B2B Rising: Applying behavioral economics to messaging
In the digital age, message still trumps medium, says Walter Ruckes, VP-sales and channel engagement at marketing firm BI Worldwide.
And marketers who shape their messages with an understanding of behavioral economics in mind have an advantage.
The study of how thoughts and emotions influence customer decisions can help marketers “figure out how to frame product messaging or offers in a way where consumers will feel like they are missing out if they don’t complete a specific action,” he told BMA Buzz.
“Digital natives are switching media up to 27 times an hour,” Ruckes told BMA Buzz. “If you try to keep up by only using technology or other tactics, you will run out of ideas—and budget— very quickly.”
BMA Buzz: What is the study of behavioral economics?
Walter Ruckes: Behavioral economics is the study of how thoughts and emotions influence the decisions we make. Essentially, it takes classical economics and applies the human factor. The basic thing to understand is this: Human actions are largely driven by emotion, not rational thinking. This is one of the keys to behavioral economics. As humans we tend to say one thing and do another.
BMA Buzz: How can behavioral economics help improve marketing programs?
Ruckes: Every marketing program can benefit from applying behavioral economics. And many marketers are already using pieces of the science, probably without knowing it.
At the most basic level, a free space on a bingo card is what the behavioral economists would call “illusionary goal progress.” If the first experience your customers have with your brand isn’t as easy as that free space, you may want to change things.
On the other side is “goal gradient theory.” This is the concept that people expend more effort the closer they get to a goal. Think of a world-class sprinter and the acceleration as they approach the finish line. Customers are goal oriented too. The challenge for marketers is to determine what those goals are.
Another insight that we’ve seen applied frequently is “choice architecture.” The example I like to use is very simple. Every parent knows that you don’t give kids unlimited options. You don’t say: “Which shirt do you want to wear?” You offer limited options in a framework: “Do you want to wear the blue or the brown shirt?”
This is a great tool to use when motivating employees, sales reps and customers. Top managers work with employees to discuss options, choose the best direction and then set goals around it. The people you think of as customers respond equally well to a similar conversation and goal-setting approach.
Behavioral economics, particularly the concepts of framing and loss aversion, can help improve existing marketing campaigns and create new, more effective ones. For example, framing is the way in which you frame or present a situation, dilemma or opportunity. Loss aversion is the understanding that humans naturally have an aversion to loss. The desire to not fail overpowers the desire to win.
Marketers need people to believe in their product, brand or service and take action on what their messaging says.
The main point is when trying to persuade people, make sure you frame the problem in a way that reveals to them what they’ll LOSE, in addition to what they’ll win.