Digital Era Creating More Spending

Featured blog by Lewis Robinson, business consultant specializing in social media marketing

Convenience has always played a role in the way that people shop. In general, the odds of a person making a purchase increase as the convenience of making that purchase increases. This isn’t the only factor in the decision-making process, but it is significant enough that every business needs to think about it. In particular, they need to think about the ways in which digital shopping and finance have made it easier to spend money than ever before.

How It Encourages Spending

Digital financial tools, such as credit cards, have a significant impact on the way that people think about shopping. Researchers have found that people have trouble thinking about the cost of a purchase when they are not using physical money. Instead, they focus almost purely on the benefits of the purchase. This changes their cost-benefit analysis so much that governments have found that they can charge higher tolls for people who use digital payment methods than those that use paper currency. The fact that purchasers don’t think about the cost of the purchase until the bill arrives means that some customers will regret their actions, but that rarely prevents them from making more impulsive buying decisions in the future.

Digital payment can also encourage impulse buying by reducing the time that the customer has to think. People usually make impulsive purchases to get immediate emotional gratification, and the importance that a person puts on that immediate gratification compared to the long-term impact of the choice tends to drop as they spend more time thinking about the choice.

Digital shopping simply offers less time to think, so the odds of a customer making an impulsive purchase go up. People who buy items in person can think about their decision while they go through the store, put the box into their cart, and head to the register. People who make their purchases on the Internet simply click on a few links, which is much faster. Even the act of paying with a credit card instead of cash cuts down on thinking time, since it takes longer to count out coins and bills than it does to swipe a card.

Avoiding Problems

Business owners are as human as their customers, so they aren’t immune to these psychological tendencies. An impulsive decision can ruin a business, so they need to stay aware of the problem and make an effort to avoid it. Fortunately, technology offers a way to do precisely that.

Financial responsibility is built on awareness. Digital shopping can be dangerous because it makes it easy to buy things without remaining aware of the consequences. A virtual bookkeeper can solve that problem by providing that awareness in a convenient, digital form.

This type of service will put all of the financial information that the business has in a file that the business owner can access while they shop. The shopper still needs to pause to look at the information, so this won’t work as a substitute for discipline, but the convenience makes it much easier to do that. It also makes it much easier to record the transactions as they happen, so the rare impulsive purchase that does slip through will get documented properly.

Simple programs can also make a difference. People who are worried about irresponsible shopping at specific websites can simply block the website. They can still shop there as long as they have the password to remove the block, but the added time will give them longer to think about their purchase. For best results, block the confirmation page that comes up before finalizing a purchase.

The End Result

Digital currency is both a blessing and a curse for businesses. On one hand, it makes people much more eager to spend money, which has lead to a vast increase in sales for many companies. On the other hand, it can also lead managers to behave irresponsibly with company funds. There is an art to balancing the two factors to get the best result, and it’s an art that every business owner needs to master if they want to prosper in a digital marketplace.

Author Bio

Lewis Robinson is a business consultant specializing in social media marketing, CRM, and sales.  He’s begun multiple corporations and currently freelances as a writer and business consultant.