Page 57 - Selling the Invisible: A Field Guide to Modern Marketing - PDFDrive.com

Yeah, but I Like It

Here’s a good question: Why do people buy what they buy?
Many service marketers assume that buying decisions are fairly logical. A

prospect for a service adds up the cost and benefits of one service, compares it to
another’s, and chooses the service with the better score.

Providers of many services—accountants, lawyers, and financial services
particularly—are prone to this notion that people really are homo sapiens—wise
primates—who make wise, rational decisions based on objective analyses of
costs and benefits.

But seemingly sophisticated prospects for even sophisticated services do not
behave this way, as the strange case of Visa vs. American Express clearly
suggests.

As the judge for this case, consider the evidence. Visa cards are accepted in
almost three times more locations than American Express cards.

You can pay back a Visa card immediately or over time. You must pay on an
American Express card at the end of each month or suffer substantial penalties
and testy little notices from Chicago.

You pay $20 for a basic Visa card, and $55 for one from American Express.
Now, what truly rational people want from a credit card is utility relative to
price. If they are being logical, they want to be able to use the card wherever and
whenever they buy and have the option to pay their balance immediately to save
interest charges or over time, if necessary. Truly rational people also want to pay
as little as possible for those benefits.
A truly rational person, in other words, chooses a Visa card. Perhaps all of
Earth’s rational people do choose Visa cards. But that leaves approximately 25
million Americans who use American Express cards. Why?
Because of prestige, apparently. That is, American Express emphasizes that
“membership has its privileges,” and that privilege of membership in American
Express is in being part of an “elite” club, an enormous “elite”—25 million
people—by the way.
Logical?
Now, some people might argue that their services are different and that their
prospects are more rational than credit card buyers. But, dear service executives,
those American Express cardholders are prospects for your service, too. And few