Recently, I came across an article about a new species of Internet café. Unlike other types of cafés, customers are charged only for the amount of time they spend at the café. And here’s what they get in return: a comfy space to do work or socialize, access to high-speed Wi-Fi, as well as an unlimited selection of beverages and snacks. Pricing is flexible. Customers can pay by the hour, or by the day, week, or month. Their website sums it up: Pay for time, consume for free!
Because I tend to be curious about these types of things, I started to wonder if the café owners had given any thought to how the payment structure itself might affect people’s level of enjoyment during their time at the café. Might their level of enjoyment be affected, for example, by whether they paid hourly rather than monthly? Or, how might it be affected by whether they pre-paid for their time versus paying as they go?
It turns out that research shows the timing of payment and the timing of when they consume a product or service does indeed play a critical role in people’s level of enjoyment.
In this article, we’ll explore:
- How the amount of time that separates payment and consumption affects the customer’s level of enjoyment.
- Look at the implications of payment preceding or following consumption.
- How businesses can leverage the relationship between the timing of payment and consumption in order to create more delightful experiences for their customers.
The Timing of Paying and Consuming
In life, very little comes to us free of charge. If we want something, we need to pay for it. And in general, paying for things is painful. Most of us work hard for our money, so we want to get the biggest bang for the buck.
When we buy things intended for pleasure—say, a vacation or some other type of enjoyable event—often, our goal is to maximize the amount of happiness we get from that event or experience.
But how do we reasonably achieve that goal? To answer this question, let’s consider two aspects of the consumer experience that have been shown to have an impact: the timing of when we pay for something and the timing of when we consume it. These two aspects of the consumer experience—and especially the relationship of the timing between the two—can play a significant role in the amount of satisfaction people derive from what they buy. Since payment is painful, we stand to incur the most enjoyment when payment is separated (by time) from consumption.
Paying and Consuming
In general, there are three different scenarios that can occur in regard to the timing of paying and consuming:
1. We pay at the same time we consume so that payment and consumption occur almost simultaneously.
2. We consume something first and then pay later.
3. We pre-pay and consume later.
How do these different scenarios affect people’s level of enjoyment at the time of actual consumption? Let’s consider each of them, in turn.
There are many examples of scenarios where we pay as we consume. An especially vivid example is a taxi ride. Think about how you feel during the ride. Unless someone else is paying the bill, your attention is likely focused on the meter, which displays the ever-increasing fare amount as the miles and time tick by. Are you enjoying the experience? If not, why not?
Most people find it difficult to enjoy the taxi ride experience because the cost of each minute is so salient. The cost of the ride and the ‘experiencing’ of it become inseparable. Research shows that paying for something is actually perceived as ‘pain’ in the brain. Payment and consumption, then, when they occur in close time-wise proximity to each other, make it very difficult to truly enjoy the consumption experience.
Consume First; Pay Later
The second scenario is to consume first; pay later. Because so many people pay with plastic (or via their mobile device) instead of cash, this is a very typical real life scenario. And while this scenario effectively creates distance between the timing of payment and consumption, thereby potentially increasing enjoyment, it comes with costs of its own.
It turns out that any purchase that does not involve the handling of actual cash has the effect of minimizing the pain of payment at the time of the transaction, thereby influencing people to spend more than they would when paying with cash.
But this is not the only problem. Because we are short on patience and often have limited amounts of discipline, we prefer to consume as soon as possible, while delaying payment for as long as possible. This, in combination with the power of non-cash transactions to eliminate the ‘pain’ of payment, leads many households to accumulate considerable debt over time.
And the emotional cost of debt is no small thing. Many people worry about the extent of their debt and how they will pay it off—something that adversely affects overall happiness, and particularly marital happiness. The dread of being in debt can significantly dampen the overall pleasure of consumption.
Pay First; Consume Later
A third scenario is to pre-pay, and it turns out that it’s this scenario that enables the most enjoyment. Think, for example, of the last time you took a vacation. Can you remember how much you looked forward to it? Likely, you got a lot of satisfaction from simply day dreaming about it before it actually happened.
The anticipation of a pleasurable event adds significantly to the overall enjoyment that people derive from the event itself.
And this is one reason why people don’t perceive events in time ‘equally’ between the past and the present. Researchers have discovered that when events are yet to occur, they provoke more emotion and are valued more than identical events that have occurred in the past. Why is this? One reason is that the future is inherently ambiguous. For upcoming positive events, people have the luxury of creating the future in their own minds, according to what will bring them the most pleasure. And also, there is something inherently tantalizing and fun about the aspect of ambiguity itself.
Consider, for example, why people routinely take the time and effort to wrap anniversary, birthday, and other types of gifts. Is this really necessary? Yes! Because the element of intrigue and surprise is an essential and pleasurable aspect of the gift giving (and getting!) experience itself. It intensifies the enjoyable feelings that are already there.
The feeling of positive anticipation is actually hard-wired into us, producing neural activation in the nucleus accumbens, a region of the brain associated with the experience of pleasure and reward.
Another benefit of delayed consumption is when enough time elapses between payment and consumption, the experience of consumption can actually feel ‘free.’ Resorts and cruise lines that offer all-inclusive packages are designed so that when people are indulging in the limitless buffet offerings, for example, the eating experience actually feels ‘free.’ (And ‘free’ feels like a wonderful thing!)
Designing for Delay
So, when does designing for the delay of consumption bring the biggest happiness payoff? According to Elizabeth Dunn and Michael Norton, authors of the book, “Happy Money,” there are three criteria:
- When the delay beckons the opportunity to seek out enticing information that builds positive expectations and excitement about the consumption experience
- When anticipation of the event (or purchase) increases the pleasure of eventual consumption
- When the consumption experience itself will be fairly fleeting
Businesses are wise to leverage the power of delay and positive anticipation when designing (delightful) consumption experiences for their customers. In their book, Dunn and Norton talk about how a company called Birchbox has accomplished this. For a small fee that is paid in advance, Birchbox members are sent a box filled with beauty samples every month. But members do not choose what will be in the box, nor are they informed as to what the box will contain. When the boxes are ready to ship out, the company sends notification and Twitter becomes aflutter with excited members trying to guess what will be in the box.
The ambiguity of what the box will contain adds to the ‘surprise’ element. But also, since members have pre-paid the fee, thereby distancing payment from consumption, many tend to forget about the fact that they paid for the service. Each month’s delivery, then, tends to feel free. And people love free!
Points to Ponder…
In this article, we’ve touched on some of the potential benefits of well-designed delay, which leaves us with a few thoughts to consider:
- Since people value (pleasant) future events more highly than those that have already occurred, it may be that pre-paying for a product or service results in a willingness to pay a greater amount—or to at least feel better about paying more.
- Substantially separating payment from consumption can make the actual consumption of products or services feel free, thereby reinforcing the feeling that the customer got a good deal.
- Finding ways to build anticipation—by creating intrigue, suspense, and excitement—captures customer attention and can help to build community and a following for your products and services.
- Although designing for delay has definite advantages and payoffs, it also comes with certain challenges. Because we live in a high-tech world where people have become accustomed to ‘instant’ delivery of products and services, it’s difficult for businesses and providers of consumer goods to overcome consumer impatience and the inevitable power of ‘now.’ And in general, people don’t readily realize or appreciate the benefits that ‘delay’ can bring to the consumption experience itself.
But challenges also bring opportunities. The Internet café discussed in the first part of this article might do well to reconsider their payment structure in order to more fully leverage the implications of separating payment from consumption. For example, how might requiring pre-payment for time spent at the café affect customers’ level of enjoyment? The potential outcomes might significantly benefit the company and the customers!
Designing for delayed consumption can apply to all kinds of scenarios. Do you plan to release a new product or service, or have you scheduled an upcoming event that customers are looking forward to? How can you leverage the power of ambiguity, for example, to build anticipation and set Twitter aflutter?
The design of experiences—even those concerned with the timing of payment and consumption—can be a significant driver of customer satisfaction, as well as company profits. If you’re looking for help with removing friction from your payment process, give us a shout, we’d love to see how we can assist you!