Research is often like the weather: if you don’t like it, just wait five minutes. After copious research studies have revealed that consumers now prefer to spend their money on experiences over material possessions – and with declining retail spend providing corresponding correlation, if not causality – along comes a new study from the Hungarian Academy of Sciences (HAS) to argue that experiences in fact provide no measurable increase in happiness or satisfaction than material goods. Does this mean we should double down on merchandise reward catalogs?
By Rick Ferguson
Slate has the story, which reveals that the HAS study relies on extensive survey data deriving from a methodology different from most consumer surveys. Money quote:
“[Researchers] Hajdu and Hajdu analyzed 10,000 responses of survey data from a major Hungarian household survey project, the Tárki Household Monitor. The survey contains a score from 0 to 10 that quantifies the respondent’s satisfaction with his or her life, as well as a measure of his or her household spending over the last month, last three months, and last 12 months. Using this survey data, the researchers split the respondent’s spending into ‘experiential’ and ‘material’ purchases, where experiential purchases were purchases in entertainment, sports, and vacation, while material purchases were any purchases of clothing and electronics. After converting the raw spending data into the percentages of each family’s total income, Hajdu and Hajdu analyzed correlations between experiential spending and material spending and life satisfaction, controlling for personal characteristics. They found that the difference in satisfaction conferred between the different purchase types was both incredibly small and not statistically significant.”
In other words, it’s the spending of money that confers self-actualization, rather than the specific category of spending. As the Slate piece notes, this single study doesn’t refute all of the studies claiming to reveal consumer preference for experiences; the HAS study merely found no statistical significance between the two types of purchases when analyzing data from this particular survey.
What are we to make of this development? Does it mean that merchandise-laden reward catalogs are bound to remain in vogue? Should we short travel stocks? The answer may be found in the Slate article’s conclusion:
“For the readers at home, perhaps the strongest takeaway is more simple: Don’t base your life choices around small bits of science that shows up in the news. But research isn’t meant to be exciting; it’s meant to be true. I suspect [the researchers] would be the first to admit their work is merely one study that joins other studies in the subject of happiness and consumption. It doesn’t support the consensus, but that’s fine. That’s science.”
Neither should marketers base their loyalty rewards strategy on “small bits of science that show up in the news.” Instead, listen to your own customers – they’ll tell you what rewards resonate with them. The closer you get to meeting the self-actualization needs of individuals, the more likely you are to build strong relationships with you. That’s science.
Rick Ferguson is Editor in Chief for the Wise Marketer Group.