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Three Ways to Get the Most Happiness for Your Dollar

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If you found $20 on the ground what would you spend it on and why? (Get creative.)

Yesterday, members of The Motherhood team were asked this question during an event hosted by the Institute for Entrepreneurial Excellence, featuring Michael Norton, an associate professor of business administration at the Harvard Business School. Norton is a widely recognized expert on the behavioral economics of investment: how investing time, money and labor can influence the way people come to value things from products to personal relationships.

Norton shared surprising data on the many ways prosocial spending – or spending money on others, rather than yourself – can help you get the most happiness for your dollar, create happier employees and provide “happier” products for your customers.

Our favorite quote by Michael Norton from the event was: “Rather than collecting people, spend time connecting with people.”

Norton expanded on these concepts and how they can easily be applied in daily life, corporate HR and marketing campaigns:

Buy experiences, not things.

Experiences increase in value over time as we cherish the associated memories. When we personally make things, they become a source of happiness in our lives. This can be applied to marketing tactics as well – creating a great consumer experience leads to a higher perceived value. Norton drove this point home when he said, “It’s easy to compare stuff. It’s not easy to compare experiences. Therefore, with experiences, everybody wins.”

Do not underestimate the value of time.

Often, we value our time even more than money. Using time as currency, such as giving time back to employees as a bonus, can be just as valuable, create big rewards, and improve corporate morale.

Invest in others and in turn you are investing in yourself. 

Prosocial spending leads to a a higher perceived value of a dollar. Designate a set amount of money for employees/customers to donate to a charity of their choice on the company’s behalf, rather than the company designating a single blanket donation. This creates a higher sense of philanthropy spread throughout the entire organization.

There has been a shift in purchasing behavior as consumers focus on fulfillment through experiences, not things. In the marketing world, leveraging advertising campaigns to create experiences around products and brands is key in connecting with modern day consumers, which includes more than just millennials.

What are some ways you get more happiness for your dollar?

Consumers want experiences, not things

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I (Nicole) recently painted a ceramic bowl at a paint-your-own-pottery studio. I’m no artist, but I enjoy challenging my creativity, and it was a fun experience with my two sisters. The floral design is definitely not perfect, but I still love it. The ceramic bowl sits in the middle of my kitchen table filled with fruit for both a cute and practical centerpiece. I have other bowls that I could use and was even gifted with a “banana hanger,” but continue to use my own hand-painted bowl.

I have fallen for what is known as the “IKEA Effect.” This phenomenon – rooted in the idea that consumers want experiences, not things – is when people place higher value on items that they’ve created or partially helped create. Perhaps you’ve felt this way after building a piece of furniture, finishing a blog post you spent hours writing or painting a room in your home. You appreciate that end product more because you contributed to its creation.

Michael Norton at Harvard Business School and Dan Ariely at Duke University have discovered that consumers will appreciate a product that they’ve built (or partially built) more than the very same product that was built by someone else. By building their own products, consumers feel proud and competent.

Research shows that all age groups (not just millennials) are happier when they buy experiences rather than items. This might seem a little counterintuitive at first, but the reality is that material things we purchase easily become part of the new normal of our lives. Suddenly there’s a bigger flat-screen TV, a faster version of the iPhone, a trendier wardrobe available – and we want it. Experiences, on the other hand, become a part of our memories, identities and connections to other people.

So what can brands do with this the idea that consumers want experiences? Ask yourself how you can make your product or service more of an experience for your consumers. As Dan Ariely says, “Labor is not just a meaningful experience – it’s also a marketable one.”

Here a few examples of brands we’ve noticed are on top of this trend:

consumers want experiences
Photo credit: HelloFresh
  • We recently had the privilege of working with HelloFresh, a meal subscription service which provides subscribers the ingredients to make dinners that they can make on their own at home. Each meal box contains a recipe card and all of the necessary ingredients to make a dinner, eliminating the need for a trip (or several) to the store. Consumers still feel like they are cooking – and delicious, quality meals at that – but without the work of meal planning and grocery shopping. HelloFresh is not just selling a service, but an experience. Customers can enjoy cooking and trying new meals with ingredients they may not have otherwise tried.
  • Last year, Coca-Cola saw a rise in sales thanks to their personalized bottle campaign. The “Share a Coke” campaign featured names on cans and bottles, which gave Coke drinkers an opportunity to interact with friends. People took pictures with their personalized bottles, gave them as gifts, or even made them into baby announcements. A campaign brand executive shared, “We gave consumers an opportunity to express themselves through a bottle of Coke, and to share the experience with someone else.”
  • Chipotle is another great example of a company that creates experiences for their customers. The personalized experience is unlike any other fast food chain: customers can customize their meals with more than 65,000 combinations from the Chipotle menu!

Fraser Larock said it best with, “Products are 25% of what you sell. The rest is an intangible feeling.”

Do you think this trend will continue to rise? Tell us in the comments!