Squirrel Spotting: The Art and Science of Customer Budgets
Peter Smith says customer budgets are rarely a true indicator of what they are willing to, or likely will, spend.
![Peter Smith is president of Memoire and Hearts On Fire. He is author of two books, “Hiring Squirrels,” and “Sell Something.” Connect with Smith on LinkedIn or at dublinsmith@yahoo.com. 2021_Peter Smith.jpg](https://uploads.nationaljeweler.com/uploads/0e20823a7344122f54235b84f41f049e.jpg)
One of the questions we asked related to customers’ budgets. Specifically, we wanted to know how budgets came up in conversation and how often they were adhered to.
In short, we learned budgets are usually arrived at organically—as opposed to a customer being asked specifically—and once established, were rarely, if ever, adhered to.
As one salesperson said, “Once you get them emotionally engaged, price doesn’t matter.”
When I asked another top salesperson how often she exceeded the customer’s budget, she replied, “Every single time.”
If I didn’t already know these salespeople as top performers, I might have suspected a little self-congratulatory hyperbole afoot.
However, there was no doubting their pedigrees, and even if they engaged in some subtle rounding of the sharp edges (I mean, surpassing the budget every single time!), the pattern of exceeding budget was consistent across virtually all interviewees.
Naysayers might argue those salespeople are engaging in predatory practices, that they are cajoling and coercing their customers into spending more than they want to. Alas, the science suggests otherwise.
Whether it is offered or uncovered during the sales process, the budget is a function of a cognitive process; cool, calculated, and sober.
It lacks context beyond the most basic measures, and it is rarely indictive of what the customer is willing to spend, or likely will spend, unless they are underserved by a salesperson.
To a great extent, a customer’s budget expands commensurate with the level of their emotional engagement with the salesperson. It’s as if the customer is saying, “Here’s my budget, but feel free to inspire me.”
In “Handbook on the Psychology of Pricing,” Dr. Markus Husemann-Kopetzky wrote, “Higher prices induce consumers to perceive product quality as better during actual consumption.”
There have been numerous studies over the years, across myriad product categories, to support Husemann-Kopetzky’s hypothesis.
As one of the bridal interviewees suggested, “Customers want to be guided.”
The salesperson who uttered that beautifully uncomplicated, yet profound, opinion might have said, “Customers want to be guided by a competent salesperson, interested in delighting her customers, and inspiring them to higher ambition, and who recognizes the budget for what it is, arbitrary and devoid of context.”
Even the most jaded observers might concede the best salespeople have a way of working their way into the emotional fabric of their customer’s stories and, as such, succeed in influencing their buying behavior.
A Gallup study some years back concluded that emotionally engaged customers deliver a 23 percent premium over average customers. We see that reality play out consistently, thanks to top salespeople.
In “Brainfluence: 100 Ways to Persuade and Convince Consumers With Neuromarketing,” Roger Dooley wrote: “On one hand, we know that the pain of paying kicks in when people perceive that a product is overpriced and makes people less likely to make a purchase.
“But now we have multiple studies showing that people enjoy a product more when they pay more for it.”
The hypothesis naturally assumes that the product is, in fact, better quality, and that customers are not being asked to overpay for mediocre or subpar jewelry.
A wonderful vehicle to help increase sales is utilizing a combination of two principles: the paradox of choice and the contrast or anchoring principle.
Anchoring works by having three distinct price points within those three options.
One option should be at the stated budget, a second option should be twice the budget, and a third should be right between those two anchors.
Customers select the second option more than 60 percent of the time. In its most simplistic form, that is a 50 percent premium over the budget.
Accepting the customer’s budget as fact underserves the business and places unnecessary limitations on the customer’s ability and willingness to reach when they are moved to do so.
It also misses the underlying psychology of the joy customers experience when making an important purchase, the regret avoidance (not having to second guess the purchase) that comes with doing the right thing, and the added pleasure and enjoyment customers derive from buying exceptional quality.
When the perfumer Ernest Beaux warned Coco Chanel the amount of jasmine he was including in what became Chanel No. 5 would make the fragrance fabulously expensive, the soon-to-be fragrance and fashion icon responded, “In that case, add even more.”
I wonder how that worked out!
The Latest
![Direct-to-consumer retail brand Diamonds Direct has opened a store in the Atlanta neighborhood of Buckhead, an area known for its upscale malls. Diamonds Direct Atlanta store](https://uploads.nationaljeweler.com/uploads/2e6577afc9470ba1c1de327fad397366.jpg)
It’s the Signet-owned banner’s first location in Georgia.
![These “Double Loop” earrings feature a drop-cut amethyst sitting atop the lower hoop, totaling 1.60 carats between both earrings. The hoops are made of silver covered in “pistacchio” colored enamel, while 9-karat yellow gold holds the stones in place and connect the two hoops behind the earlobe ($1,770). Bea Bongiasca’s Double Loop Earrings](https://uploads.nationaljeweler.com/uploads/f338ef6b4603be3c97765f833b831ca0.jpg)
Commemorate “brat summer” with these green hoops.
![The skyline of downtown Providence, Rhode Island. Jewelers of America held one of its Multifacted Learning Workshops there on July 17 and National Jeweler Editor-in-Chief Michelle Graff tagged along. Stock image of Providence, Rhode Island, skyline](https://uploads.nationaljeweler.com/uploads/4ec5b02d4cbaaaa2283bdcf6820950a4.jpg)
Editor-in-Chief Michelle Graff returns from Rhode Island with thoughts about in-store shopping and a trends report.
![Untitled design.jpg](https://uploads.nationaljeweler.com/uploads/583fbcb2bb839782810080debef35d3c.jpg)
As the demand for lab-grown diamond jewelry may still be increasing, the most notable change we are likely to see is price stabilization.
Sponsored by Gemological Institute of America
![](https://uploads.nationaljeweler.com/uploads/99a46b30cc354962ac2e29ecd113587a.jpg)
![Earlier this month, online giant Amazon and the Better Business Bureau filed a joint federal lawsuit against ReviewServiceUSA.com for allegedly selling fake reviews, both positive and negative. Amazon package outside door](https://uploads.nationaljeweler.com/uploads/27fce4225a38900d54a5536ce523a22d.jpg)
They claim ReviewServiceUSA.com was selling both positive and negative reviews of products and businesses.
![A shot of the Venetia diamond mine in South Africa, owned by De Beers Group. The diamond miner and marketer saw revenue drop 21 percent and rough diamond sales decline 20 percent in a “weak” market for diamonds. De Beers’ Venetia diamond mine](https://uploads.nationaljeweler.com/uploads/a1f16ceaaba662e80385166060d192a7.jpg)
Lab-grown diamond sales in the United States and ongoing economic challenges in China are impacting natural diamond demand.
![1872 x 1052 Gemolite.jpg](https://uploads.nationaljeweler.com/uploads/9d60901b44425a53b9010301897a3bbc.jpg)
GIA®’s most advanced microscope has new features to optimize greater precision and comfort.
A longtime member of IJO, she’s remembered for her passion for design, learning, and environmentalism.
![A malachite and diamond bracelet from Pomellato’s “Pom Pom Dot” collection, launched earlier this year. Pomellato and Boucheron were bright spots for Kering in an otherwise underwhelming first half of the year. Pomellato Malachite Pom Pom Dot bracelet](https://uploads.nationaljeweler.com/uploads/3c237b62e009742fc52487097daf3c5a.jpg)
The gains come amid a tough time for parent company Kering, which saw sales slide 11 percent in the first half of the year.
![Volunteers and Shane Co.’s corporate team from all 22 locations of the family-owned jewelry chain have begun packing backpacks with school supplies for teachers to distribute to their students this school year. Shane Co. and the Kids in Need foundation logo](https://uploads.nationaljeweler.com/uploads/1c5abfb36ec775724f014f47bfbb47fc.jpg)
The fine jewelry retailer filled backpacks with back-to-school essentials for students in 13 states.
![A shot from the advertising campaign for LVMH-owned Bulgari’s “Eden the Garden of Wonders” high jewelry collection. LVMH’s jewelry and watch sales slipped in the first half of the fiscal year. Bulgari high jewelry campaign](https://uploads.nationaljeweler.com/uploads/c24eb75ca8cea44d2e9859648f4a98ee.jpg)
Tiffany & Co. is focusing on its “iconic” collections while the company has made changes at the top at TAG Heuer and Hublot.
![Chaumet, a Parisian jeweler owned by LVMH, has designed the Olympic and Paralympic Games medals. Chaumet Paris 2024 Olympics medals](https://uploads.nationaljeweler.com/uploads/7831b3a738baddfc7d783e6df0fbf796.jpg)
The Parisian brand is the first jewelry company in the history of the Olympic and Paralympic Games to design the medals.
![The acquisition of Union Life & Casualty by Jewelers Mutual will help strengthen both the pawn market and the insurance industry, said JM. Jewelers Mutual and Union Life and Casualty logos](https://uploads.nationaljeweler.com/uploads/195925667226ecfc51b4e1bb09607143.jpg)
Union Life & Casualty will join JM Insurance Agency Partners, expanding the provider’s pawnbroker coverage.
![The winner of this year’s Lonia Tate scholarship, Bradlei Smith will receive the opportunity to earn her Graduate Gemologist diploma from GIA and, following graduation, an internship at Ben Bridge Jeweler in Seattle. Bradlei Smith](https://uploads.nationaljeweler.com/uploads/996834935ae30a7a1195db8b9db6cb7d.jpg)
Los Angeles-based Bradlei Smith was selected for this year’s award.
![De Beers Group mined 6.4 million carats of diamonds in the second quarter of 2024, down from 7.6 million in the same period last year. (©De Beers Group/Photo credit: Ben Perry @ Armoury Films) De Beers rough diamond display](https://uploads.nationaljeweler.com/uploads/80cd02b1c8384f4b2efda0bcdf6a75e1.jpg)
The company also reported the $150 million sale of an iron ore royalty right, part of its ongoing effort to divest “non-core” assets.
![In honor of its summer bridal event, Long’s Jewelers is partnering with Wequassett Resort and Golf Club on Cape Cod in Massachusetts, and jewelry brand JB Star on a vacation giveaway. Long’s Jewelers giveaway promo](https://uploads.nationaljeweler.com/uploads/4e7a90944c4e8875a4f3818dbe26b28b.jpg)
The giveaway is part of the New England jeweler’s summer bridal event.
![L.A.-based flower designer, Sophia Moreno-Bunge models Guzema’s “Hidden Beauty” collection in front of a garden in Rustic Canyon in Santa Monica, California. Sophia Moreno-Bunge of Isa Isa modeling Guzema’s Hidden Beauty collection](https://uploads.nationaljeweler.com/uploads/6f3822623eb7fd2f6468f82825194cb1.jpg)
The ad features three celebrity florists creating floral sculptures while wearing jewelry by Guzema.
![The Entrepreneurship Grants program supports winners with financial aid to scale their businesses and increase their societal impact, said Diamonds Do Good. Pictured here are three of the 13 winners, top right is Tresia Shituula, and bottom row left to right, are Monkgogi Moshaga and Mohamed Samu. Tresia Shituula, Monkgogi Moshaga, Mohamed Samu](https://uploads.nationaljeweler.com/uploads/a7c9b87301b76a9446f6522747ce5b95.jpg)
The grant provided a total of $100,000 to support 13 entrepreneurs from diamond communities in Africa and India.
![Ghazi Osta, better known as Gus, was the owner and president of Volusia Gold & Diamond, a store he and his wife, Leigh Osta, opened in 1986. He was shot and killed inside the store Friday afternoon after a brief argument with a regular customer. (Photo courtesy of Volusia Gold & Diamond Facebook page) Ghazi “Gus” Michel Osta](https://uploads.nationaljeweler.com/uploads/c8c1fa3df746cbd364915a98dcac9d21.jpg)
Ghazi Michel Osta, or “Gus,” was killed Friday by an 83-year-old man said to be a frequent customer at his store, Volusia Gold & Diamond.
![Elyssa Jenkins-Pérez (left) is the Responsible Jewellery Council’s new head of North American development, and Effie Marinos is its new specialist advisor for technical standards. Elyssa Jenkins-Perez and Effie Marinos](https://uploads.nationaljeweler.com/uploads/94332af0c7a776e7a8c36fabf76baa5f.jpg)
The organization also announced Effie Marinos as its new specialist advisor for technical standards, as well as four other appointments.
![Karen Rentmeesters, who joined the Antwerp World Diamond Centre in 2010, will take on the role of CEO. Karen Rentmeesters](https://uploads.nationaljeweler.com/uploads/3256fcc71cd43a399055c61f68486269.jpg)
Rentmeesters has served as interim CEO since April following former CEO Ari Epstein’s resignation.
![Longtime Washington, D.C., jeweler Brian Mann (right) with his wife Jessie Mann, an artist who custom-paints porcelain Limoges Boxes, at a 2016 Jewelers of America member event. Mann, the longtime co-owner of David Mann Jewelers, died June 21 at age 70. Brian and Jessie Mann](https://uploads.nationaljeweler.com/uploads/be4debc6e0b3198943a66ef0e2197c2c.jpg)
Mann, whose family’s jewelry store was located inside the Pentagon, is remembered for being a thoughtful champion of the industry.
![The 1916 Company recently opened a new Tudor boutique in Denver’s Cherry Creek Shopping Center. Tudor store in Denver](https://uploads.nationaljeweler.com/uploads/9f8600ea53ed731963331ebd28a10d16.jpg)
The 500-square-foot boutique is located in Denver’s Cherry Creek Shopping Center.
![This necklace from Messika’s “So Move Max” set is made of yellow gold with 19.18-carats of brilliant-cut diamonds and designed with circle motifs that move within the links (price upon request). Messika’s So Move Max Necklace](https://uploads.nationaljeweler.com/uploads/14c78af4a4e8c6b996a81bbb5a5bc69f.jpg)
Dance all night long with the “So Move Max” set’s necklace.
![On Sept. 1, Julien Tornare (left), current CEO of TAG Heuer, will become CEO of Hublot. Antoine Pin, now the general manager of Bulgari’s watch business, will take over Tornare’s role as CEO of TAG Heuer. (Images courtesy of LinkedIn) Julien Tornare and Antoine Pin](https://uploads.nationaljeweler.com/uploads/b24627b34ece895ddd254bae22751fb8.jpg)
Luxury giant LVMH is reshuffling the leadership in its watches division.
![A rendering of a billboard from Etsy’s new campaign. The campaign is designed to highlight the platform’s creators and how their products are made. Etsy billboard rendering in NYC](https://uploads.nationaljeweler.com/uploads/9a94f394f326b90dc1c9da6a711c5e09.jpg)
Sellers and shoppers have spoken out against a rise in mass-produced merchandise on the platform meant to highlight handmade goods.