23 Apr Using Psychology to Influence Posted at 04:44h in Services Marketing, Tools by Danielle Spinks-Earl Share Jhonnie Blampied makes a good point in the latest B&T – that creativity is more important in the offer than the way the offer is communicated. He shares an example of a Londoner who suffered from people frequently parking across his driveway, usually when he was trying to leave for work. He tried putting up a ‘No Parking’ sign and then ‘No Parking, Please‘ with little effect. He added ‘Offenders will be Prosecuted’ and it made no difference. Finally he took a spray can and wrote SKINHEADS LIVE HERE above the garage and never had a problem again. “There is a real difference between what advertisers write into their communications and what consumers read into them,” says Jhonnie. This is exactly where marketers need to tap into the power of behavioural economics. It is well understood that people like to avoid loss – the loss, for example, incurred by damage to one’s car. People also like to approach activities that offer some kind of reward or fun. This is the approach / avoid behaviour paradigm. Some gymnasiums have understood this. When a gym charges an annual fee, the customer will work out a lot immediately after payment and less an less frequently in the months that follow.Why? Because the memory of this sunk cost is raw and they want to maximise value from that expenditure. Over time, the painful associations of forking out the money diminish and so does the motivation to recoup value. But that just frees up capacity, right? That’s not a bad thing? As Gourville and Soman write in the article, “Pricing and the Psychology of Consumption”, you have to encourage people to use a service in order to get a repeat purchase (Harvard Business Review, September 2002). If Joey stops going to the gym three months after buying his annual membership, do you think he is going to see the value in renewing it nine months later? Not if he doesn’t use it. Therefore, it is much better to have members pay quarterly or monthly. In JB’s article, he gives an example of a gym that tips tradition on its head. This gym charges a joining fee as well as a monthly membership fee. However, if a customer visits the gym twice a week or more throughout the month, the monthly fee is waived. If they don’t visit the gym, they pay the fee. To avoid loss, the customer is encouraged to exercise. Social change can also benefit from understanding the same principle. Attempts to encourage young drivers to stop speeding have generally used the shock and fear appeals, with very little effect. This is possibly due to Shock and Fear both offering a strange attraction to adolescent males. When NSW released its highly successful No one Thinks Big of You campaign, the appeal changed from one of violence and gore to Shame. If you speed, everyone will think you have a small penis. So, instead of being an attractive activity, speeding became an activity to Avoid. JB writes that Volkswagon used the same understanding of behaviour, but took an alternative position. It encouraged drivers to participate in ‘not speeding’ through a fun/reward appeal. How? The speed camera lottery campaign offered VW drivers a chance to win the proceeds of others’ speeding tickets. Perhaps City Rail could take on a new advertising strategy? Instead of the tired and disingenuous claims of reliability and comfort (everyone knows they get packed and are consistently unreliable), why not appeal to the ‘educated commuter’. He has one up on his colleagues every day. He is Mr Answers at the meeting because he’s the one who has already read the Australian Financial Review while they were stuck in traffic. He he. What do you think? Tags: B&T magazine, behavioural economics, hbr, no-one thinks big of you, psychology of pricing, RTA, speed camera lottery, volkswagon Danielle Spinks-Earl BA Comm. M Mktg. Freelance writer, designer, marketing communications manager.