Monday, May 31, 2010

Change the environment to get co-operation.

I wrote about this a few weeks ago in one of my behavioural economics pieces.

We tend to believe that change is difficult because people resist change. And to change their behaviour, we need to change their minds.

Not always. Sometimes it is easier to simply change the environment.

For example, sales and marketing do not always get on. There is often a natural tension between these teams. This is not always a bad thing. However, it can sometimes get out of hand, and become destructive. The first response to fix this is to do workshops, talk through issues, align objectives, ask for respectful behaviours etc etc.

All good. An easier way might be to simply sit these two teams beside eachother. Yep, move a few desks.

Social Psychologist Leon Festinger and his colleagues found that a leading indicator of relationships in work is how near they are to eachother. You've probably seen this in action. Your best mates at work either work on your team, near your team or you used to work with them. Propinquity is what they call it.

Wednesday, May 26, 2010

More behavioural economics - framing

Image courtesy of BigBeaks

I mentioned anchoring the other week - where our decisions can be overly influenced by a piece of information.

Another similar topic is framing.

In a nutshell, the context and way situations are described can influence our decisions. This bias is called framing. Credit card companies are good at this. In the 1970s, many retail stores charged separate prices for stuff. One price for cash payment and a slightly higher price if consumers paid with a credit card.

Now, we consumers don't like to pay premiums for stuff. It bothers us. (I think this is loss aversion at play?) So, instead of calling the 'credit' price a premium, the credit card companies recommended that the retail stores call the 'credit' price the normal price. And if a customer paid with cash, she was actually getting a 'cash discount'. Smart stuff. Words are important.

Google 'framing credit cards' to find a pdf about this called 'The Framing Hypothesis'. Better still, buy Nudge.

Monday, May 24, 2010

Smart expandable ad

This is clever. An expandable ad that you re-size for your room measurements. Click here to see in action.

Tuesday, May 18, 2010

A bit more on: free versus almost free

After my amazon story, Kevin Kavanagh sent me this graph demonstrating the difference in uptake when price goes from almost free to free. One for my behavioural economics presentation.

Source is Todd Slattersten. He gave away a free ebook recently on pricing. Worth a download.

Friday, May 14, 2010

The difference between 'free' and 'almost-free'

Some more on behavioural economics (for my presentation).One of the stories I like best is from Dan Ariely's now-famous book predictably irrational on how customers reacted to free shipping from

Several years ago, started offering free shipping of orders over a certain amount of spend. Ariely explained that if you bought a single book for say $16.95, you might pay an additional $3.95 for shipping. But if you bought another book, for a total of say $31.90, you'd get shipping for free.

The result? Sales rocketed everywhere - with the exception of France. In France, there was no increase in sales. Were the French more disciplined than the rest of us? And were able to resist something free?

As it happens, no.

Amazon in France were actually charging one franc for delivery as part of the deal. I believe there was a clause in the France legal system that meant they could not give free shipping on books. But a franc is only about 20 cents. It is nearly free.

In the end, Amazon decided to make it free in France and pay the daily fine for the privilege. And sales jumped dramatically like every other country.

Why such a big difference between free and almost free? Chris Anderson in his book Free: The future of a Radical Price offers a feasible explanation. When stuff is free, you don't need to think. You don't need to put your brain through any mental exercise to consider if this is good value or not. No risk.

Thursday, May 13, 2010

Email marketing position with Concern

If you are in the market for a new job in digital - drop over to Concern. They are looking to fill an email marketing position. Sounds very worthwhile.

More information here.

Tuesday, May 11, 2010

Choice architecture

Dave Trott posted an example of behavioural economics the other day. I quote direct (lazy of me I know):

Rory Sutherland gave me a brilliant example of choice architecture. At a school in the USA, the girls in their early teens had just discovered lipstick. They would go into the female toilets to apply it. Then, giggling, they’d leave the imprint of their lips on the large mirror. This made a lot of extra work for the cleaning staff. The head teacher asked the girls to stop. Of course they ignored her.

So she took the girl’s to the female toilets for a demonstration. She said, “It takes a lot of work to clean the lipstick off the mirror.” She said to the janitor, “Please show the girls how much work it takes.” The janitor put the mop in the toilet, squeezed off the excess water and washed the mirror. Then put the mop in the toilet again, and repeated the process. From that day on there was no more lipstick on the mirror.

Authors Thaler and Sunstein give many other examples of choice architecture. For example, when taking out money from ATM machines, lots of us mindlessly walk away, leaving our bank cards in the machines. So instead of putting stickers on the ATM screen reminding us not to, they simply change the process so we must now take our cards before the money comes out.

Smart stuff.

P.S. Mr Sutherland is speaking tomorrow morning in Dublin on behavioural economics. I won't be there, but looking forward to hearing how it goes.

Monday, May 10, 2010

Anchoring charity donations

More on behavioural economics.

Anchoring is interesting. When we are buying stuff, we're overly influenced by one particular piece of information we are exposed to. There are lots of subtle examples. In their fascinating book Nudge, Thaler and Sunstein explain that charities can influence the amount donors give by how they present the donation options. People will give more if the options are €100, €250, €1,000 and €5,000 than if their options are €50, €75, €100 and €150.

Barry Schwartz gives more anchoring examples in his book Paradox of Choice. If you walk into a suit shop where the suits displayed are €1,500 each, and you see a nice suit for €800, this may seem like a good deal. But walk into a different store where suits are displayed at €500, and the same €800 suit seems very expensive. The pricing information is anchoring your views.

Schwartz gives more examples. For example, a high-end catalogue seller of kitchen equipment was selling an automatic bread maker for $279. Later on, they added another more expensive deluxe version for $429. While they didn't see too many of the deluxe makers, sales of the $279 machine almost doubled.

Wednesday, May 5, 2010

More behavioural economics - tweak the environment

As I scribble down my notes for an upcoming presentation on behavioural economics, I decided I'd post the good examples here.

Getting people to do something new can be difficult. It is not easy to change behaviour. We often assume it is because they resist or fear change. But sometimes this is not the reason. Sometimes you can be successful by simply changing or tweaking the environment.

Losing weight is a popular one. Most of us at one stage or another have wanted to lose weight. One relatively simple technique to lose weight is to use smaller plates. I know, this sounds a bit obvious and overly simplistic. But it works. For those of you that know me, you'll know I've lost about 2 stone in the past six months. Part of this was simply eating smaller portions.

Watch Brian Wansink's video here and you'll hear that the difference between using small and large plates equates to 15 pounds in weight in a year.

Why is this important to us marketers? If we want to change consumers' behaviour, we need to know why they're doing what they're doing in the first place. We tend to assume that people are doing things because they want to. Or won't change because their resist change - it's simply the way they are. This is known as the fundamental attribution error.

The result of this thinking is a lot of energy spent trying to change their mind.

However, often change can be achieved without changing the person's character. Instead, just change or tweak their environment.

More examples later. Good books on this include Nudge and Switch. And Brian Wansink and colleagues have articles you can download here.

Tuesday, May 4, 2010

People shot in face with cupcakes in slow-mo

Saw this on gizmodo. Somebody rightly commented "I've said it before...Slow-mo makes everything better"

Saturday, May 1, 2010

The wisdom of behavioural economics

At the time, I wasn't familiar with the term 'behavioural economics'. But have found this stuff interesting ever since I randomly picked up a copy of The Wisdom of Crowds in Hughes & Hughes several years ago. A signed copy from author James Surowiecki, no less.

Not sure if Surowiecki's book is technically considered behavioural economics actually. It is more pop-culture stuff, like Freaknomics or Gladwell's Tipping Point. (Both wonderful books if you haven't read them.)

The basis of his book is that the combined intelligence from a crowd of people is higher than that of any of the individuals in that group. This feels at odds with what we'd expect. And as a culture, we look to the hero, the individual that can fix everything. There are lots of books about finding the smart leader that will get bring companies back from the brink.

The book title itself is a word-play on the 1841 book 'Extraordinary Popular Delusions and the Madness of Crowds' by Charles Mackay, a collection of stories about herd mentality. Surowiecki's premise is that as long as each person's decision can be made independently (so no social pressure to conform), the combined result will be better.

For example, if you ever find yourself on the gameshow 'Who wants to be a millionaire? - you have a better chance of getting the right answer by asking the audience than calling the smartest person you know. The 'Call a Friend' option delivers the correct answer 65% of the time. The audience pick the right answer 91% of the time.

This area is becoming more popular and mainstream within marketing. So I'm pulling together the most interesting learning, experiments and stories from this area to present to my team. I'll post them here as I scribble them down. Feel free to send me relevant blog or article links if you have them.