Excel in behaviour, not just numbers: Why Behavioural economics is important for finance professionals

I've been lucky enough to tour around the country with the CPA Congress in the past few weeks to talk about the application of Behavioural Economics to finance.  Being a past beano, I know only too well that 1. businesses live and die by the numbers and 2. it's really not about the numbers - it's about the behaviour surrounding the numbers.  I might think 6/10 great, you might think 6/10 is bad; the number is objective but the interpretation is subjective.  That's why it's so important for finance professionals to understand behaviour if they want to significantly impact their business and their customers.

Here are three quick behavioural techniques for finance professionals.

1. Know when to fold 'em
As a finance professional you encounter this behaviour all too often. It may be a client who just won't sell bad shares, a client who simply can't be convinced to move to better performing options, or a stakeholder who refuses to close down a project that has no hope of generating a return. The numbers don't lie, but rational analysis is not what's holding your customer back.

We hate to acknowledge failure.  Selling shares that have tanked smacks us in the face with our bad decision so we prefer to avoid recognising the loss and instead sell good performers so we can feel like we've aced it!

As a finance professional, your task is to soften the blow by distancing ego from outcome.  For instance, if the time has come to sell a bad investment, try talking about broad market forces rather than individual judgment. Gotta know when to fold 'em.

2. Why one dollar isn't the same as another dollar

When Hungry Jacks ran a $2 Groupon deal for a $6.95 meal package they received over 120,000 downloads in three hours.  When ATMs started to carry a warning about a $2 fee for 'foreign' bank transactions, activity plummeted from 50% to 40%.  If $2 can change behaviour, imagine what larger amounts can do! 

If you've ever wondered why some people like prefer to get their health rebate returned as a lump sum whereas others take it as a discount off their premium, or why we stress about utility bills going up but happily buy more clothes than we need, it's called 'mental accounting' and it impacts how we spend and save money.  For finance professionals, you need to tease out how your customer is thinking about money so that you can influence their behaviour.

3. Information blinkers

If you've ever found that your client or stakeholder seems only to hear information that supports their position and ignores anything that is contradictory, then you have been introduced to information biases.  Known by names such as Confirmation Bias, Hindsight Bias and Clustering Illusion, we unconsciously use these filters to distort, accept or reject information so that it gels with our view of the world and alleviates anxiety about whether things make sense.

As a finance professional, know that your customer will be blinkered by their filter system. It's not that they don't understand necessarily, it's that you need to find a way of meshing your perspective with theirs.  Thankfully, behavioural economics provides clues on how to do this.

There are plenty more of tips for finance professionals from behavioural science, and what I love is that human behaviour doesn't have to be a mystery anymore.  Think of behavioural economics as an audit process with 'behavioural standards' in place of accounting standards and you have a ready made toolkit for influencing your customers.  At last you can excel in influence as well as numbers!

Interested in finding out more?  I am running a series of fast track webinars for finance professionals on topics like those mentioned. Click here for details.

PS 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.

Image from http://www.rgbstock.com/photo/mhALQQI/more+money+1  

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.

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Image credit: http://www.rgbstock.com/photo/meZ98Fc/Broken+Chain

Innovative packaging bridges analogue and digital divide

How to simplify the experience of using unfamiliar technology?  This was the question resolved by Vitamins Design Consultants on behalf of Samsung who were interested in selling more smart phones to older consumers.

The answer lay in the packaging.

The roadblock to purchase
When you are unfamiliar with a piece of technology - could be a phone, oven, car, DVD player - it can inhibit your willingness to purchase.  After all, we all hate feeling like we are stupid, and not feeling capable to use something that other people obviously can is extremely off putting.

Removing the mental barrier
With this in mind, Vitamins determined that more could be done to support consumers in the initial stages of setting up and familiarising themselves with their new phone, and that this promise of support would inspire more people to purchase. 

Out of the Box
In a brilliant lateral move, Vitamins turned the packaging of the phone - the box it came in - into a storybook of what to do when.  As the user flicked through each page they were instructed to complete a stage of the set-up. For instance, the SIM card was embedded in the page with the instruction "This is your SIM card, the heart and soul of your phone, please lift it out".  

From there, the user was asked to physically slot the phone into the book, like placing a picture in a frame.  Each page took the user through the phone's interface - what to press to make a call, how to email and so on.  A perfect blend of analogue and digital!

Behavioural techniques
I love what Samsung and Vitamins did with their Out of the Box packaging because they used key behavioural insights and techniques;

• Overcoming loss aversion - we hate to feel stupid because it reduces our sense of identity. They created something that supported even the most nervous of new users. 
• Vividness - clear, concise steps meant that there was no confusion as to what to do in which order.
• Completion - once started, there was no giving up but also no need to.  Simple instructions lead the user through each stage so they ended up with a fully functioning phone and the confidence to use it. Contrast this with technology that you get home, try to set up, get lost in the manual and therefore leave it sitting as a white elephant.  My multi-function printer springs to mind as an example.

Lessons for your business
A few blog posts ago I talked about "consumption design'; that part of the product experience that relates to how the product is consumed.  Vitamins have demonstrated that the product (the phone) doesn't necessarily need to be changed, but the context in which it is 'consumed' can be.  We often limit our thinking about packaging to its functional benefits ie keeping the product free of damage and/or sexy of the shelf, but we should be thinking about how packaging can be behaviourally improved to enhance consumption.  Here's to thinking out of the box!

For more on Vitamins, visit http://vitaminsdesign.com/projects/out-of-the-box-for-samsung/

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.

How a Freemium site got me to upgrade

I've been in the market for webinar software and came across Anymeeting.com via a search engine.  A few elements of their business model appealed as examples of behavioural techniques in play.

Freemium model
Adopting an increasingly popular model for online providers, Anymeeting offers both free and premium options for its online meetings and seminars.  The catch with the free option is that you and your participants will see advertising.  Given I will be charging for my webinars and therefore don't want advertising interfering with the experience of participants I have decided to ditch the free service in favour of a subscription.  A couple of advantages of this tiered system; buyers get to trial the service before committing to payment (building confidence and familiarity) and Anymeeting diversify their revenue model by having paid subscribers and advertisers.

Free version with ads 

Upgrade path alleviates pain point

Outcome oriented CTA

We are used to seeing language like 'upgrade to experience benefits...' on sites, but what I liked about Anymeeting was how they expressed it in their call to action (CTA).  Rather than 'upgrade now' or 'subscribe', Anymeeting have gone with "Remove ads", a simple, outcome oriented CTA.  Aside from removing any doubt as to what would happen by clicking through, this CTA also tapped into the behavioural principle of loss aversion where we are more motivated to avoid pain (poor reaction by paying audience to seeing ads) than seek gain.

Helpfully, they also provided a comparison of what your users see in both free and paid versions of the site.

Ads vs None visual

Anchoring and influencing choice
Anymeeting do their best to upgrade buyers from the time they first visit.  Notice how the three program levels are displayed, with the Pro for Meetings package deliberately shaded green to stand out.  If they wanted to minimise free option sign-ups they could have taken things further by choosing a more muted CTA for this program (eg dark grey) to shift buyer attention to the paid alternatives.

Program comparison

You'll also note the use of price relativity between the Webinars program ($69.99) and the Meetings option ($17.99) which would encourage take up of the latter.





Payment terms 
The thing I didn't like?  The payment process for upgrading to a subscription defaulted to a monthly recurrent charge and was not sufficiently clear on how I could stop the payment.  Supporting the buyer at the point of payment with this type of information is important to overcome risk aversion. Sure some buyers (like me) will proceed, but dropouts become more likely and undermine the effort its taken to get them to the point of sale.  Providing money back guarantees is good, but letting the buyer know how they can escape is powerful too.

Lessons for your business
Lessons for your business?  Consider a Freemium model to get people started, rethink how your call to action can be expressed as an outcome, take the lead in how you structure the options you sell and finally, cover off last-minute payment nerves with guarantees and explanations.

(As with all my blogs I have written this piece based on my experience as a customer and have not been commissioned by Anymeeting.)
 
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Behavioural lessons from one of the best websites

My heart began to race.  It was the last one and I knew there were four other interested buyers.  No time to muck around, I better go in for the kill. Where's my credit card?

Welcome friends to the world of booking accommodation online, a goldmine of examples of behavioural economics applied to the customer experience.

Let's look at just three of the techniques used by one of the best exponents, Booking.com.

Sample listing from Booking.com

Create a sense of urgency
No surprise, but part of getting customer commitment is a sense of urgency.  Urgency comes from our fear of missing out, so this is how Booking.com use it;  

• Notice that the number of rooms left is displayed next to the City View room deal. Trust me, when it gets down to 1 you jump pretty quickly.  Chances are you will even stop looking for reviews in your rush to secure the room - the overall rating will do.

Create a sense of normalcy
As much as we deny we are persuaded by what others do, we are.  Being a normal part of the 'herd' is core to our functioning, so here's how Booking.com use it;

• There are 6 other people looking at this hotel - good, because it means I have great taste. But worrying that there are six people looking and only three of the city rooms available!  Urgency strikes again.
• Last booking - others have trusted this hotel enough to book
• Guest reviews - whilst the impartiality of reviews may be questioned, they do carry psychological weight because they are ostensibly written by people like us

Create a sense of value
We need to make estimations of value whenever we are looking to buy.  If the business doesn't control how its price is contextualised we will rely on whatever's in our head - dangerous for any business.  You must therefore anchor the prices relative to others. For example, carry more expensive options to encourage sale of the cheaper option, and always list your original price along with its marked down amount.  Booking.com;

• Notes that the price for the City View room has been marked down, and obviously so.  No good just showing your 'sale price' if you don't also show the original because your customer may not understand how great a deal this is.

I've booked a lot of accommodation over the years and whilst there are many sites - Lastminute.com.au, Expedia.com, Wotif.com amongst them, I keep being drawn back to Booking.com for its interface and communication of information.  Let me know if you agree that it is one of the best, and whether you have used similar behavioural techniques in your business.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

Three tips for influencing your buyer

Decisions, decisions. If you are in the business of influencing buyers to buy then you have lots of decisions to make about how best to communicate your message to secure the behavioural outcome you want.  Here are three tips to get started.


1. Eliminate barriers to buying

The Red Box eliminates a barrier

Often we get stuck by convention, and it's only when a new market entrant pops up that we see opportunities for doing things differently.  For instance, a few short years ago it was convention to buy clothes from a bricks and mortar retailer, and now that has been changed with the emergence of online. The barrier of "what if it doesn't fit?" has been mitigated by free return policies.


And convention has been that you have to wait for your dry cleaner to open their doors to drop off your clothes right?  Not in a suburb of Sydney where The Red Box allows its customers to get on with life according to their schedule, not the shop's.

Tip: Look for any barrier to the buyer doing business with you.  Opening hours, location and trading policies (eg payment options) are a great place to start.

2. Reduce choice regret 
Part of your buyer making a choice is assessing whether they will regret their final selection. Buyer's will try to avoid putting themselves through any pain of regret which means they may defer their purchase unless you help them over the hurdle. 

Coles' My5 forces choice

On the subject of choices, I think one of the failings of the Coles' FlyBuys program's "My5" is that it forces people to make a choice about which items they will buy most often and commit to that as the basis of their discount.  The risk is that whenever they buy things other than those nominated they regret their decision - creating an unhappy psychological tension that will dilute the 'loyalty' proposition.


Tip: money back guarantees and/or price match guarantees can reduce choice-regret.


3. Normalise the behaviour
We all want to be normal.  I know, I know, you are above average but for most of us we are greatly persuaded by what others are doing and we seek social acceptance. Why else would be buy ridiculously expensive cars and use Facebook?  If you can tap into the desire to be normal through your marketing communications you will increase your chances of success.

Rexona ad uses normalising

One of my favourite advertising examples is Rexona deodorant's "Do you sweat more than normal?". This works because no one really knows what a 'normal' amount of sweat should feel like, we just know how we sweat.  The ad plants the seed of doubt that we are not normal and provides a solution to that tension. 


Tip: Use "most popular" and "best selling" to help guide your buyer's choice but be selective and authentic - buyer's will be able to smell if you are lying.


Communicating with your buyers in an effective manner is a deceptively complicated task. Set yourself up for success by being clear on what behaviour you want from the buyer, eliminate any barriers to buying, reduce any risk of regret and use the desire of the buyer to be socially accepted to influence their decision.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

Lessons in behavioural economics from a small business owner

"Find your happy place" is what my photographer kept telling me as he snapped away for my website head shots. Well, I want you to find a happy place too by learning about how my photographer Con intuitively used behavioural economics to persuade me to buy his services.


1. Present services as clustered packages
Con offers three packages for professionals, Start-Up, Professional and Entrepreneur.  By packaging up the options Con was doing a couple of things.  First, he was creating a perceived value gap between them to support the price ladder, and second he was reducing the complexity of the decision. Contrast this with a longwinded and overwhelming conversation where the customer has to define their requirements such as number of shots and intended use - packaging options is a much smarter play. 


2. Include special offer pricing

Con uses anchoring in his package pricing.  Anchoring is where we fixate on the pricing information first presented, and then judge other prices in relation to that.  Every business can and should use anchoring to help their customers contextualise value. In fact as the price tag image showcases, retailers use this technique all the time to make the sale price seem like great value compared with the Recommended Retail Price (RRP).


In this case, the most expensive package was presented first on the page to anchor me with the other two below, helping to persuade me that they were reasonable.  


Then, under each package was quoted the "Regular Price" followed on the next line by a "Special Offer" price in larger font.  As an added bonus the amount saved also specified.   Now not only was I anchored to differences between packages, I was primed to work out how to qualify for the significant savings.  By this stage, I had mentally accounted for the Special Offer price, triggering my behavioural intent to avoid paying full price before even knowing how to qualify for the discount.


Whatever you do with your pricing, do not underestimate the power of the pain your customers will feel by missing out on the discount.  Intellectually I know that the RRP and the 'amount saved' is a fabrication, but that doesn't mean it does not persuade me.  


3. Use payment terms to your advantage
The Special Offer price was related to the payment options. The first option was to pay 50% on booking with the balance on the day. The second option and "by far the most popular" according to the collateral was to qualify for the special offer by paying 100% upfront at the time of booking.  Cash flow is king for small businesses, so locking in payment ahead of the work is a great strategy.  Note the "most popular" is a clever way of using social norming to influence adherence to Con's preferred option.


4. Up sell once the cost is sunk
Having elected for the most frugal package before the shoot, I was then caught when the number of photos I liked exceeded my allocation.  No problem, I could pay extra on the day.  This is a great way for businesses to drive some extra revenue for two reasons. One, I had already worn the cost of the initial outlay so it was a 'sunk' cost, and two, I had by that stage engaged in the process and so it was harder to walk away. Known as the 'endowment effect', we find it harder to let something go when we've had a hand in creating it.


So there you go. As a small business operator Con was effectively using behavioural principles such as anchoring, social norming, loss aversion, endowment effect and choice architecture to guide buying behaviour.  Con's found his happy place, so you can too.  


PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

Making dough from the right behaviour

Fresh from a breakfast seminar with Tom O'Toole, I wanted to share some of his pearls of wisdom plus some behavioural insights.


Who is Tom O'Toole?
Tom O'Toole is known as the Beechworth Baker, a man who started a bakery in a country town in Victoria (population 3,500) which, over the past 28 years, he has grown into a multi-million dollar, multi-site business.  He is now sought out by businesses across the globe to learn his recipe for success.


Business is very straightforward for Tom.  It's all about staff and customers.  As he says, 5% technology and 95% psychology and attitude.


Here are some of Tom's pearls;


Staff training:  "What if we train them and they leave?" "What if you don't train them and they stay?!"

• Tom's first nugget was in response to small business owners who lament spending money on staff who then leave (loss aversion rears its head). Yes, it's a hassle if you invest in someone who then leaves, but you don't really have any other option.  Instead, focus on creating an environment that they don't want to leave.

Staff empowerment: "If you wouldn't buy it, then don't sell it"

• Tom recalls being torn between anguish and pride whenever he sees goods disposed of for failing to meet the standards of the staff member in charge.  Whilst he may have disagreed with their decision, Tom knows it was theirs alone to make.  This is where too many owners and managers undermine their own policies when it comes to the marginal, subjective decisions.  Overruling means undermining. 

Customer focus: "You're not making 200 pies, you're making one pie 200 times"

• Tom used this when training a baker who was making 200 pies.  Known as the "Drop in the bucket effect", it can be hard to focus on the outcome of our work when we are producing things repetitively and/or en masse.  In this case, it was easy to see 200 pies but forget the 200 customers that would each have an individual experience of their pie.

Accountability: "Anytime I have a problem in my business, it's within my four walls"

• In other words, stop blaming external factors.  Your competitor, the roadworks out the front, the weather...Known as "actor-observer bias", we tend to blame negative outcomes on things external to us whilst thinking positive outcomes are always down to us.

Pricing:  "Quality and service will be remembered long after the price is forgotten"
Tom tapped into a few very powerful behavioural principles here.

• First, there's what is called the "hedonic treadmill". This means we overestimate the joy we will feel from a purchase (eating this pie will make me happy for weeks), because we adapt very quickly and move on.  But the experience of service and atmosphere will be with us longer.
• Second, we have a "remembering" and "experiencing" self.  This means we are persuaded by not only the experience but our memory of it, 
• And finally, we self-herd.  This means we follow decisions we've made previously so because the memory of a great quality pie and great service will outlive the memory of cost, we will be more likely to buy a pie in future.

Personal growth: "Everything you want is just outside you comfort zone"

• A believer in raising the bar and constant self-improvement, Tom challenges our "status-quo" bias where we tend to stay in our comfort zone.

Leadership: "When you are placed in charge, take charge"

• We can often be scared to assert ourselves as leaders because that can mean failure is on our head.  This is classic "loss aversion" where the risk of losing is more persuasive than the benefits of succeeding, so acknowledge that's what is holding you back and try anyway.

Communication: "Everyone smiles in the same language"   

• In talking about language gaps he has experienced here and overseas, Tom keeps it simple; See similarities rather than differences. We can all smile, and that's the greatest bonding device you can have.  Behaviourally, Tom is using our tendency to seek patterns and commonality to overcome our tendency to demarcate.

A refreshingly authentic and animated presenter, Tom is the poster-child for smashing through lazy mediocrity by keeping it simple and getting it done.  As he says, "you can starve to death reading a cookbook".  Time to get cooking. 


PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.


Image from http://blogs.abc.net.au/victoria/2012/03/by-popular-demand-tom-otooles-inspiring-conversation.html

What business are you in?

If I asked you what business you are in, what would you say?  Consulting, retail, manufacture, accounting, health...Well you're wrong, kind of. You see I think you are in the business of behavioural change because everyday you are influencing people to do something.  Buy, sell, read, write, talk, type, click, swipe, walk, run, turn up.  Each of us everyday has the task of influencing others to move from one state to another, and that's why behavioural economics is such an opportunity; it's a playbook on what you need to do.


Lessons from the fitness industry
Let's take some guidance then from one of the most challenging behavioural changes that we can make - getting ourselves or others into shape. The difficulty has always been sustaining the change once initial enthusiasm has worn off, and this is due to the potency of the outcome (looking better, feeling better) not being as forceful as the immediate attraction of other choices (lazing on the couch, staying in bed or eating the wrong foods).  After all, you can experience the benefits of the chocolate now, but the benefits of not eating the chocolate are distant and ambiguous. 


Given this challenge it is therefore no surprise that a range of websites and Apps have been developed to help people sustain the behavioural change of a healthier lifestyle.

GymPact App

One that garnered a lot of attention last year was GymPact because it charges you if you don't follow through on your commitment.  The concept is that our desire to avoid a penalty will be enough to push us towards fronting up at the gym when we would otherwise have been able to talk ourselves out of it. The App is clever because it creates activities in the short term to keep us on track as we inch toward to longer term benefit.

Another site that works for any type of personal commitment is StickK. Here you are required to make public your commitment contract and even put money on the line that goes to a recipient of your choice if you fail.  

A more recent example is SlimKicker.  I first heard about the concept last year when it's creator got in touch to discuss how behavioural economics could be incorporated to help keep people motivated and accountable.  


According to SlimKicker developer Christine Chu, the site is designed to maintain motivation and emotional engagement by rewarding and reinforcing progress.

"I think the main problem with being healthy is motivation. It's an abstract, overwhelming goal. I think the best way to counter this is to turn it into winnable games and small victories.

 So... my app makes living healthy, and fitness into a RPG game, where users earn points, and "level up' as they accomplish their health goals.

Everytime they add something healthy like veggies to their diet, they earn points. Everytime they complete a workout, they earn points. As they achieve more and more, they'll level up and unlock badges, and discounts/coupons to  rewards like spas, health foods, etc."

A few of the clever elements of SlimKicker include;

• Levels - people move through different fitness levels, collecting points and rewards along the way which breaks the task of 'getting fit' down to goals that are attainable. (Overcoming behavioural short-term bias.)
• Progress -  Throughout each level the user can see how far they have come and have to go. (Using behavioural principle of completion to secure continuation once started.)
• Inspiration feed - a sense of community has been created through users sharing how they are feeling about their successes and slip ups. (Uses social norming to influence behaviour.)

By far my favourite part of SlimKicker is the Challenges section. You can sign up to participate in challenge (for instance, no snacks after dinner) and be rewarded with points upon completion.  What's great about this is that you can see at a glance "who's in" and how many others are giving the challenge a go.

SlimKicker's Challenge

There are some areas of SlimKicker that can be further improved, for instance showing how many points are needed to complete a level, clearly stating that the website is free to join and explaining
how the site is financially supported but I think they are doing a great job of tackling behavioural change.

Applications for your business
Getting people to exercise and eat healthier is really no different to the challenge of getting people to buy something today when the benefit is not immediate.  Examples include building a house, securing investors for your proposal, ordering something online where you have to await delivery, signing up for a course, contracting a consultant and paying insurance. You need to overcome the pain of now whilst keeping your customer's 'eye on the prize'.

• Make the benefit vivid:  Draw it, mock it up, make a model...do something that ensures the customer can see what they are working towards.
• Use milestones: stage the process so that your customer feels like things are progressing.  Think of it like FedEx parcel tracking where your customer can see how far the parcel has travelled and how far it has to go.
• Keep the connection: communicate with your customer throughout the process so they feel comfortable that things are progressing.  I ordered a new iPhone cover through a Kickstarter project in December last year for expected delivery in January. Today I received project update number 18 advising me where they were up to in production, so whilst it's a long time to wait, I have been taken on their journey throughout thanks to their frequent and transparent communications.

It's easy to think we are  simply in whatever business we spruik on our business card or website, but always remember we are behavioural change experts and it is up to us to support our customers going from one state to another.  What better guide than Behavioural Economics?


PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

PPS A short presentation I have put together on why every business should know about behavioural economics is available on this website and has been viewed over 1,200 times since being posted.

"From-To" image from http://www.rachel-levy.com/wp-includes/wp-content/uploads/From_To.jpg

Jabadabado flu shot for you?

Imagine you are marketing a service that deliberately gives people disease, is physically painful, requires them to come to you and they have to pay. Welcome to flu shot season!

Two Australian pharmacy chains are approaching the task of enrolling flu shot customers in subtly different ways, so let's look at my reaction and, perhaps more meaningfully, the behavioural techniques at play.

Example 1 Arm yourself against the flu

Terry White Chemists

• "Arm yourself against the flu".  Hmm clever arm joke...except now I'm thinking about the painful jab in my arm.
• Date range is kind of helpful, though I'm not sure if this means you'll only take bookings for that period and after that I'm on my own. If you are creating a sense of urgency why not provide a countdown of days left?   
• $25, not sure whether that's good value or not and an asterisk makes me nervous that there are conditions attached.  Yes, I was right, maybe I'm not eligible.
• Nurse Practitioner in store. Good for them. 
• Good information that no prescription is needed
• Quick and convenient. What does quick mean?  Why is it convenient?  To whom?
• Background image of a needle. Are you kidding?!!

Example 2 Get the jab not the flu

Priceline

• Get the jab not the flu is likewise a funny line but also effective because it helps me understand the trade between outlay (mild "jab") and outcome (avoiding flu)
• Nice use of "jab" to diminish the pain of the experience
• Why wouldn't I? Well, of course there's no real reason not to!
• A $30 vaccination protects me?  Hey, I like to be protected and $30 seems reasonable.
• No prescription and only 10 minutes. Yes, 10 minutes is do-able.
• Two options to book, online or in store so there's no excuse.
• Background image of a hip young chick. Well if she can do it, so can I plus she makes the bandaid look cool!  Wonder if they come in different colours.

Lessons from jab central

Every aspect of marketing should be regarded as an opportunity in choice architecture, and you have the power and responsibility to shape the behavioural outcome of your communications.  Both ads were created with the objective of stimulating flu shot bookings. Both ads were presented as banners on their home page. Both ads articulated price and attempted to create a sense of value.  

And yet the behavioural influence exerted by "Get the jab not the flu" is far stronger than "Arm yourself against the flu" because it overcomes status quo bias (ie where we can't be bothered to get a flu shot) by creating a sense of scale between what we have to gain vs what we have to lose.  The loss (discomfort of injection, price, inconvenience) is minimised to such an extent that the gain (avoiding flu) seems appealing enough to act.

So if there is one call to action from flu season it is this; you must overcome our innate tendency to do nothing by ensuring the gain of changing behaviour exceeds the loss.  If a jab can do it, so can you. Happy jabbing.

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