Bottom Dollar Effect
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There was a study where people were asked to purchase movies each costing $10 each with some assigned credits. Some of the subjects were assigned a $30 credit while others were given $50.
After purchasing and watching 3 movies, these 2 groups were asked how they felt.
The results were rather interesting.
People with the $30 budget were less satisfied with their 3rd film than those with a $50 budget. Essentially people ($30 group) who had their budget depleted by the 3rd movie rated the experience negatively than those who still had some credit in their account.
The researchers then made another discovery. The negative experience was more profound in people who had difficulty earning a steady income. And it effects became even worse when the $30 group were told that their movie budget would not be refilled tomorrow.
They also found that the negative experience disappeared when the participants were told that their budget will be refilled soon.
This idea of associating negative emotions to a product that depletes the last remaining dollars from our budget is known as the bottom dollar effect.
Why do I market my courses in the middle of the month?
A lot of my subscribers are part of regions that get their salaries between the end of the first week and the beginning of the third week, so it helps to market it to them when they have a full wallet.
I’ve tried marketing to people during the end or the beginning of the month and the results are almost never as good as the middle of the month.
Even though my course starts during the beginning and end of the month, I make it a point to time my launch strategically to coincide with my audience’s payday.
Irrespective of whether you spend $5 or $5000, the experience of it can vary vastly depending on whether it is your first $5000 of the month or the last $5 of the month.
Feedback and review management processes can also be greatly enhanced by adding this factor to them. If you are asking for feedback when someone’s funds have depleted (ie; end of the pay cycle), you might end up seeing a negative trend in the feedback received.
The opposite too might be true, when people don’t have the feeling of being financially burdened they might end up associating your service positively.
You can use the same strategy if you running a subscription business. If the customer’s billing cycle falls during the end of their pay cycle, then they are more likely to negatively associate with your service and can churn at a higher rates.
A simple remedy in this case could be giving your customer a grace period of 14 days from billing or just shift the billing cycle by pro-rating.
Now that you know about this effect, take advantage of it.
Thanks for reading.
Do check out my growth marketing course.
It is starting on June 28th. All class recordings will be available for all students.
what are the best resources to learn more and deeply about 'bottom dollar effect'?