It’s one of the great ironies that behavioural economics has a behavioural economics problem. Specifically, choice paralysis. When push comes to shove and you have to do something to improve your business — create a marketing campaign, write an email, have a conversation, prepare a pitch — it can seem too overwhelming to know which behavioural principle to use, and how.
My advice? Keep it simple.
Focus on the three barriers to people taking action:
• Apathy: too lazy; they can’t be bothered (a.k.a. System 1);
• Paralysis: too overwhelmed; they are confused (a.k.a. paradox of choice); and
• Anxiety: too scared; they are worried about proceeding (a.k.a. loss aversion).
But let’s bring it to life by looking at how some businesses have sought to address these barriers.
Most businesses have to address apathy because they need their customers to be bothered to act. A good way to go about this is to ensure the effort you are asking of them is much less than the payoff they receive.
#BanTheBag is an example of a campaign that makes it extremely easy for people to act. Launched by Clean Up Australia and TV program The Project, #BanTheBag is a petition to ban single-use, non-biodegradable plastic bags in NSW, Victoria and Western Australia. In just a week the petition has generated over 100,000 signatures.
How? First they laid out the case for the ban, including clever use of the social norm that Tasmania, South Australia, Northern Territory, Australian Capital Territory, Queensland and lots of other countries already had. Then they personally identified the three decision-makers responsible (the state premiers), and put pressure on each not to be the last one standing. And importantly, the online petition was a doddle to sign, reducing effort by limiting the number of fields required.
Of course reducing effort is not the only way to address apathy. McDonald’s this month launched an unbranded campaign with actress and brand-fan Mindy Kaling. What made the campaign noteworthy was McDonald’s was not mentioned by name, nor its logo included. Instead the fast-food giant sought to trigger deeper brand associations and appeal to customer familiarity. In essence, McDonald’s was asking their audience whether they were clever enough to guess who Mindy was talking about. Of course they were. We all were. And who doesn’t like to feel smart?
Art director Matilda Kahl made headlines when she adopted a uniform of the same black pants and white top every day. Grace Coddington, former Vogue-US creative director, famously wears black every day. Barak Obama was widely cited as only wearing grey or black suits during his time as US President, eliminating low-grade decisions and saving his energy for more important matters. There can be power in constraining choice.
In a business context, when Steve Jobs returned to Apple one of his first moves was to cut the number of products by about 70%. This, along with a new eye to innovation, saw a turnaround from $1 billion loss to $309 million profit in his first year. Jobs recognised that having too many undifferentiated options (there were 12 versions of the Macintosh computer) not only created overhead, it confused the customer.
But limiting the number of options is only one strategy to address paralysis. Another is to make use of defaults because people tend to stick with what has been selected. In Australia for example, the government is keen to increase public take-up of My Health Record, a centralised repository of personal health information. To maximise enrolment, the government is using an opt-out model where people are automatically subscribed unless they state otherwise.
For times when you can neither constrain choices or create a default, your best bet is to focus on how you structure and communicate options. European retailer TK Maxx has opened in Australia, promising “big brands, small prices”. With stock changing rapidly, stores are structured by department (womenswear, homewares), then category (dresses, manchester) and size so their shoppers don’t get overwhelmed.
Seizing on a gap in the market, in 2010 US jewellery designer Kendra Scott decided to “engineer the scary out of jewellery stores”. Scott had identified that people felt too intimidated to visit most jewellery stores, particularly those that didn’t list their prices and had snooty staff. By creating a warm, fun, vibrant environment, Scott democratised jewellery and created a business worth more than $1 billion. What does this show us? Addressing customer anxiety is important.
In fact anxiety was proving to be stumbling block for US smart lock firm August. Having identified that missed deliveries was a pain point for customers, August knew it had the solution. Customers could unlock their door remotely via an app, letting the delivery person in without them having to be present. But how to overcome customer anxiety about having a stranger in their home? August decided to combine their smart lock with a camera, giving customers the confidence that the delivery person was able to be monitored and held accountable.
A final example of addressing anxiety comes by way of supermarket chain Aldi, which has recently confirmed it is extending its inventory by 250 product lines. Why? To reduce customer concerns that their time would be wasted if they visited a store and could not find what they needed. Importantly, Aldi is avoiding the trap of fixing one behavioural barrier (anxiety) but creating another (paralysis) by maintaining a focus on breadth rather than depth, ensuring shoppers have a higher hit rate across categories while having limited choices within a category.
I hope that gives you a sense of how real businesses are addressing the three key behavioural barriers. If you have other examples I would love to hear from you.
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Bri Williams is an authority on behavioural economics applied to everyday business and personal effectiveness.
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