An introduction to Behavioural Economics

*LavenderTC Miles - Planning Director

Getting people to do what you want

What is LavenderCampaigns

Brand designAdvertisingLead systems

SHORTTERM

RelationshipsDialogue1:1 programsSatisfaction

MEDIUMTERM

Systems ofinteraction

InterfacesApplicationsCommunities

LONGTERM

*

Clients

Our Philosophy

Direct Marketing

Ideas that people want to spend time with

Our Heritage

Behavioural Change

Traditionally the end of the process

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Advertising methodology is focused on:

- how we relate to people

- emotive insights

& the belief that most decisions are thought through and have to be prompted

Most people act first and think later

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A different way to look at things

- Most decisions are not thought through

- Behaviour is driven by channel as much as attitudes - what’s happening in the moment

- Focus on the how & not so much the what

2009 Effie Gold Winners

The most effective campaigns understand this

Behavioural Change

Why do we do things?

How do we behave?

What influences our decisions?

A lot of answers lie in “Behavioural Economics”

How much should I pay for that cup of coffee?

Is it worth saving?

Am i going to pay for a parking ticket?

Shall I ask that person for a favour?

Am I happy with those jeans?

Am I going to go on that second date?

Should I get another drink?

Overall finding:We are complex people living in a complex world

An innate desire to fit in

Bad at making decisions

Hate parting with things

Social Norms Paradox of Choice

Influenced by surroundings

Relative Positioning Loss Aversion

Remember, every consumer has the option of doing nothing

So how do we help people to do what we want?

1. Spend more time appealing to satisficers

MaximisersShow-offs, competitive, seeking the best/new

SatisficersFitting-in, risk averse, tried & tested. Happier

So do everything you can to minimize risk

Tried & Loved1 million sold

Latest technologyWide Colour Enhancer

Digital Noise Filter

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& Reinforce a good decision made or about to be made

Thousands are coming back every week

If phones are busy, please call backtestimonials

2. If you’re looking to change behaviour appeal to social norms

Saskatchewan Ministry of Health Georgetown University Drink Consumed – down 12%, men fighting – down 33%

25%

Helping people to compare themselves creates good results

3. Get people to make a decision for the future (or take away the pain today)

What would you like to eat in a weeks time?

What would you like to eat now?

The Save Tomorrow Pension

10% of any future pay rises go direct to your pension

200% increase in pension sign-ups

4. Reduce people’s choice

24 to 6 Jars5x sales

26 to 15 varieties+10% sales

Lack of choice also makes you happier

5. Always have a default option

16gbWiFi Only

64gbWiFi & 3g

Help people make the compromise choice

Maximum

Minimum

x

Rule of 3

Never make it a ‘yes’, ‘no’ decision

6. Help people anchor their decisions

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

Adjacencies- chips & dips- cheese & wine

7. Appeal to people’s values

Tested in Glamorgan & Thames Valley police – reduced speeding by 35%

8. People respond to positive experiences

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Make it a conversation

+ 40% Conversion

Mints – surprise & delight – unprompted 14% increase in tip amount. An extra mint = 23%

9. Do someone a favour

69% response rate

.... and in the office....

Always use a post-it note

and finally if you’re trying to negotiate a pay-rise....

Your environment really matters

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

- Do someone a favour- Make it a positive experience

http://nudges.org/

http://timharford.com/

http://freakonomics.blogs.nytimes.com/

http://danariely.com/

Further Reading

*The agency for the consumer age.

Thank You*