Opportunity knocks: getting your buyer to answer

In the past week I've had two door knockers - those poor souls who have to go door to door to peddle their wares - attempt to win my business.  One succeeded and one failed, and here's why.

What was the product offer?
Door knocker one, let's call her Sally*, represented Energy Makeovers who on behalf of the Victorian government, are installing free Embertec 'smart switches' to reduce energy consumption.  Door knocker two, let's call him Bruce*, was from Fairfax, offering a free trial to The Age newspaper print edition together with a bonus copy of The Good Food Guide.

Some background on me.  I don't leave my appliances on when they are not being used, so I don't really feel like I am wasting much power and I do read The Age online and buy it occasionally on the weekend.  If you were segmenting me by my usage patterns, things would look shaky for Sally but encouraging for Bruce.

Then why did Sally succeed in getting me to agree to a smart switch where Bruce failed to get a paper in my hand?  The behavioural approach they took.

Day and Time: Beware depletion effects
Sally called on my house around midday on Saturday, whereas Bruce came by at 6.30pm Wednesday night.  This made a difference to me because by Wednesday night I had already made a lot of decisions in the course of my day.  As Jonathan Levav of Stanford and Shai Danziger of Ben-Gurion University examined in their study of over one thousand parole judges, when we get mentally depleted we tend to opt for status quo. In this case, my status quo was not to have a newspaper delivered so it was easier to say no than think about saying yes.

Sally on the other hand caught me at lunchtime on Saturday - fewer complex decisions had been taken leaving more mental room to face the task of hearing the offer.

Vividness: Help me see the outcome
When Sally came to my door she had the switch in a box, ready to go.  This made a difference because I could see the unit - it was real.  Whilst I had never bothered to respond to direct mail or marketing flyers about the switch, here was one on my doorstep with someone ready and capable of installing it.  We are enormously influenced by what happens in the immediate term and by the vividness of the what is being proposed, so having the units on hand and on display had impact.

Bruce came to my door with what looked like a script and holding a copy of The Good Food Guide.  Nice try - having the book there was a good idea.  But, the guide was not the core proposition, the printed newspaper was.  Why on earth did Bruce not have copies of the newspaper to give out?  Show me what I'm signing up for, don't distract me with 'steak knife' bonuses.

The catch of Free
Both Sally and Bruce had a 'free' product for me; a free power switch and a free trial.  There is no doubt that 'free' is the most persuasive price point you have at your disposal - it can definitely change behaviour because it wipes out the economic risk on the part of the buyer.  But with 'free' comes the invariable question, 'what's the catch?' which is the buyer's attempt to assess the social and psychological risk involved in the transaction.

Whilst Bruce may have been offering the newspaper for free, I was busy calculating the psychological trauma of getting out of a contract once the trial period concluded as well as the social implications of having a newspaper delivered.  Bruce's offer came with a commitment that I didn't want to make.

By contrast, Sally's free switch was also free of obligation.  If I didn't like it, I could remove it.  The psychological and social costs of the transaction seemed low so I  didn't feel that there was a hidden catch.

Treat reasons given for decision with caution
Having worked as one I couldn't help but think of the product managers back at HQ assessing the performance of their door knocking strategy.

Embertec would have been pleased because my house had one of their units installed.  They didn't ask me why I agreed to the unit so I can only hope that they know the transaction was won in large part by having the product in the hands of their representative.

Fairfax would have been disappointed to have missed an opportunity to convert a digital reader.  To his credit, before I closed the door Bruce asked me why I didn't want to take up the offer.  I told him that I read the paper online - which is true - but I did not tell him the real reason was I couldn't be bothered with the process; that I was midway through preparing dinner, the last thing I was thinking about was a newspaper and I was mentally fatigued.  When Bruce reports back to Fairfax, the results of this self reported behaviour will invariably influence the decisions they take in future even though it was not accurate.  Fairfax will never know that they could have won my business if the door knocking process had been different, and for product managers that is immensely frustrating.

Lessons for your business

• Make your product or its outcome vivid so that it is real to your buyer
• Segmentation can be meaningless if you don't carefully design the behavioural interaction
• Remember that free has a psychological and social cost that you also have to manage
• Reasons cited for a decision must be treated with caution
• Place greater emphasis on observation of behaviour to identify what elements of your offer work

* Names are fictitious

PS Did you know I can audit your website or marketing materials for behavioural effectiveness?  Just email bri@peoplepatterns.com.au to find out how.

PPS Why not join like minded colleagues by signing up to the People Patterns mailing list?  Every month you'll receive a short wrap-up of behavioural tips for business. Click here for the 20 second sign-up.


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Why team training falls over and how behavioural economics can help

I sat in a seminar last week on team development and it's prompted me to think about how behavioural economics can be used to improve team performance.

The presenter started by sharing the characteristics of high performance teams, citing the 2012 AFL premiers the Sydney Swans as an example.  What elements of team dynamics were called out? Process, shared vision and values, playing for each other, clarity about the contribution each individual was expected to make and so on. People in the room had no trouble listing these elements, and yet we seem collectively to struggle on a day to day, hour by hour, decision by decision basis to make it happen.

Perhaps I'm jaded, but there seems to be an intractable disconnect between high performance teams and the rest of the world.  For every Sydney Swans there is a Port Adelaide. Where the Swans are the exception, the rest of us are the rule.  And in spite of team dynamics being one of the most studied and trained aspects of organisational performance, an area we spend a fortune on, we scratch our heads and mutter "if only".

So what's breaking down?

Insights are fleeting, behaviour is entrenched
There's no doubt that team profiling tools and team building sessions can improve performance. It's the sustainability of that performance that is at issue.

In a previous life when I facilitated induction days and team building events, and in other lives where I've participated, I've seen light globes go off.  People gain insights into their colleagues and the walls get broken down between right-brainers and left, between introverts and non, between instigators and concluders.  The team members see why they approach issues from a particular perspective and with that, develop an understanding of how their colleagues may see things differently.  Finally! We have a shared understanding and common language that means 'conflict' is not necessarily personal, it's simply a function of us not being empathetic.  Hurrah, at last we can be a high performance team!

But then something happens.

It's called habit.  We revert to old patterns of behaviour and as the weeks go by, we forget that Jo is a right-brain, introverted, polkadotted, instigator and we just think Jo is an idiot.

How can behavioural economics help?
The core reason that team training fails to deliver sustainable performance is down to behavioural change.  And for effective behavioural change, you need to understand human decision making and for that, there is behavioural economics.

Here is a taster of where behavioural economics can explain the breakdown of behavioural change.

We are more motivated to avoid loss than seek gain.  The gain in this situation is that if everyone performs, we become a high performance unit.  But that's not enough on a day to day basis to keep people behaving differently.  Why?  Because of what I have to lose.  Change means I have to give up what I'm used to (loss aversion), it requires more thinking and self-control than I can afford when I'm just trying to get my work done (depletion effect), and whilst the downside of having to spend time empathising with my colleague's style of thinking is blatantly obvious - I mean, who has the time?! - the payoff - "if this stuff even works" seems both ambiguous and way off on the horizon (short-term bias).  And anyway, why should I if no one else is (social norming)?

To embed high performance you must design for it
To embed high performance, this is what you must do. Design for the behavioural change.

First, use behavioural economics to understand the reasons inhibiting change, and on the flip side, will facilitate change.  In the example above "why should I when no one else is" can instead become "I will because I see others doing it", "If this stuff even works" can instead become "I know what I need to do in small interaction to make a difference overall".

And second, ensure that you have strategies to support both the motivation to change as well as ability to change.

In other words, when the team come back to the workplace all pumped up, when motivation is at its peak, that is the time to get them to commit to new processes and policies, do the hard stuff like moving their office to be closer to their colleagues, schedule meetings they don't like having and so on.  Then, when motivation levels drop, the hard changes have already been taken care of so all that you require is the easier tasks.  Morning teas, 'thank you' post-it notes...whatever you and your team have designated as 'easy' things should be rolled out so that even if no one really feels like it, you do it anyway and before you know it, you are on the path to high performance.

So by all means, learn from the best and aspire to create a high performance team; after all, the Sydney Swans did it.  But don't leave team performance at an intellectual level, assuming team members will change their behaviour on a rational basis because you'll be wasting your money. For a team to perform differently than they have been, your task is one of behavioural change and for that, you need behavioural economics.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of behavioural tips for business. Click here for the 20 second sign-up.


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Learning from a botched loyalty program request

I was at a well known tea retailer the other week, at the register ready to pay.  "Would you like to join our loyalty program?" asked the sales assistant.

Here's how it went down...

• Assistant: "Would you like to join you loyalty program?"
• Me: (exasperated sigh to infer my purse was already groaning under the weight of loyalty program cards). "What's involved?"
• Assistant: "You just need to provide some information."
• Me: "How much information?"
• Assistant: "All of it."
• Me: "What's all of it?"
• Assistant: "Name, address, phone, email..." (she went on but I'd closed off long ago)
• Me: "And what do I get?"
• Assistant: "10% off once you reach $500."
• Me: "No thanks"

Pretty simply this assistant and/or the store's policy had botched the opportunity to engage me in their program because effort exceeded reward. The effort/reward equation is one I've flagged before as a useful distillation of what you are requiring of your buyer compared with what they receive.

Both effort and reward should be assessed on financial, psychological and social terms as well as time and physical commitment.

In this scenario I was being asked to complete a seemingly endless registration form (time & cognitive effort) for a distant and insignificant payoff (10% after $500).  Note the significance on the payoff is scaled in terms of effort.  Had I been automatically granted 10% discount on the day for nothing more than an email I would have been rapt.

Here's how it could have gone down (because as my purse attests, I have been known to join such programs);

• Assistant: "Would you like to join you loyalty program?"
• Me: (exasperated sigh to infer my purse was already groaning under the weight of loyalty program cards). "What's involved?"
• Assistant: "I just register your name and email and as a thank you I can take 10% off today's purchases"
• Me: "OK sure. My email is..." (immediate benefit, negligible effort)

From there, the company could and should send me a welcome email from which point they can establish a relationship and ask me for more personal information.

It's easy to go wrong when seeking to engage your buyer, so remember to keep effort/reward in balance and you'll see your conversion improve.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of behavioural tips for business. Click here for the 20 second sign-up.

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