into the bargain
Birchbox customers pay $10 per month for a collection of free samples
Birchbox customers pay $10 per month for a collection of free samples

What is happy money?

Research shows that greater wealth often fails to provide as much happiness you might expect. In a national sample of Americans, individuals thought that their satisfaction with life would double if they made $55,000 rather than $25,000. But the data revealed that people who earned this higher amount were only 9% more satisfied than those making the $25,000. And once people earn around $75,000 per year, making more money has no impact at all on their day-to-day feelings of happiness.

So instead of focusing on making more money, perhaps people should concentrate on spending differently? Happy Money explores the purchases that give us the biggest happiness bang for our buck (or pound) and, in doing so, uncovers some little nuggets of information that could help your business be more successful when selling those purchases.

The 5 principles of happy money

There are 5 principles of happy money:

  1. Buy experiences
  2. Make it a treat
  3. Buy time
  4. Buy now, consume later
  5. Invest in others

1. Buy experiences

Most people in Britain aspire to own their own home. We go nuts over it. But research shows that home-ownership and happiness don’t necessarily go hand-in-hand. In fact, material things (like gadgets or fancy clothes) turn out to provide less happiness than experience purchases (like holidays, concerts or a special meal).

In an attempt to prove the point, try this experiment; think of some of the purchases you’ve made in the last year that you believed would increase your happiness. Which ones are easier to remember, the material thing (a nice piece of jewellery, a new iPad or gadget, new clothes) or the experience (a memorable trip, a concert with friends, a special meal with loved ones)?

It’s also been proved that people who spend more money on leisure report significantly greater happiness.

This can be applied to business.

Paying for the privilege of crawling through mud

Rather you than me...
Rather you than me…

Shortly after graduating from Harvard Business School, Will Dean started Tough Mudder, a company that stages races with obstacles designed by the British Special Forces. His customers pay to do things like sliding headfirst into a pond of something “that smells like a thousand years of fermented goose poop” AND THEY LOVE IT. Why?

Dean has cleverly crafted his business to maximise the social aspects of the Tough Mudder experience. At the start line, runners stand side by side and recite the Tough Mudders pledge to put teamwork and camaraderie ahead of their own finish time. Some of the obstacles are designed to be impossible for one individual to surmount alone, so runners have to help one another. This gives Tough Mudders an enormous sense of belonging, and their loyalty to the brand is staggering.


How to apply this Happy Money principle to help your business

By using this principle, you can make your customer’s experience last way beyond a simple purchase.

This could be achieved simply by providing excellent personal customer service, or with a simple small touch to make a visit memorable. How about offering a fancy cup of coffee whilst your customer waits for an eye test? Or offering your customer a go on a racing game while they wait for you to finish servicing their car?

2. Make it a treat

Chocolate. Scientifically proven to taste best the first time...
Chocolate. Scientifically proven to taste best the first time…

Did you ever have that conversation where someone asks “What would your last meal be if you were on death row?” It’s your chance to put together your dream dish; the food you’d choose over any other. After much deliberation, you come up with your most favouritist food, each course perfectly complementing the one before.

Imagine you could have that meal tonight. Nice thought, huh?

Now imagine that you had that meal every night for the next fortnight. I wouldn’t mind betting you’d be getting bored of it after 3 or 4 nights.

The point is that for us to enjoy something to the maximum, it needs to be considered a treat.

In a test, one afternoon students came into a psychology lab to complete a simple task; eating a piece of chocolate.

The following week they returned for a second piece. Overall, the students enjoyed the chocolate less the second time round.

This is the sad reality of the human experience; in general, the more we’re exposed to something, the more its impact diminishes.

It’s also been established that wealthier individuals have a lower proclivity to savour life’s little pleasures. They’re less likely to pause to appreciate a beautiful waterfall on a walk, or stay present in the moment during a romantic weekend getaway.

Furthermore, a similar phenomenon happens with people that live in big cities; people living in London are less likely to go and see Big Ben because they believe they can go whenever they like, so they put it off. A time-limit window encourages people to do something before they miss out completely.  In an experiment to explore this further, two groups of people received a gift certificate for a tasty pastry at a local shop. Only 6% of people redeemed it when they were given a two-month expiry date, compared to 31% who were given a shorter three-week window.

How to apply this Happy Money principle to help your business

In June 2011, Twitter went in to meltdown about an unlikely culinary delight. KFCs Double Down is, frankly, a heart attack waiting to happen; two slices of bacon, two kinds of cheese, and the Colonel’s secret sauce, all sandwiched between two slabs of fried chicken. According to KFC, it’s “so meaty, there’s no room for a bun!”

Mmmm... heart surgery...
Mmmm… heart surgery…

The previous year, in Canada it was an absolute sensation, selling a million Double Downs in less than a month. What did KFC do in response? They pulled the product.

Although this seemed a bit of a bizarre move, what KFC had done was to make the return the next year even better. By deliberately removing the product from sale it increased its desirability. Parents of small children may have noticed that Disney do this all the time with their animated films.

Could you increase desirability of a product or service by only making it available at certain times?

In another recent scientific experiment, before receiving a massage, three-quarters of people reported that they would prefer to savour the experience without interruption. But those that were forced to take a break during the massage ended up enjoying it more, and were willing to pay more for their next one. Why not consider offering or delivering your products “in instalments” rather than all at once?

In a further study, researchers paid people £2, telling them they could keep the money or use it to purchase a lottery ticket. When the prize was a £200 dinner at a gourmet restaurant, 84% of people bought a ticket. When the prize was £200 cash, only 65% of people bought a ticket. This difference is quite remarkable – after all, you could use the £200 to pay fo your £200 dinner, or anything else you wanted. But the opportunity for a treat in the form of a gourmet dinner provided a more compelling incentive than cash. If you’re running a prize draw or a free giveaway, think about what appeals to the people you’re asking to take part.

3. Buy time

Time and money are frequently interchangeable. My uncle Brian is known to drive for an hour to find petrol that’s 5p a litre cheaper. On several occasions, it’s been pointed out to him that he spends the money he’s saved getting there and back, but he’s amongst many people who often sacrifice their time to save small amounts of money. This human foible is delightfully captured by this headline in the Onion:

ANAHEIM, CA. – Thirty-one year old Edward Brawley’s plan to get himself an umbrella from a random lost and found took two hours, but it saved him $2.99.

Many of us wish we had more free time to do more of what we love and in theory, it’s possible to use money to buy more of this kind of time. But research suggests that people with more money don’t spend their time in more enjoyable ways on a day-to-day basis. People who feel prsssed for time have difficulty “staying in the moment”. Are there ways we can make our customers – and maybe our employees – happier by giving them more free time?

How to apply this Happy Money principle to help your business

One way to influence your customers is to demonstrate how buying your products or services buy them precious time – time they could be enjoying doing x, y and/or z.

Or alternatively, highlight how spending more time on what you’re selling them (an experience, perhaps) will make them feel happier.

And of course, some products can act as a catalyst for spending future time doing something enjoyable – for instance, if you’re selling your customer a dog, sell them the vision of the lovely summer walks, the benefits of fresh air, the social aspects of meeting other dog walkers…and avoid mentioning picking up dog poop on a dark, wet winter morning and chasing after your disobedient mutt when you’re already late for work.

This is what dog ownership is like, EVERY DAY...
This is what dog ownership is like, EVERY DAY…

We all know that happy employees are productive employees, so why not explore ways to maximise that happiness? Research shows that your employee will be happier if you give them an “experience gift” (like a spa day, or a fancy meal) than a cash bonus. You can even make them happy without spending any money at all. Consider giving them the gift of time with “email-free Tuesdays” or perhaps one hour a week for them to spend on whatever non-work project they like.

Finally, charities take note; potential donors contribute more time and more money to a charity when they’re first asked about their willingness to donate time. Thinking about time makes people focus on the warm glow of giving to others, propelling them to help out whenever they can.

4. Pay now, consume later

Yes, that’s right – you heard me right. Although innovations in technology have encouraged us to consume now and pay later, this widespread pattern can be counter-productive for happiness.

This principle highlights the power of anticipation.

Ever wondered why more people cite Fridays – when they’re working – as their favourite day of the week more often than Sundays – when we can spend our time doing whatever we want? It’s because of what we know comes next – the excitement of Friday and Saturday night versus the prospect of a Monday morning.

To further highlight the effect of anticipation, in one scientific study, people led to believe that a set of cartoons would be funny ended up laughing more. In another, people led to believe a politician would perform well in a political debate viewed his performance more positively than those who had been told he was feeling a bit under the weather.

Delay can enhance the pleasure of consumption too, by introducing what’s known as the “drool factor”. In a recent experiment, university students chose whether to eat a chocolate bar immediately or wait 30 minutes. When students had to wait, they enjoyed it more and expressed more interest in buying additional chocolates.

How to apply this Happy Money principle to help your business

Show your customers lots of lovely pictures of your product (especially if you’re selling an experience like a holiday or hotel break). Remind customers of their upcoming delivery (send them an email – with lots of lovely pictures, of course – one month, two weeks, and one week before delivery).

Build anticipation with your customers

If your product is “fleeting” and only lasts a short time, delay actually draws out the pleasure beyond the experience itself. You can also make unavoidable delays more enjoyable by building anticipation. One example of this we recently experienced at Tomango was in implementing a suitable “loading” message whilst a website performed an unavoidably time-consuming task.

One extreme idea worth trying is the idea of “Pay now” bundling – where you remove the “pain of paying” from the future experience of the actual delivery of your product, so it becomes a delightful surprise.

5. Invest in others

Spending money on others can increase your happiness even more than spending your cash on yourself.

In an experiment, people were given $5 in an envelope with a note. One group were invited to spend it on themselves and the other group were asked to spend it on someone else or donate the money to a charity of their choice. When asked later, the people who spent the money on others were measurably happier that those that spent money on themselves.

However, in order to get the biggest happiness bang for your buck, you need to be aware of three key strategies that boost the impact of investing in others;

Make it a choice

In a study, a graduate student requested a bit of help via an email. She ended her plea by saying either “It’s entirely your choice whether to help or not” or “I really think you should help out”. In both cases, the plea was very effective, but importantly, helpers felt happier if they had been reminded that  helping was their choice; people don’t like being told what to do.

Make a connection

In another experiment, £10 Starbucks gift cards were handed out. One group was told to use the gift card to take someone else out for coffee, but a second group was told to give the card to someone else, but not to accompany that person to the coffee shop. Who was happiest at the end of the day? The people who used the gift card to treat someone and spent time with that person at Starbucks. So in other words, investing *and *connecting provided the most happiness.

Make a connection. Make an impact.
Make a connection. Make an impact.

Make an impact

It can sometimes be difficult to see how our £10 or £20 donation to a large organisation like UNICEF can make a concrete difference in a child’s life. Contrast that with Spread the Net, which allowed donors to contribute $10 to send one malaria net to sub-Saharan Africa. Their slogan?

“A child dies needlessly from malaria every minutes. One bed net can protect up to five children for five years. 1 net. 10 bucks. Save lives.”

By seeing the immediate and tangible outcome of your donation, you can establish a connection *and *make an impact.

How to use this Happy Money principle to help your business

Whilst this section might seem to only apply to charities, you can extend this idea to any business by offering vouchers for customers to donate to a charity – and by following the three strategies above, you reinforce the happiness the customer  gets from it. Make no mistake, this will make your business great – and of course, you’re helping someone else out too.

Consider how you use gift vouchers to make a connection and an impact
Consider how you use gift vouchers to make a connection and an impact

Consider how you market and package gift vouchers and how they’re “delivered”. By pointing out the connection and impact that the giver provides to the receiver, you make them feel even happier about their purchase.

And finally, charities; think carefully about how to ask for donations. Can you establish a connection between the donor and the beneficiary? How are you telling the story about the impact the donation has?

A step further

Want to improve your marketing and make your customers truly happy with your business and product? Chat to our experts today and learn how we can help.