Financial lessons from a cheese peddler

This guest post comes from Adam Piplica at Magical Penny.

The psychology behind saving, spending and selling is useful to know if you’re to grow your pennies. Equally, it’s important to understand what tactics and strategies help you to save -- and to identify situations in which you’re more likely to fall prey to impulse spending.

Upselling

As I started looking out for these kinds of things myself, I became much more aware of sales techniques and “upselling”: for example, when a waiter suggests you have a side dish as well as a main course, or a sales assistant tries to convince you to take out an additional warranty on an electronic device. Such techniques can be dangerous if you’re trying to follow a budget, but I still find them fascinating.

Call me strange but over the last few weeks I’ve been paying particular attention to the “sandwich artists” in Subway stores, specifically how they handle the “extra cheese” question. Here are three examples of what I’ve heard:

1. “Would you like extra cheese in your sub?”
2. “Double cheese?”
3. “Cheese on both sides [of the open bread]?”

Which of those three did you find most persuasive? For me, it’s No. 3. Here’s why:

• No. 1. “Extra” is something in addition; superfluous; less important. It’s easier to say no to extra. Perhaps you’re on a diet or you simply don’t feel like even more cheese on your sandwich. Similarly, when it comes to saving, saving your “extra” money is hard work. Who has extra money anyway? FAIL.
• No. 2. “Double” is fun -- it’s a 100% increase. If you have the option for double, you generally take it. But double is also excess, so “double cheese” is a great upsell technique among the steady stream of drunken customers heading to Subway after leaving the clubs in the early hours, but I doubt it would work so well during the day. Comparing this with money again, “doubling” your savings can be even harder than saving your “extra” money. Where is it going to come from? Willpower alone won’t be able to help you double your savings rate. FAIL.
• No. 3. The guy using the “cheese on both sides” line is an upselling genius. For every customer I saw, he already had the four slices of cheese in his hand (two standard and two “extra”) before asking, “Cheese on both sides?” His tone of voice made it sound more of a fact than a question. Who was I to deny this fact? Of course I want cheese on both sides. He made it sound like the thought of cheese on just one side of my bread was ridiculous. WIN.

It’s only a small thing but his success rate at the upsell was amazing. Extra cheese is the equivalent of 60 cents here in England and assuming he upsold to two customers a minute, he was increasing revenue by about $72 an hour, selling little slices of cheese alone. Over five busy lunch hours he would net an extra $360.

• Currency converter

Only one person said no to this technique while I was watching, and even then the guy made the customer confirm it -- “You don’t want cheese on both sides?” -- before reluctantly putting the extra cheese in his hand back in the food container.

• Bing: Other upselling secrets

Connecting this to saving psychology, when it comes to saving your pennies, little decisions can have a huge impact and a strong and certain mindset helps too:

“Of course I am going to save money. It’s obvious! How else am I going to be able to live my future dreams -- buy a house, go traveling, start a business -- if not through saving?”

Willpower is great for getting started, but to be certain to save consistently you have to take the willpower out of the equation and make it non-negotiable. Here are two easy ways to make saving consistently each month a reality:

• Pretax: Put money in a 401k before you see it. If you are a salaried employee, you most likely have the option to join a 401k. Do it. It quite often includes free money as your employer will match what you put in up to a certain percentage of your salary.
• Post-tax: Automate your savings. I have a friend who says he’s too lazy to save money each month. But you can still save money and be lazy at the same time: It’s easy to set up an automatic transfer from your checking account to a separate savings account each time you get paid.

Before I automated my saving I found that some months I would have an excuse not to make the transfer: “I’m going on holiday,” “It’s Christmas,” etc. But once it was automated, I didn’t have to make that choice.

Upsell yourself the cheesy way

By saving before tax with an automatic contribution to a retirement fund and automating savings from your post-tax, take-home pay, you will be saving more, just like the upselling sandwich artist manages to use psychological tricks to unload more cheese on an unsuspecting public. By following these two simple tips, you can ensure the sandwich of your financial life has cheese on both sides, effortlessly.

Go on, upsell yourself to yourself. Meanwhile, what other tricks help you save or earn money?

Related reading at Magical Penny:

• Lifestyle inflation: The silent killer of dreams
• How to afford your midlife-crisis car
• Don’t act your age: How to keep saving and keep your friends