The very recent vote by Great Britain to leave the European Union – dubbed by media as the Brexit — has sent shock waves through financial markets, political institutions, and businesses worldwide. Despite polls prior to the election indicating that the vote to leave would prevail, the world was taken seemingly by surprise when it came to pass. The pound sterling tumbled to a 31-year low. British political parties were thrown into upheaval. Stock markets around the globe took dives. And the fall out is far from over. But, apparently, many who voted to leave the E.U. are now saying that they wish they could take back their vote. Kelvin Mackenzie, a columnist for the British Sun newspaper which backed the leave, said he was suffering from “buyer’s remorse,” regretting his vote. He was not alone. Emily Tierney, a columnist for the Independent newspaper, wrote “If I could take my vote back now, I would. I’m ashamed of myself.” They are not alone. A Survation poll carried out for the Mail on Sunday after the Brexit vote found that of the 17.4 million who voted to leave, 1.1 million say that they wish they had voted Remain. Given that the leave vote prevailed by only 4% of the votes cast – or 1.2 million votes — that is a monumental case of Buyer’s Remorse.
The truth is that any transaction that involves the ‘purchase’ of a product, service or idea must contend with the possibility and consequences of “buyer’s remorse.” For retailers, “buyer’s remorse” is part of what fuels returns. So what is Buyer’s Remorse anyway? Why does it happen? Is there a way to curb or eliminate Buyer’s Remorse completely?
What is Buyer’s Remorse?
The strict definition of buyer’s remorse is the sense of regret after having made a purchase. It is frequently associated with the purchase of an expensive item such as a boat, car or house. It may stem from fear of making the wrong choice, guilt over extravagance, or a suspicion of having been overly influenced by the seller.
Buyer’s remorse is thought to arise from or is a byproduct of “cognitive dissonance”. Psychology defines cognitive dissonance as the mental stress or discomfort experienced by a person who:
- holds two or more contradictory beliefs, ideas, or values at the same time,
- performs an action that is contradictory to one or more beliefs, ideas, or values, or
- is confronted by new information that conflicts with existing beliefs, ideas, or values.
This certainly happens with purchases and votes. American social psychologist Leon Festinger’s theory of cognitive dissonance focuses on how humans strive for internal consistency. A person who experiences inconsistency (dissonance) tends to become psychologically uncomfortable, and is motivated to try to reduce or eliminate this dissonance—as well as actively avoid situations and information likely to increase it.
What factors affect Buyer’s Remorse?
Post-decision cognitive dissonance arises when a person must make a difficult decision, such as a heavily invested purchase between two similarly appealing choices. Factors that affect buyer’s remorse include:
- the resources invested,
- the involvement of the purchaser,
- whether the purchase is compatible with the purchaser’s goals, and
- what positive or negative evidence the purchaser encounters post-purchase that confirms or denies the purchase as a good idea.
The amount of dissonance produced by two conflicting cognitions (beliefs, ideas or values) or actions depends on two factors:
- The importance of the beliefs, ideas or values. The more that the elements are personally valued, the greater the magnitude of the dissonant relationship.
- The ratio/commitment of the beliefs, ideas or values to the purchase. This is the proportion of dissonant to consonant elements.
The greater the degree of dissonance between the purchase and the belief/idea/value, the greater the pressure to reduce the dissonance. So if a person purchases a boat, but then gets home and is reminded by an angry spouse that they have committed to save money for retirement and their kids’ college funds, the dissonance could be so great as to cause Buyer’s Remorse. Here is what someone experiencing buyer’s remorse might think/feel:
|Emotions||I was in despair|
|I resented it|
|I felt disappointed with myself|
|I felt scared|
|I felt hollow|
|I felt angry|
|I felt uneasy|
|I felt I’d let myself down|
|I felt annoyed|
|I felt frustrated|
|I was in pain|
|I felt depressed|
|I felt furious with myself|
|I felt sick|
|I was in agony|
|Wisdom of purchase||I wonder if I really need this product|
|I wonder whether I should have bought anything at all|
|I wonder if I have made the right choice|
|I wonder if I have done the right thing in buying this product|
|Concern about trust||I wonder if I’ve been fooled|
|I wonder if they spun me a line|
|I wonder if there is something wrong with the deal I got|
Can Buyer’s Remorse be Eliminated?
To eliminate buyer’s remorse, the cognitive dissonance must be eliminated (either by the person or an outside force). People desire consistency or alignment between their expectations and their reality. Because of this, people engage in a process called dissonance reduction to bring their cognitions (beliefs, ideas and values) and actions in line with one another. Establishing this uniformity then lessens psychological tension and distress. Dissonance reduction can be achieved in four ways. Let’s use an example. A woman buys a leather coat even though she is a vegan and doesn’t believe in using animal products. To reduce dissonance, she might:
- Change behavior or cognition so that they align (“I will return the leather coat to the store.”)
- Justify behavior or cognition by changing the conflicting cognition (“The cow was going to die anyway for people to eat beef; might as well not let the pelt go to waste.”)
- Justify behavior or cognition by adding new cognitions (“I donate money to the World Animal Protection Fund that is focused on ending serious forms of animal cruelty.”)
- Ignore or deny any information that conflicts with existing beliefs (“Owning a leather coat cannot really be considered a form of animal cruelty.”)
There are many situations in which a person will need to reduce the cognitive dissonance between their beliefs/ideas/values and their actions rather than feel Buyer’s Remorse, such as:
- To minimize regret of an irrevocable choice. Such as with the Brexit vote, many Brits may feel even more justified that their vote to leave the E.U. was the right one despite the painful economic and political fallout simply because they cannot change their vote.
- To justify behavior that opposed their view. A person will judge people who buy gas-guzzling SUVs less harshly once they themselves buy a large vehicle that has a poor efficiency rating.
- To align one’s perceptions of a person with one’s behavior toward that person. This is dubbed the Ben Franklin Effect because he first observed and wrote about this way of resolving cognitive dissonance. A person who has performed a favor for someone is more likely to do another favor for that person than they would be if they had received a favor from that person. The explanation is that a person internalizes that the reason for helping was genuine esteem. “I convince myself that I must like the person if I helped him.” The opposite case is also believed to be true, namely that a person will come to hate someone whom he wronged. The person will de-humanize the other person to justify the bad things he did.
- To reaffirm already held beliefs. Confirmation bias refers to how people read or access information that affirms their already established opinions, rather than referencing material that contradicts them. This bias is particularly apparent when someone is faced with deeply held beliefs such as when a person has ‘high commitment’ to their value or ideal.
The desire for internal consistency of one’s ideas, beliefs and values with their behaviors is very strong. So when there is dissonance, such as Buyer’s Remorse, a person simply needs ways in which to align their values with their behavior. For example, a person with Buyer’s Remorse over the purchase of a gas-guzzling vehicle might be reminded that a growing family needs a larger vehicle, and that the cost of gas is half of what it was a year ago. Or the person with Buyer’s Remorse over an investment might be given case studies and testimonials of other investors who achieved higher-than-expected returns on similar investments. Ultimately, Buyer’s Remorse need not necessarily kill a deal or end a sale. With the proper information from a savvy salesperson, buyer’s remorse can be eliminated once the dissonance is resolved.
Quote of the Week
“To reduce buyer’s remorse, erase doubt.” Anonymous
© 2016, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.