Hyperbolic discounting is one of the cornerstones of behavioural economics, and centres around the premise that we show a preference for rewards that arrive soon rather than later. We effectively discount the value of that later reward, to the point that offered £5 now versus £10 in a month, studies predict the majority of us will take that £5 today, thanks very much.

Using hyperbolic discounting in marketing is about leveraging our irrational emphasis on what matters today and a preference for immediate payoffs.

The ramifications of our brain having a strong desire for present satisfaction is huge – how is that pension plan coming along? – and should be handled with care.  Unfortunately, as a couple of the next examples show, it often isn’t.

Credit where credit’s due

Store credit and credit cards are a powerful enabler of consumption, enabling us to have right now what we technically can’t. The payoff is interest, resulting in a higher price in the future, but that pain is delayed until a later date and we don’t feel it now.

This offering has been around for years and an ever increasing number of stores have some type of credit option to cash in on this cognitive weakness. A softer alternative is fast delivery options.

Get it to them fast

Being able to get that thing you want right now is almost always the most desirable option. Brands meet this with delivery in as little as two hours, and click and collect options that enable you to reserve online and drive to store where you can have that item in your hands 15 minutes later.

If you aren’t pandering to your customers desire for immediacy, chances are another brand will be.

Top tips

  • Leverage scarcity – another bias that primes us to shop impulsively, when stuff is running out or sold in a limited run, the FOMO kicks in.
  • Reduce friction – removing the amount of hurdles between a person and what they want will increase the likelihood of them getting it. No one likes lengthy checkout, lead and delivery times – when these are unavoidable you may have seen customers jump ship rather than endure the wait.
  • Tempt with great visuals – remember you are trying to seduce the customer, so standard product shots on a white background might not cut it. Look at how brands like Caspa and Harry’s peddle their wares on Instagram, and try not to want to buy.
  • Make it seem like a no brainer – offer cooling off and trial periods that allow customers to change their mind. This happens to be another tactic employed by Simba and their bed in a box brethren.

This is an excerpt from our latest free report: Applying Behavioural Economics in Marketing

For a short time only we are also offering a free one-hour training workshop to inspire, surprise and expand the minds of your brand and marketing teams on some of marketing’s hottest topics.

By Greg Copeland

Behavioural Strategist