This post is authored by Nate Decker, PhD, Principal Behavioral Scientist at Symend, and Tara Giller, PhD, Senior Manager of Behavioral Science at Symend. Nate brings more than a decade of industry experience applying behavioral science principles and techniques across a wide range of B2C, B2B, NGO and government organizations. Tara is an analytics and behavioral science leader with experience in e-commerce and financial technology. She has over seven years of experience leading data and research initiatives in corporate settings.
As inflation increases and forecasts suggest an impending recession, your customers may develop what is called a scarcity mindset. The inflation of everyday essentials and other pending risks or realities, like layoffs, have a significant impact on your customers’ finances, as well as their mindset. During times of distress, your customers’ mindset can shift in unexpected ways. First, they may experience nearsightedness, causing them to hyper-fixate on solving one problem and avoid all other priorities. They may also experience limited or reduced mental bandwidth. Both of these are signs that your customers are experiencing a scarcity mindset, which can inhibit decision-making and directly impact engagement. Enterprises need to be aware of these challenges when interacting with customers to maintain strong engagement while fostering financial wellness.
What is a scarcity mindset?
Think back to a situation outside of your control that left you with limited time, money or energy – perhaps you suddenly lost your job during the COVID-19 pandemic due to changing market conditions. This is an example of a circumstance that could put your customers in a scarcity mindset.
According to Deloitte Insights, scarcity requires constant trade-offs which can lead to an intense focus on unmet needs, distraction from other priorities and mental fatigue. Experiencing a scarcity mindset can lead to poor decision making and prioritization. This creates significant barriers for companies looking to engage with their customers during times of uncertainty.
What is nearsightedness and how does it affect customer engagement?
Nearsightedness, also known as myopia, is when someone subconsciously dedicates their focus to resolving a specific resource constraint that they perceive to be critical. For example, customers experiencing financial stress after a large, unexpected expense or a sudden job loss may hyperfocus on solving this primary problem, while ignoring other priorities.
Typically, people understand that if they don’t pay their bills, debt will add up over time and potentially become unmanageable. However, when someone is experiencing a scarcity mindset, their perceptions of consequences can become skewed. Nearsightedness can cause your customers to overvalue immediate benefits at the expense of future ones. When your customers are consumed by a specific issue, they may fail to make small investments now, like paying off debt, even when the future benefits can be substantial. Consumers who are anticipating future scarcity often experience a similar mindset.
To effectively communicate to customers experiencing nearsightedness, you need to make it easy for them to take action on other tasks, while ensuring that your offers add value. Send hyper-personalized and relevant offers that appreciate the customer’s frame of mind – in other words, engage your customers with empathy during difficult times by being helpful. Truly engaging with empathy means understanding your customers and adapting the way you interact based on those insights. Other types of communication are likely to be ignored.
Scarcity and nearsightedness are affecting your customers’ mental bandwidth
Everyone has a finite capacity for making decisions and your customers are already faced with an average of over 35,000 decisions every day. A scarcity mindset influences and strains your customers’ ability to make everyday decisions.
Your customers’ mental bandwidth will become limited because the majority of their energy is focused on one priority. A lack of mental bandwidth can impair judgement, potentially leading your customers to make poor financial decisions. To lighten the mental load, your customers need digital tools and communications that are easy to use and easy to understand, without constant reminders or irrelevant distractions.
How you can invest in your customers’ long-term financial wellness
To prevent disruptions to the effectiveness of your customer engagement strategy, try to anticipate when your customers may be experiencing a scarcity mindset so you can adjust your strategies accordingly.
Be clear and thoughtful
Simplify messaging, offers and options so your customers can easily engage – remember that the messaging may seem simple to you, but someone experiencing a scarcity mindset may become easily confused or frustrated, which can lead them to procrastinate or avoid the situation. Even worse, unclear messaging increases the risk of the customer making an impulse decision that isn’t right for them. Alternatively, your customers may feel overwhelmed and decide to call in to speak with someone for assistance so they don’t have to navigate the issue themselves. Designing clear and thoughtful communications can reduce inbound call volumes and keep your customers satisfied. To prevent your customers from feeling the need to call in, try to better empower them to complete the task themselves by simplifying the process or highlighting the positive outcomes associated with that action or offer.
Gather customer feedback
Every customer is unique and their perception of scarcity is based on their individual circumstances and motivations. If your customers are not engaging with your messages, you can request feedback or input to validate your assumptions about why they are disengaged. This can be done by providing multiple calls-to-action. For example, if you are sending out a new offer, provide options such as:
- “Accept” – customers engaging with this option can indicate that the offer was valuable and/or helpful
- “Learn more” – customers engaging with this option can indicate that more or different information is required for them to make a decision
- “Not interested at this time” – customers that select this option may think the offer isn’t the right fit or the information needs to be presented differently
More opportunities for feedback give you a better understanding of each customer so you can further adapt future outreaches. This allows you to make the content more relevant and easier to process.
Whether it’s time, money or some other resource, scarcity affects your customers in varying ways. Enterprises must be aware of these challenges to empathize with their customers, understand their behaviors and anticipate their needs. Effectively adjusting your customer outreaches to be hyper-personalized and relevant will improve customer satisfaction, helping to create loyal customers for life.
Download our 2022 consumer report, The Great Shift in Billpayer Behavior, to discover more about what’s driving consumer behaviors. Find out what support service providers can offer customers to overcome the impact of exhaustion and uncertainty, and to engage with them more effectively.