An introduction to Behavioural Economics
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Getting people to do what you want through understanding human behavior and decision making. The document discusses 9 strategies based on behavioral economics research: 1) Appeal to "satisficers" who prefer low-risk options. 2) Leverage social norms. 3) Encourage people to make future commitments. 4) Reduce choices to minimize paralysis. 5) Implement helpful default options. 6) Use anchoring to frame decisions. 7) Appeal to people's values. 8) Create positive experiences. 9) Do small favors to encourage reciprocity. Understanding how context and subtle influences affect decisions can help influence behavior change.
An introduction to Behavioural Economics
- 1. Getting people to do what you want *Lavender TC Miles - Planning Director
- 2. What is Lavender* Brand design Campaigns Advertising SHORT TERM Lead systems Dialogue Relationships 1:1 programs MEDIUM TERM Satisfaction Interfaces Systems of Applications LONG interaction TERM Communities
- 3. Clients
- 4. Our Heritage Direct Marketing Behavioural Change Our Philosophy Ideas that people want to spend time with
- 5. Traditionally the end of the process !"#$%&%''( 012#*(3$#&4($%#556( 7&4%$'*#&4(8%9( Advertising methodology is focused on: !4:%$.',&;(8%*2/4/5/;6((2#'( )&*%$%'*( 3%%&(#3/7*(2/"("%($%5#*%(*/( - how we relate to people <%/<5%(=(>/-7',&;(,&-$%#',&;56(/&( %8/.:%(,&',;2*'( - emotive insights ?$%4,-#*%4(/&(*2%(3%5,%>(*2#*( +%',$%( 8/'*(4%-,',/&'(#$%(*2/7;2*( #3/7*( & the belief that most decisions are thought through and have to be prompted !-./&(
- 6. Most people act first and think later
- 7. A different way to look at things !"#$%& 4(-&)$5($%(&-$&0"-& - Most decisions are not thought through '()*+(& 6((2& - Behaviour is driven by channel as much as attitudes - what’s happening in the moment ,%-(+()-& 78*%/& - Focus on the how & not so much the what .*/(01*2*-3& 69-9+(&*%-(%#$%&
- 8. The most effective campaigns understand this 2009 Effie Gold Winners
- 9. Behavioural Change Why do we do things? How do we behave? What influences our decisions?
- 10. A lot of answers lie in “Behavioural Economics”
- 11. Am I going to go on that How much should I pay for second date? that cup of coffee? Should I get another drink? Is it worth saving? Shall I ask that person for a Am i going to pay for a favour? parking ticket? Am I happy with those jeans?
- 12. Overall finding: We are complex people living in a complex world An innate desire Bad at making Influenced by Hate parting to fit in decisions surroundings with things Social Norms Paradox of Choice Relative Positioning Loss Aversion
- 13. Remember, every consumer has the option of doing nothing
- 14. So how do we help people to do what we want?
- 15. 1. Spend more time appealing to satisficers Maximisers Satisficers Show-offs, competitive, seeking the best/new Fitting-in, risk averse, tried & tested. Happier
- 16. So do everything you can to minimize risk Latest technology Tried & Loved Wide Colour Enhancer 1 million sold Digital Noise Filter
- 17. & Reinforce a good decision made or about to be made !"#$%&'()#*+(#,-)./#$0(*)(#1*00#,*12# Thousands are coming If phones are busy, please testimonials call back back every week
- 18. 2. If you’re looking to change behaviour appeal to social norms Georgetown University Saskatchewan Ministry of Health Drink Consumed – down 12%, men fighting – down 33%
- 19. Helping people to compare themselves creates good results 25%
- 20. 3. Get people to make a decision for the future (or take away the pain today) What would you like to eat What would you like to eat in a weeks time? now?
- 21. The Save Tomorrow Pension 10% of any future pay rises go direct to your pension 200% increase in pension sign-ups
- 22. 4. Reduce people’s choice 24 to 6 Jars 26 to 15 varieties 5x sales +10% sales
- 23. Lack of choice also makes you happier
- 24. 5. Always have a default option 16gb 64gb WiFi Only WiFi & 3g
- 25. Help people make the compromise choice Maximum Rule of 3 x Minimum
- 26. Never make it a ‘yes’, ‘no’ decision
- 27. 6. Help people anchor their decisions
- 28. If I was to offer you any off the following at the same price: - A week in Alberta - A week in Dawson City - A week in Dawson City with meals included
- 29. Adjacencies - chips & dips - cheese & wine
- 30. 7. Appeal to people’s values
- 32. 8. People respond to positive experiences Tested in Glamorgan & Thames Valley police – reduced speeding by 35%
- 34. Make it a conversation + 40% Conversion !"#$%&'( )#*&+,%"-(
- 35. 9. Do someone a favour Mints – surprise & delight – unprompted 14% increase in tip amount. An extra mint = 23%
- 36. .... and in the office.... Always use a post-it note 69% response rate
- 37. and finally if you’re trying to negotiate a pay-rise.... Your environment really matters
- 38. Summary - Creating action is the most important thing you can do - Help people minimize risk - Help people fit in - Take away the pain of buying - Restrict Choices - Help people anchor their decisions - Appeal to people’s values - Make it a positive experience - Do someone a favour
- 40. Thank You* *The agency for the consumer age.