Walmart CEO Confirms Payday Timing Effect

Walmart

A surprising commentary by Walmart CEO Mike Duke reinforced the theory that less affluent consumers operate on a payday-based buying cycle (see When Are Consumers Most Receptive). According to Duke, “Purchases are really dropping off by the end of the month even more than last year.” Walmart shoppers often are paid at the beginning of the month and stock up on goods then.

Duke thinks that high gas prices are exacerbating the monthly cycle by depleting consumer cash more quickly. By the end of the month, many are tapped out.

Beyond Retail

It isn’t just retail stores that need to think about this cycle. Direct mail, email, and Web offers geared to a less well-off demographic will almost certainly be impacted by monthly variations in consumer willingness to spend. Even consumers who make such purchases with a credit card or who may not be totally out of cash may respond at a lower rate if they feel less affluent late in their pay cycle. The more upscale your customers are, the less likely it is that you’ll see a payday effect. Even those customers that are being stressed financially are likely to have timing buffers like credit cards that will mute the pay cycle. But if your target demographic is more like Walmart’s than Tiffany’s, offers that are viewed shortly after payday will likely perform better.

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— who has written 955 posts on Neuromarketing.

Roger Dooley writes and speaks about marketing, and in particular the use of neuroscience and behavioral research to make advertising, marketing, and products better. He is the primary author at Neuromarketing, and founder of Dooley Direct LLC, a marketing consultancy. Follow him on Twitter.

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8 responses to "Walmart CEO Confirms Payday Timing Effect" — Your Turn

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Wes Man 29. April 2011 at 1:41 am

This is something very logical and simple, yet I’m sure not many do seize this opportunity.

This is definitely worth testing!

Reply

Roger Dooley
Twitter: rogerdooley
29. April 2011 at 6:49 am

I agree, Wes. I’m sure both local and national retailers have long been aware of this effect, but I’ve never heard of a direct marketer taking it into account.

Roger

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Pam Smith 1. May 2011 at 9:44 pm

This is something I just experienced this weekend. A young playwright had a premier of her work this weekend. She had requested some help with marketing her work and I decided a couple of weeks ago to attend the show in order to get a look at her work. By this Saturday though, I wasn’t sure if I wanted to pay for a ticket, especially for an iffy production. I decided my first peice of advice to her would be to put on her shows at the beginning of the month.

Reply

Roger Dooley
Twitter: rogerdooley
2. May 2011 at 6:31 am

Interesting, Pam. I suppose, too, it depends on how far in advance tickets are purchased. The more tickets are bought well ahead of the day of the performance, the less any payday timing effect. I suppose, too, it depends on the audience demographic. If it’s an affluent group, they’ll likely be unaffected by payday cycles. Good luck to your playwright friend, that has to be a challenging startup process!

Roger

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Steve Hill 3. May 2011 at 10:55 am

As a pay-per-click marketer, I can tell you for certain that it happens digitally both in B2C and B2B. I’ve often seen drop offs in performance towards the end of the month. It can be tough a tough trend to pinpoint for an individual business though, especially if there isn’t much data available, but that’s when you have to coordinate with your clients representatives to get a bigger picture.

Great article Roger!

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Roger Dooley
Twitter: rogerdooley
3. May 2011 at 11:16 am

Interesting, Steve. I’m sure it varies by client and product.

B2B cycles often relate to budgets but can be unpredictable – either there’s no money left, or there’s money that has to be spent right away to avoid its loss. Makes planning tough…

Roger

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Nadine Bendycki 3. May 2011 at 12:23 pm

Simple. elegant and oft forgotten aspect of human behavior. I know I have heard about what you are saying as it relates to Casino gambling, which in many states is heavily dependent on seniors. Apparently, there is a Third of the Month Effect – i.e. once recipients get their Social Security check, the casinos see an increase in foot traffic. Makes sense. Thanks for the reminder.

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Roger Dooley
Twitter: rogerdooley
3. May 2011 at 1:41 pm

Hadn’t thought about casinos, but that makes total sense, Nadine. So, I guess they would want to time their promotions to hit just before that when the customers are deciding where to go, or where to start out at least.

Roger

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