Sales Influence Moment #17 – Consumer Psychology of Refunds and Discounts


In this video I show how the method of a Refund can impact a buyer or client’s perception. The key take-away here is understanding the psychology of how the “endowment effect” works and how you can use it to create greater customer satisfaction.

The basic equation to remember here is: Pain of Loss > Pleasure of Gain. In the first scenario you experienced the ‘pain’ of having to give something back. In the second scenario you experienced the “unexpected” pleasure of ‘gain’ so you feel great.

Also, it’s worth noting that unexpected surprises (scenario 2) have a “magnifying effect” (i.e., people LOVE surprises over expected outcomes) which is why they’re great when used correctly to award clients or buyers for their loyalty or patronage.

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