How does this e-tailer win us over? By becoming our default. According to Dan Ariely in Wired, we would rather shop at a place that has our address and credit card information on file than at one where we’d have to enter this information — even if it means paying more. As consumers, “we have a marked tendency to take the path of least resistance.”
Because the movie-rental giant charges no late fees and lets you create a queue of what you want to watch, writes Ariely, you’d assume customers are getting their money’s worth. This model actually exploits the gap between what people want to do in principle and what they want to do right now. Typically, you watch fewer movies for your monthly fee than you order.
By making a limited number of coupons available, this free-subscription, deal-of-the-day website makes us feel we need to buy immediately, even if we may not use the discount. “These sites have everything an addictive game could want,” says Martin Lindstrom. “A prize. A ticking clock. A challenge. Other players. An ‘invitation only’ exclusivity. And fun.”
When you make an iTunes or App Store purchase, you don’t get a receipt right away, reducing what economists call “the pain of paying.” You get your purchase immediately, but you’re not reminded of what you paid until later. The retailer has successfully “decoupled payment from consumption,” writes Ariely, making you more likely to buy.