What is mental account?

People always put their money in different mental account. For example, living expense, family improvement, self improvement, social networking, entertainment, etc. you might think they all under one big pocket, but they are split to the tiny mental account even beyond your imagination.Case: You lost $80 before you plan to see a musical If you lost your monthly public transportation pass that worth $80, most people still willing to see the musical. However, if you lost $80 that is the money you plan to purchase the musical ticket, most of people will give up the plan.

How to use it?

Scenario 1 Chocolate factory

When business plan the marketing, they design the product as a gift for friends, which is belong to the social networking mental account. It is much better if they design the chocolate as self-using, which is belong to the living expense mental account.

Scenario 2 House renovation

The contractor is displaying his plan to the owner. If the contractor can let the owner understand that his plan can help the owner get extra 100 square footage, it definitely will push the owner to choose him. The owner will consider that the contractor can help saving money from house purchasing because of the extra footages, instead of considering that the owner spend more money on renovation.

Today’s point — how to lead your customer?

Mental accounting, it means that people split their money in different using with different amount. You have to change the cognition of your product or service. It will let your product/service move from the mental account which the customer is not willing to pay to the one that the customer willing. Then you will see that the stingy customer turn to generous. Actually your customers are not really stingy, they just not willing pay from THIS mental account.

Challenge

Show us some good example that you see a business changed their product in the customers mental account.

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