Turns out it’s a third of a penny.
So if you want to increase your profits, retailers, simply tell your staff to stop wasting time smiling and get an extra transaction through the tills once a day.
But is that really all a smile is worth? I wrote somewhere recently that an economist doesn’t know the price of a baby’s laugh. Although I had this research in mind, I had not read it quite carefully enough. All it measures is the additional willingness-to-pay of a consumer already in a predefined transaction context.
What I mean by that is that, once a consumer has decided what they want; and remembered their past memories of how to satisfy that desire; then selected which shop to go into; and gone into it; at that point, the smile makes only a third of a penny impact on them.
Where the smile really matters is at all of the previous stages. How do I decide what I want today? Which experiences am I more likely to remember? Based on those memories, which shop might I enter?
At any of these points, a smile might matter. And even though the consumer doesn’t pay directly for any of them, they all have a value. These are the decisions from which profit arises; because once they have been made, price sensitivity has already disappeared.
So I’d suggest that a smile, like a good advertisement or a strong brand, actually accounts for a big part of the value of your product. A smile could be worth hundreds of pounds when you’re selling a car, or tens of thousands when you’re applying for a job.
So if Lucy Tobin’s giving away three for a penny, I’ll buy as many as I can get.