Digital Behavioural Economics

Read more

Marketers are in the persuasion business. By understanding the behaviour behind decision making we can greatly influence the outcome.

We need to acknowledge that the human brain is lazy. It likes taking shortcuts. Our subconscious, or System One brain as it is often called, takes over to speed up the process. People often don’t even know why they do what they do. In fact 95% of our decisions are subconscious. By knowing what levers to pull to engage our audience’s System One brain marketers are able to persuade our audience of the behaviour we are looking for.

This is true as much offline as online… but with one small difference. In the online space our System One thinking is much more pronounced as we have swapped depth of information for breadth information. This wealth of information has created a poverty of attention. Human beings are looking for instant value. In fact a persons’ attention span is now just 7 seconds. A goldfish is 8 seconds. Therefore digital behavioural economic techniques become that much more important.

We’ve reviewed, combined refined, and taken a marketing centric view to identify the seven biggest digital Persuasion Principles. Robert Cialdini’s 1984 book “Influence – The Psychology of Persuasion”. He listed 6 principles: Liking, scarcity, herding, authority, reciprocity and consistency. We have updated these for a digital context:

1. Scarcity
2. Attention
3. Herding
4. Relativity
5. Incentive
6. Liking
7. Dis-inhibition

Attention
Having easy access to so much information does not necessarily mean we take more in. In fact the opposite is often true. Think of it like sipping from a tap versus from a fire hydrant – that is often what the internet is like. We are inundated with choices which can paralyse us or mean we make the wrong decisions. This choice overload has resulted in a lack of attention as we have traded depth for speed. We therefore need to make things incredibly easy for people to counter that choice overload. This is in fact why Online Travel Agencies like Expedia are able to charge hotels and holiday companies 20% of the price of the holiday to help them grab the attention of the audience.

Using images can help counter choice overload and capture attention. 67% of online consumers consider clear detailed photos to be more important than product information or even customer reviews, according to a study by MDGAdvertising.com. In fact too much text is exhausting. Reading texts on a computer is not the same as text on paper. In a 1985 study college students took 12% longer to read and comprehended 47% less when a document was read on a computer as opposed to paper presented – Psychologist, Susan Belmore, Uni Kentucky. Which is why on average we only spend 15 seconds reading an article online.

But sometimes you want your audience to slow down. In 2013 Uber suffered at the hands of the hashtag #Neveragain as Jessica Seinfeld had quickly ordered an Uber in a snowstorm without seeing the 8.25x surcharge. She posted her $415 Uber bill on Instagram creating a huge backlash against Uber. Uber responded by interrupting the customer journey to ensure that people actively opted-in to the surcharge so that this issue could not happen again.

Beauty is also important for capturing attention. A 2011 study by Gitte Lindgaard showed that our first impressions of a website shaped our subsequent sense of trustworthiness. If the people found the site more visually appealing they were more likely to trust it. We trust good looking sites more than we do actual reviews and independent measures.

Scarcity
DeBeers diamonds shut down mines to create a perception of diamonds being rare, which is simply not true. In fact fake diamonds have the same quality, but as authenticity and scarcity is important to us we spend more on the real things.

We can create feelings of scarcity online through time pressured auctions. In other words this item is only available for a finite amount of time and we are in competition with others to get it.

We can also create uniqueness and with it scarcity through story-telling. Someone once sold an old, broken down, washing machine on Trademe as a ‘Scary washing machine’. This headline with the ensuing description manufactured a sense of scarcity; ie there is only one with this story.

Online dis-inhibition effect
Online dis-inhibition is the lack of restraint one feels when communicating online in comparison to communicating in-person. Anonymity, asynchronous communication, and empathy deficit contribute to online disinhibition.

This can manifest itself in negative ways such as trolling but it can also be used to encourage repressed behaviours. For instance Pizza Hut found that customers when ordering online tended to spend more, make the pizza more complicated and added 33% more toppings in general, 20% more bacon and 6% more calories.

This can also be used for creating surveys as people will more likely give you a more accurate answer online.

Humour can be a good tool for countering the dis-inhibition effect and fending off people who look to complain, e.g. humorous 404 pages. But obviously there is a time and a place for humour…

Incentive
All human behaviour is driven by some sort of incentive. These incentives are not always obvious or tangible. Marketers typically use the word ‘incentive’ in a very limited way that is connected to promotions or reward programmes. But incentives can be positive or negative, tangible or emotional. They can be contained within a product or we can attach them to it.
If we want to influence behaviour it pays to understand how the many and various types of incentives work.

Tripadvisor has been incredibly successful in its use of incentives. It has 69 million monthly visitors with more than 60 million travel reviews and opinions from travellers around the world. Over 90% of topics posted in the TripAdvisor forums are replied to within 24 hours.
In return, TripAdvisor incentivises contributors to keep right on commenting by awarding ‘badges’ and assigning status levels to top contributors. This is a very seductive way to get travellers to build the site and app content for free.

Easter eggs are another clever way of incentivising your audience to explore and share your content or site. Examples such as YouTubes Harlem Shake or Zappos’ floating kittens all make an experience more fun whilst: humanising the brand; increasing brand awareness as people share it; boosting site traffic and increasing user engagement.

Missions are another powerful incentive to complete an action. A study found that a 12-stamp card with two bonus stamps will nudge people to faster coffee purchases than an empty 10-stamp card because people will feel as if they’ve already made some progress (two coffees worth!) and are closer to their goal. This is a strategy LinkedIn uses to encourage users to complete their profile.

Herding
We instinctively follow the crowd, making our decisions based on what those around us are doing. The emotional thinking being that if it hasn’t killed them it probably won’t kill you either.

Ratings and reviews instil trust and reassurance. We feel much more comfortable if others have gone before us and valued a product or service. Rob Pye, General Manager of ghdhair.com said: “We’ve experienced a 30% uplift in conversion as a result of having Ratings and Reviews content on product pages in the UK and even more in secondary markets in other countries, where we’re seeing anywhere from a 35% to 127% uplift in conversion when people interact with reviews.”

Relativity
Comparison with available alternatives provides a shortcut for decision making. The selection and presentation of these alternatives can greatly influence our decisions.

A brilliant online example of this comes from the Economist. They offered three subscriptions for their magazine: ‘Web’, ‘print’, ‘web and print’. When the ‘web’ cost $59, the ‘print’ cost $125 and the ‘web and print’ cost $125 people tend to choose the latter option as they feel like they are getting the web subscription for free. In fact 84% of people choose that option. When you remove the decoy of $125 for ‘print’ and offer simply ‘web’ and ‘web and print’, the majority favour web with 68% choosing it as it is the cheaper option.

Liking
Personalisation is key to liking a product or service online. Psychologists Diana Cordova and Mark Lepper created a math video game that was designed not to be fun. In the intro of the video game it set a scenario about planet earth facing an energy crisis and you and your crew having to travel to another planet to get resources. Two version were created, a generic intro and a personalised intro based on some short questionnaires. The generic version got a score of 2.9 out of 7 on the fun scale. The personalised version got 5.42 showing the power of personalisation to drive engagement.

Brands can often benefit from making their websites more likeable. eBay was suffering at the hands of Amazon with the ‘eBay discount’. eBay found that people wouldn’t spend more than 50GBP or it would have to be less than 20% of the cost on amazon to make the risk worthwhile. This was because there was a perception that eBay was run out of a Californian kids basement. By putting images of real customer service staff on the site meant that it was seen as more trustworthy and that there is a large legitimate team behind eBay.

As mentioned beauty influences trust in a website but it also influences value. Claudia Townsend of University of Miami and Suzanne Shu of UCLA randomly assigned an annual corporate report where one was aesthetically pleasing with a clear layout and high quality images whilst the other was not as pretty. Both had the same information. Their students were asked to come up with a valuation of the company in the annual report. The annual report with the high aesthetic had a share price of $327.01 whereas the low aesthetic achieved just $162.41. The same can be said for websites.

Loss aversion, or the desire not to lose things, is a useful tool for marketers to encourage our audiences to like our communications. By explaining what our audiences will miss out on if they unsubscribe from our emails we can stop them from unsubscribing. It is also a tactic used with Augmented Reality. By being able to ‘see’ the product on us or in our house we are more likely to purchase the real item as we don’t want to ‘lose’ it.

Influencer marketing is another tactic to encourage like-ability. The neurons that fire in our brain when hearing from an influencer is much the same as hearing from a friend or family member.

In conclusion
By using behavioural economics we can influence behaviour change without necessarily requiring offers or sales incentives. We simply tap into human being’s innate unconscious behaviours. By having a series of 7 principles we are able to identify when each principle can be used in a much more considered manner thereby being more actively effective for our clients.

By Dan West, Digital Strategy Director

More work

VTNZ Road Commander

Forsyth Barr Sheeple

Mitre 10 Roy – Kong’s Out Again