A recent Freakonomics podcast called “The Maddest Men of All” perked up my ears. Rory Sutherland, the vice chairman of Ogilvy & Mather in the UK, talked about applying behavioral economics to advertising. Behavioral economics is the study of how individuals react, and while economics assumes rational actors, behavioral economics asks what people really do.
Of course, this has been done for ages in advertising – “Hurry! This offer won’t last long!” The example in this story applied these principles to persuade customers to keep their news subscription through call center interactions.
How to harness behavioral economics for yourself:
1. Channel (gentle) peer pressure
Knowing others are making a similar choice is a very motivating force for us social creatures. “Many people like you are doing this.” Choices presented in this manner still offer options but nudge the listener to the majority action.
2. Help people avoid loss
Dan Ariely has written a lot on loss aversion. People are more likely to avoid a loss than reach for a win. Language like, “I wouldn’t want you to miss out” drives the listener to take action.
3. Stay positive in the face of negativity.
Even when reading the terms and conditions, call center employees were encouraged to use a friendly tone and phrases like, “I am confident that…”
I like these takeaways because they can be applied broadly and show measurable results. In this study, using one of more of these techniques were three times more likely to be successful in retaining customers.
How can you creatively apply these to drive action in your business?