Kate Middleton, the future wife of Prince William, grew up just a couple of miles from my home in West Berkshire. Indeed, we’ve even bought stuff from her Mum’s business, Party Pieces. But now, Kate has gone from being a local girl you might see in the village pub or in the post office to someone who millions of people worldwide want to know about. In fact, she is such “hot property” that a travel firm is planning coach tours of our local area for American tourists.
The coach company is on to a good thing. If they tried selling their tour to local people we’d all ask why? We know where the family lives! Gosh – villagers have even been in the pub with Kate and William. Why would we pay for a tour? The coach firm might try and persuade us that they would have experts on board, providing us with details we might not know and that the trip would include a slap up meal in her “local”, The Bladebone Inn. But would we pay? Probably not. But offer a trip of West Berskhire villages unheard of in much of America and they’d pay without arguing over the price.
It’s an example of something known as “construal theory”. What this suggests is that when we are close to something, we think about it in concrete terms – in my case, how much money it might cost to visit my local area. However, when we are far away from something, we think about it in abstract terms – so the Americans think about visiting West Berkshire in terms of the emotional high it would give them knowing they had been close to royalty. It’s the same with holiday bookings. When you think of booking a holiday on a Spanish Costa, you dream of the relaxation, the sun, the sangria and the sea. The locals think of the traffic jams, the airport noise and the other more mundane matters.
This impact of distance has now been investigated in the field of negotiation where researchers at the University of Texas found that when people thought they were far apart they tended to agree. When they were closer together, the negotiation was tougher and there was more disagreement. This appears to because the perception of distance between people makes them think more abstractly; it’s “distance makes the heart grow fonder” kind of stuff. When you think abstractly, you negotiate less toughly because you are thinking of the emotional impact, not the financial one.
This has important implications for online business. As I pointed out three years ago, in spite of the international nature of the Internet, most activity online is local, not global. Maybe it is time to reconsider that.
If your business is local – and many businesses are – your customers are more likely to make it tough for you than if your customers are on the other side of the planet. That’s because they are thinking of the concrete, factual matters about what you offer. They are likely to negotiate you down in price, putting pressure on your business. Or they will find a more cost-effective alternative supplier.
But if your customers are thousands of miles away, they will agree on your prices more easily because they will be thinking much more in the abstract sense. Perhaps it is time to stop chasing local customers, but look further afield, maybe in another continent, for your sales. You could well make more profits this way. Certainly, the enterprising coach company looking to run tours around here are going to make more money from Americans than they ever will from us locals. Sorry Kate, I mean Ma’am.