There is a particular author that we have long been a fan. While not a household name, for those who have read his work, it has in many cases profoundly changed the way they approach their business. He’s not a popularist like Seth Godin or an amalgamist like Malcom Gladwell. That his work reads as smoothly as it does is almost a minor miracle given his academic credentials and the imposing sound of his focus area - Behavioral Economics. Sounding familiar? It should. We’re talking about Dan Ariely, and he, along with another well renowned professor and author, Michael Norton gave an all day seminar to a hundred or so in the NYC tech scene this past weekend. It wasn’t called a seminar on user acquisition, but as we see with behavioral economics, it should have been.
User acquisition is all about getting users to take an action. Getting users to convert means understanding why users do what they do, and that’s exactly what behavioral economics focuses on. As researchers, they didn’t design their experiments so that marketers could make better converting pages. Their research just happens to be one of the few with amazingly applicable insights, ones that could alter the trajectory of a performance marketing business.
“The Two Greatest Words in The English Language - De-Fault”
Unlike more traditional disciplines of economics, behavioral economists begin with the viewpoint that humans aren’t inherently rational. We might strive to be, but by and large we do not know why we do what we do. The narrative of our lack of understanding is told through experiments and analysis. One such analysis has lessons directly related and already well used by our industry. It’s all about organ donation in Europe where a group of countries has amazingly high donation rates and others, many of whom are neighbors and similar to those with high rates, have incredibly low rates. It’s a confusing situation, but a small reason explains the variation - the sign-up form. On the high donor percentages, the form is opt-out. On the low donor sign-up, it is opt-in. What this and other research confirms is that when there are complex decisions involved, we as humans often let the person in charge (of the form) decide for us. The default choice in so many situations is the most compelling, because it is the path of least resistance.
Another example of the default comes from the experiences of prescription mail order company Express Scripts. Instead of getting drugs at the store, they will mail them to you in three months supply. At some point in using them, the company wants you to save money and switch to generics when applicable. If you asked people do they want to save money, they answer yes, but judging by the number that actually switched, you would think that people either didn’t want to switch or didn’t like generics. So what did they do? They tested many calls to action emphasizing the costs savings of switching. Eventually, they said - either you pick which you prefer or we stop sending you medicines period. Guess what? People took action, and the company actually got a pretty good feel for people’s real preferences between brand name drugs and generics.
Complexity only makes things worse on our ability to decide... or better from a marketer’s standpoint. Think about 401k’s. In the beginning, we set them up. They are brutally complex so we just go with some allocation. The markets change, our needs change, but do we really ever change our allocation? No. Studies continue to show how this plays out including one with jam. It’s one of those items that actually ties in well to performance marketing as people don’t go to the store to buy jam. Unless it’s on your shopping list, who really thinks to themselves that today is a good day for that. Research by Ariely looked at what happened when at a store there was a display for 6 jams versus 24, i.e., what percentage of people approached the stand, sampled the jams, and ultimately bought jams thanks to some incentive at the table top. The results in the beginning were intuitive in that the percentage of people who approached and tried were higher in the 24 jam layout, but in terms of purchase, it was factors higher with the six jam set up.
The lesson among these studies is that the moment something becomes the default is more likely to be carried out; marketers shouldn’t underestimate the default and how it can be positioned in a way the people wouldn’t think to change it. Secondly, people generally find it hard to move away from whatever was their first choice, and if someone throws in additional complexity, that will only increase the odds of someone keeping the choice at the default or in the case of jams not taking the action desired. Coming up in future articles on this topic are the quirky nature of preferences, behavioral economics style relativity, and more.
Editor
DM Confidential
www.dmconfidential.com
|
Digg 
