That\u2019s why you need to understand the three main types of buyers. Research indicates that there are two extremes of spending \u2014\u00a0those who spend freely and those who spend carefully.<\/p>\n
Most people are somewhere in the middle, comprising the broad three types of buyers. Knowing who\u2019s who will help you better market your products.<\/p>\n
What I\u2019m suggesting is an advanced form of market segmentation. Just as you cater to certain market segments based on demographic features, you can also cater directly to certain types of buyers.<\/p>\n
I\u2019m going to show you how to do this.<\/p>\n
First, I\u2019m going to explain the three types of buyers. Then, I will explain their characteristics. Next, I\u2019ll share some pointers on how you can appeal to each buyer type. Finally, I\u2019ll provide a little insight into how to understand the buyer types that are frequenting your business or website.<\/p>\n
There are three types of buyers.<\/h2>\n
The first thing to understand is that there are three main types of buyers:\u00a0the average spenders, the spendthrifts, and the tightwads.<\/p>\n
The labels here are probably enough explanation, but let me dig in a little deeper so you can understand how these three types of buyers can influence your marketing efforts.<\/p>\n
Image from Helpscout.com.<\/a><\/p>\n In the first place, you have spendthrifts. This group is the smallest percentage of buyers, but they are the most fun to market to. Why? Because they spend with no hesitation.<\/p>\n Spendthrifts feel little to no \u201cpain\u201d in making a purchase. This is the main reason that spendthrifts are spendthrifts. It\u2019s unfortunate that people tend to judge spendthrifts with epithets such as \u201cselfish\u201d or \u201cmaterialistic\u201d or \u201ccompulsive.\u201d It\u2019s more accurate to describe spendthrifts in terms of where and when they experience pain in the purchase process.<\/p>\n They don\u2019t feel pain leading up to the purchase. In other words, they do not anticipate purchase pain. If they do feel pain, it\u2019s not until after the purchase is finalized.<\/p>\n The driving force of a spendthrift is their lack of buying pain. They don\u2019t feel a twinge of remorse when they pull out their credit card to make a purchase. Thus, they spend easily and freely.<\/p>\n On the other end of the buyer spectrum are the tightwads.<\/p>\n Tightwads do not enjoy spending money. They perceive money as a non-renewable resource. It\u2019s meant for saving, not spending.<\/p>\n The reason why tightwads hate to pull out their wallet is because spending hurts. <\/em>They feel a high level of buyer\u2019s remorse<\/a>, which can happen before, during, or after a purchase, but especially before.<\/p>\n Often, such tightwad tendencies are irrational, but that\u2019s because pain doesn\u2019t affect people on a rational basis. (Pain affects us emotionally, not rationally.) This is true for spendthrifts, too, only in the opposite way.<\/p>\n Tightwads who are in firm control of their thinking can <\/em>be persuaded, but it\u2019s hard. I\u2019ll provide a few tips in the section, \u201cHow to Appeal to Each Buyer Type,\u201d towards the end of this article.<\/p>\n Now we come to the average Joe spender. This is where the majority of people are.<\/p>\n Average spenders are more likely to respond to persuasion and make an informed decision. Spendthrifts and tightwads have both already made up their mind, sort of. There\u2019s little you can do to persuade them. The spendthrift has decided to buy. The tightwad has decided not <\/em>to buy.<\/p>\n The average spender, however, is ready to think about it. This is where you put forth your greatest effort.<\/p>\n This all sounds rather neat and clean \u2014 three types of buyers, nice little statistics.<\/p>\n In the real world, it\u2019s not all that tidy. Here are some of the caveats:<\/p>\n In other words, we\u2019re all at different points on a continuum, depending on what product it is and where we\u2019re at in life. This means things are a little more complicated than a simple pie graph.<\/p>\n In spite of this, we can make some fairly accurate assessments of buyer behavior based on studies. The study from which most of my data is drawn is the excellent paper, \u201cTightwads and Spendthrifts<\/a>,\u201d by Scott Rick, Cynthia Cryder, and George Loewenstein of Carnegie Mellon University.<\/p>\n In the discussion below, I\u2019m going to focus on the two noticeable extremes of buyers \u2014 spendthrifts and tightwads. Understanding the average spender is as straightforward as thinking of a mashup of tightwad and spendthrift.<\/p>\n If we can understand the extremes, we can identify the middle.<\/p>\n Now it\u2019s time to explore each of these buyer types. Besides just being \u201cspendthrifts\u201d or \u201ctightwads,\u201d what are their specific characteristics?<\/p>\n Spendthrifts are spendthrifts, no matter how much money they make. <\/em><\/strong><\/p>\n Spendthrifts have a wide range of incomes. There are tightwads all along the income spectrum. You can have rich spendthrifts and poor spendthrifts.<\/p>\n The rich spendthrifts are more noticeable, because the objects on which they spend their money are more lavish \u2014 yachts, houses, vacations, etc. Spendthrifts in a lower income strata make purchases that, when compared to their total income, are actually just as extreme.<\/p>\n It doesn\u2019t matter how much income the spender has. Their purchasing habits are just as likely to be in full force whether they make $10,000 per year, or $500,000 per year.<\/p>\n Image from Social Science Research Network<\/a><\/p>\n Note:\u00a0 In the chart above \u201cunconflicted\u201d refers to what I call \u201caverage spenders.\u201d<\/p>\n They don\u2019t think about the consequences of spending, but rather the benefit of gaining the product or service.<\/em><\/strong><\/p>\n Spendthrifts really do <\/em>think long and hard about a purchase. They may even wait to make a purchase, carefully considering it.<\/p>\n But what are they thinking about? They are thinking about the joy and delight of the purchase, not the pain. They consider everything after <\/em>the point of purchase. That\u2019s one of the reasons why they have no pain; they\u2019re focused on the pleasure.<\/p>\n Spendthrifts are usually younger. <\/em><\/strong><\/p>\n Studies on spendthrifts indicate that younger buyers are more likely to be spendthrifts than older buyers.<\/p>\n Often a person may pass through several gradations of spending styles as they age. For example, a 20-something will have a spendthrift stage, but this style of spending will level out in later life.<\/p>\n Another issue to keep in mind is that someone may be a spendthrift in one <\/em>area, but not another. Ironically, a spendthrift may be extremely cautious and controlled in, say, food expenditures, but have no problem spending thousands of dollars on electronic gadgetry.<\/p>\n In college, spendthrifts are more likely to study the humanities, communication, and social work. <\/em><\/strong><\/p>\n These fields of study \u2014 more art and less science \u2014\u00a0do not require rigorous attention to metrics, numbers or other features. Instead, they are more related to feeling and emotion.<\/p>\n Spendthrifts lack self-control in spending situations. <\/em><\/strong><\/p>\n In any other situations, spendthrifts may be able to exercise high levels of self-control. When it comes to spending, however, they have difficulty exerting any level of control. Their main controls in spending situations are strict economic factors such as a maxed out credit card or a low credit score<\/a>.<\/p>\n Spendthrifts are more likely to carry debt. <\/em><\/strong><\/p>\n According to the research nearly 60% of spendthrifts have a balance on their credit card. In fact, a full 8% of spendthrifts have over 20,000 in credit card debt.<\/p>\n Image from Social Science Research Network<\/a><\/p>\n Spendthrifts aren\u2019t savers. <\/em><\/strong><\/p>\n It\u2019s probably obvious that spendthrifts aren\u2019t savers. Just as they don\u2019t feel the pain of purchasing, they don\u2019t feel the pain of not saving <\/em>either. Anticipating purchase pain of any kind is unlikely.<\/p>\n Tightwads are more likely to have a bachelor\u2019s degree. <\/em><\/strong><\/p>\n Education and spending habits are correlated. More tightwads have a college education than spendthrifts. This doesn\u2019t indicate intelligence levels, as much as it does overall life foci and objectives. Ironically, however, those who do <\/em>attend college have made or are making a very big, very expensive, and often debt-laden purchase \u2014 education itself.<\/p>\n In college, tightwads are more likely to study engineering, computer science, or natural science. <\/em><\/strong><\/p>\n Contrast this with the field of study for spendthrifts \u2014 humanities, communication, and social work. There is a clear difference between engineering and social work.<\/p>\n Tightwads tend to feel the pain of a purchase just before they make the purchase. <\/em><\/strong><\/p>\n Spendthrifts, as I mentioned above, don\u2019t feel this pain until after they make the purchase. This moment of pain can prevent the purchase, in the case of tightwads. For spendthrifts, however, it\u2019s too late.<\/p>\n Tightwads are often overly self-controlled. <\/em><\/strong><\/p>\n Their powers of self-control are so strong, at least in the area of spending money, that they can\u2019t suspend their powers of self-control when it would be beneficial to do so.<\/p>\n Tightwads are savers. <\/em><\/strong><\/p>\n A surprising 28% of tightwads have over $250,000 in savings. Where the spendthrifts don\u2019t save, the tightwads surely make up for it.<\/p>\n Image from Social Science Research Network<\/a><\/p>\n What about average spenders \u2014 the vast middle metric?<\/p>\n Rather than sequentially consider their individual characteristics, it\u2019s important to instead consider them as the balance between the tightwad and spendthrift.<\/p>\n Average spenders think about purchases, but don\u2019t overthink it. They don\u2019t focus exclusively on the pleasure or the pain of a purchase. They think about both. They decide on a purchase after<\/em> looking at the facts and reading the marketing copy.<\/p>\n This is the average spender.<\/p>\n Most tightwads are predisposed to say \u201cno\u201d to a purchase, hardening their resolve like a mom on a shopping trip with toddlers as they march down the candy aisle. But their \u201cno\u201d is not impenetrable. Here\u2019s how you can break through.<\/p>\n Use data. <\/em><\/strong><\/p>\n Numbers don\u2019t lie, and many tightwads are numbers-driven. (Remember, these people were engineering majors.)<\/p>\n A buyer with a numbers-driven mindset is going to make decisions based on numbers. If you can show them charts, graphs, statistics, and studies, they are more likely to switch on their rational mind, respond to the numbers, and make the purchase.<\/p>\n Focus on cost savings. <\/em><\/strong><\/p>\n A tightwad anticipates the pain of a purchase. What can counteract this pain? The pleasure of saving.<\/p>\n Buying <\/em>something hurts. For the tightwad, it feels like they are losing something. However, if you can show how much money the tightwad will save, <\/em>this counteracts the pain of the purchase. If the pleasure of saving can overcome the pain of spending, then you have a buyer.<\/p>\n Show them the function. <\/em><\/strong><\/p>\n Tightwads are willing to buy for utilitarian purposes. Show that your product or service fills a need, and show how <\/em>that need is filled.<\/p>\n Studies show that spendthrifts are likely to make purchases that give them pleasure, such as the luxury of a feel-good back massage or a day at the spa. This isn\u2019t going to fly with the tightwad. Instead, they need to hear that the back massage will enhance the longevity and strength of their back, or that the spa treatment will improve their productivity at work.<\/p>\n You don\u2019t really need to focus on the spendthrifts. They will buy with or without your persuasive techniques. That being said, there are a few things that can improve your profitability with the spendthrift buyer.<\/p>\n Focus on the pleasure. <\/em><\/strong><\/p>\n Spendthrifts are more likely to buy for pleasure. This \u201chedonic motivation<\/a>\u201d means that they have an intense interest in things that will provide them with adventure, gratification, status, or some other perceived emotional need.<\/p>\n Your goal is to dish up the greatest amount of pleasure, making it easier for them to focus on this when they consider a purchase.<\/p>\n Make the price higher.<\/em><\/strong><\/p>\n A spendthrift is not blind to price. They think <\/em>about it, but only insofar as it affects their perception of the product\u2019s pleasure-giving ability.<\/p>\n If the price is higher, they will consider the product to be more valuable or more enjoyable. For example, if the standard rate of a hotel room is $195 per night, than a room that costs $625 per night will be at least three times <\/em>as enjoyable in their estimation.<\/p>\n A higher price will not drive away spendthrifts. Instead, it may actually attract them.<\/p>\n Add on fees. <\/em><\/strong><\/p>\n Spendthrifts are more likely to pay extra fees.\u00a0 In one study analyzing the responses of spendthrifts and tightwads, researchers tacked on an extra fee to a purchase. It was only $5, but spendthrifts were five times as likely to pay it than tightwads.<\/p>\n Shipping costs or handling fees may drive away some users, but it won\u2019t have a negative impact on the purchase of a spendthrift.<\/p>\n You should spend more of your time working to appeal to the average spenders.<\/p>\n The main reason for this is because they are most <\/em>likely to respond to persuasive techniques. You get to make up their mind based on the power of your persuasion and data.<\/p>\n I suggest that you use tactics such as increasing your traffic<\/a> to pull in a higher number of visitors, conducting conversion optimization<\/a>, and improving your copywriting to make it more persuasive<\/a>.<\/p>\n![\"buyer](\"https:\/\/ceblog.s3.amazonaws.com\/wp-content\/uploads\/2014\/12\/buyer-1.png\")
<\/a><\/p>\nSpendthrifts \u2014 15% of the population<\/h3>\n
Tightwads \u2014 24% of the population<\/h3>\n
Average Spenders \u2014 61% of the population<\/h3>\n
Is it all this tidy?<\/h3>\n
\n
Characteristics of the Buyer Types<\/h2>\n
Spendthrifts<\/h3>\n
<\/a><\/p>\n<\/a><\/p>\nTightwads.<\/h3>\n
<\/a><\/p>\nAverage spenders.<\/h3>\n
How to Appeal to Each Type of Buyer<\/h2>\n
How to appeal to tightwads. (It\u2019s hard.)<\/h3>\n
How to appeal to spendthrifts. (It\u2019s easy.)<\/h3>\n
How to appeal to average spenders (It\u2019s important.)<\/h3>\n
How to Figure out What Type of Buyers You Have<\/h2>\n