When Bank of America came out with their Keep the Change program last year, I thought it was really clever. They simultaneously targeted people who (for whatever reason) aren’t proactive about saving, and made the barrier to entry super low.
Then during the this year’s Superbowl, Wachovia came out with Way2Save, which is the same basic idea, except instead of rounding up the purchase, a full dollar is transfered into your savings account with each purchase. The commercial even ends with the line, “More than just change.”
But is the secret to this marketing strategy simply “more is better?” There’s some interesting Psychology here that I just had to explore.
What strikes me as interesting is that these campaigns really have nothing to do with the quality of the savings accounts! It only addresses getting money into the account in the first place. Even if customers treat this as additional money going into Savings, it could be easily copied without the bank’s interference.
Consider Keep the Change as an example. Say each purchase puts, on average, 50 cents into your savings… multiply that by the number of debit card purchases you have each month, and transfer that amount each month on your own. Easy!
But then again, if I make one debit card purchase per day, that means I transfer $15 each month, and that’s a lot of money. Spare change, on the other hand, is a lot less intimidating.
Wachovia seems to be pulling a Gillette-style power play, suggesting that more is inherently better. Spare change isn’t intimidating, but is an extra dollar? A lot of people round the tip up to the next dollar. I topped my gas tank off to the next dollar until my friend Jason told me that it’s a bad idea. But how many people figure out a tip and then add an extra dollar? Has that tiny increase already crossed the line? I’m interested in your thoughts.
The idea for this post actually came to me when I was at Whole Foods the other day. As I was checking out, the checker informed me that it was “Round Up” day.
They were asking everyone to round their purchase up to the next dollar to help build houses in New Orleans. Aside from being a great cause, it had all the appeal of Keep the Change, plus the fact that it was only a one-time purchase. It was a great way for Whole Foods to get their proverbial foot in the door. I agreed to participate.
Then my purchase was tallied up, and it came to a whopping… $26.97. Wow. Now I feel like the idiot who’s donating three pennies to a worthy cause. So I tell the checker to put in an extra dollar. And when all is said and done, I ended up paying more than other grocery store charity drives that flat out ask me for a dollar. Overall, it seemed like a really effective way to get people involved.
Have you encountered a similar “round up to the nearest dollar” promotion anywhere? What other applications exist for this idea?