Return to site

How Super Wealthy People Control Their Own "Purchase Experience" Each Time They Buy Something—and Why You Should Too

(Yes, control is possible, even if you are not super wealthy)

· Product

First, let's address the obvious question: what exactly is a "purchase experience?"

A Google search is not going to give you the answer. Remember, this article is about what lesson you can learn from super wealthy people, and I suppose lesson # 1 is that super wealthy people don't look to Google searches to tell them how to be smarter with money than 99% of people.

To illustrate the above point, a quick Google search returns a list of articles written for companies who want to improve their customers' purchase experiences.

purchase experience platform

A sample of what Google thinks we mean when we say "purchase experience"...

If Google-search were your single-source-of-truth for defining "purchase experience," then your immediate reaction might be that the term is entirely irrelevant to you (unless of course your professional life entails selling to customers; but even in that case, you would probably think that its relevance to you arises from your role as a seller and not as a buyer).

And, look, I will readily admit that the term sounds suspiciously like jargon, like the kind of made-up, not-in-plain-English word it would weird to use at the family dinner table. That's all true. But it also distracts from another, more important truth that only super wealthy seem to know.

It's this: when you make a purchase, the result is a purchase experience.

Let's dig into this, because I remember when I first learned this lesson; I was visualizing the purchase scene, me standing in a store, having just tendered my credit card through the touch-screen point-of-sale, and the cashier handing me a bag with a thing in it. Obtaining that thing is what most people consider to be the result of a purchase. I get that, because I did too. But that is a fundamental misconception; and it's not only wrong, but it's also the root cause of almost all bad purchase experiences--or to use the same kind of jargon that a seller might use--almost all customer pain points, which, in plain English, means anything annoying that happens to you after you buy a thing.

An example...

You should never have to call a company to find out about a thing you paid for.

Yet in the case of almost every product or service, you will at some point have to call the company to find out what is happening with the service you paid it to deliver. Maybe you purchased a product, to be delivered last week, but it has not arrived yet. Maybe your cell phone service keeps dropping calls while you are in your building at work. Maybe your service bill just arrived showing what appears to be a 10% fee increase. In each of these case, you have to contact the company to resolve the issue. That's the status quo, and each one of these post-purchase demands on your time/attention becomes part of the purchase experience.

A purchase is like a baby: fun to make, not fun to take care of.

No one has a kid because they like changing diapers and cleaning up messes. But you know you have to do those things; they are the responsibilities that come with being someone's parent.

It's the same when you buy something. No one makes a purchase because they look forward to talking to customer service when something eventually goes wrong, or, in the meantime, fielding constant marketing emails from the company you purchased from. Like children, purchases become your responsibility. It's fun when things go right, and you're able to simply enjoy what you purchased. But even so, you still have to make sure the bills are paid, and when an issue inevitably arises that needs to be fixed, it's annoying as hell.

Why? Because it's time-consuming, and the ROI of that time spent is that, at best, you merely get back to equilibrium, where you can once again enjoy the thing you paid for. There is no compensation for this. So your total cost of the purchase experience is really...

= [Price you paid for the thing] + [Time you spend managing that purchase]

Honestly, if you do the math, you might prefer a 2-minute diaper change to a 10-minute customer service call.

This is what super wealthy people like Warren Buffett have figured out.

With a kid, you can offload many of those tedious responsibilities to other people: schools, day-cares, babysitters, nannies. But with purchases, you're stuck bearing the full weight of the purchase experience--over which, importantly, you have little control.

Super wealthy people have something you don't have: some form of (what I will call) a "life manager." On the more elaborate end of the spectrum, a life manager could take the form of what's called a "family office," which is basically an entire company whose sole purpose is to manage financial parts of a wealthy person's life; or, on the simpler end of the spectrum, it could simply be one or more personal assistants or a chief of staff. This article lists 26 different types of "life management" positions that super wealthy people hire for, and offers the following summary for why super wealthy people hire life managers: "Time is money when you're worth millions or billions."

For example, do you think Warren Buffett ever calls customer service to complain about a late delivery? No. What about a fee increase? Probably not. But, on the other hand, do you think that these issues go ignored in the Warren Buffett household? Probably not. Why not? Because one bedrock principle that wealthy investors in particular follow is that: you should not lose money. And when you spend money to buy something and then do not get it as advertised, that is a form of losing money. Wealthy investors like Warren Buffett don't let that slide. But more importantly, they also follow another bedrock principle: time is money. So they do not spend their time to low-ROI things. This does not mean that they leave those things undone; it instead means that they delegate those responsibilities to other people.

If you think about how your "life management" system compares to those of the super wealthy, you should notice at least two things.

First, nothing slips through the cracks. No task is so small as to be "not worth my time." If a super wealthy person makes a purchase, someone will make sure that the purchase experience is high-quality. And second, because no issue is ignored, the purchase experience of a super wealthy person will likely be much higher than yours, even if you were to purchase the exact same thing. If your cell phone signal keeps sputtering, you might address it only after it persists for awhile, whereas a super wealthy person--through a life manager whose job includes optimizing the wealthy person's purchase experiences--will address it immediately.

This might appear to be a crass observation--"of course wealthy people are more likely to get what they want, because they have money that I don't have"--but it is actually a good place to talk about the role of "transaction costs" in managing a purchase experience. The simple way to think about transaction costs is to define them as simply the cost--in, say, time or money--to do something. The transaction cost, for example, of eating a Twinkie is low, while the transaction cost of eating a cake you make is high; because you have to spend considerable time to make the cake before you can eat it, while you need only open the Twinkie's plastic wrapper.

Transaction costs function at deterrents to do things. So when transaction costs are high, you would be less likely to do a thing, and when they are lower, you would be more likely.

Once you grasp this concept, a profound realization emerges: the thing that separates the quality of your purchase experiences from those of super wealthy people is not the billion dollars sitting in the wealthy person's bank account; it's the transaction costs.

While transaction costs may appear to simply be a function of the thing you purchase, they are not. Rather, they are more a function of your system to mange the purchase experience, which changes the framing in an important way. You don't need a billion dollars and a staff of 26 personal assistants to ensure a high-quality purchase experience; but you do need a good purchase experience system. Good purchase experience systems lower the transaction costs of ensuring you get what you pay for.

What constitutes a good purchase experience system?

Well, on one hand, a billion dollars would probably do. You could use that money to hire just about anyone you want, and you would not have to be too clever about being resourceful because you have ample resources.

But that's not you, and that's not 99% of people. The rest of us have to be resourceful. One of the most efficient "resourcefulness designs" is what business analysts might call a marketplace, or what engineers might call a platform. At it most basic level, a platform is tool for connecting people who need things with people who have things to give. Uber is a platform. Airbnb is a platform.

You don't find too many billionaires using these platforms, but that is because billionaires don't care about the primary benefit these platforms offer: efficiency, both in time and money; they have enough resources to not have to be efficient. But you know who you do find on these platforms? People like you and me, over a 100 million of them at present, because these platforms lower the transaction costs further than any alternative systems, to get a ride in the case of Uber, or to sleep in a stranger's guest bedroom in the case of Airbnb.

To keep it simple: what you need is a platform that drastically lowers the transaction cost of managing the quality of your purchase experiences. If you find this, then you can...

  1. Dictate the terms of your own customer experience (rather than letting the company do it, which is what you have always done).
     
  2. Control the quality of the purchase experience.
     
  3. And, like the super wealthy, let nothing slip through the cracks and waste no time talking to customer service.

Now the wheels in your head should be turning: "I never have to talk to customer service again?!"

The punchline is that this kind of control is possible. Once you realize that, the strangeness of the status quo begins to unravel.

A purchase is an agreement between you and a seller. Once you give the seller your money, that seller should now work for you, in the specific sense that the seller is now obligated to ensure that you get what you paid for. This is why the rhythm of customer, for example, is strange.

  • When your cell phone signal sputters, you have to call customer service to complain--even though the company probably already knows that their signal has been failing you.
     
  • When your package was due to arrive last week but has not yet appeared, you have to call customer service to check on the status--even though the company probably already knows that the package is late and could have simply sent you a status update to save you the phone call.
     
  • Why should you have to alert the seller when it has failed to deliver as promised?
     
  • Why should you have to spend any time resolving its "failure to perform" as agreed?
     
  • Once you make the purchase, why should you have to further expend anything of value--whether time or money--to simply get the ting you already purchased?

This is what such a "purchase experience platform" needs to have.

You need all of your purchase data in a single, cloud-based place. That way, you never have to spend time collecting it when something needs to be addressed.

 

You need a way to delegate secure access to certain purchase data, ideally by company/seller. That way, with the click of a single-button, you can have a "life manager" on-demand, who can then ensure that you get a high-quality purchase experience.

 

You need a roster of "purchase experience assistants" connected to that platform, some of whom will be specialists in certain types of tasks like legal issues, and some of whom will be generalists. That way, there is always someone ready to manage your purchase experiences for you, resulting in the same effect that super wealthy people get for their billion dollars in the bank.

That's it. Those are the essentials. You can, of course, enhance the platform along the way with new features to automate certain tasks and process large amounts of data to do things like get rock-bottom prices for all of your purchases--the result of both being an even further lowering of overall transaction costs.

Now, where to find such a platform...

All Posts
×

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!

OKSubscriptions powered by Strikingly