Nudge
We all know that most purchase decisions we make are not driven by purely rational thought processes. That generally, we make decisions based on our emotions and then seek to rationalise the purchase afterwards. (Anyone who’s ever spent £200 on a pair of shoes or bought a 50” TV knows this to be true). Which is why planners are getting really excited about the discovery of ‘behavioural economics’ (old-ish hat in academia), which offers empirical evidence into how people really go about making decisions. IPA president Rory Sutherland sees spreading the word as one of his single most important tasks whilst in office. He cites the example from behavioural economics bible Nudge, in which the economist authors came up with a more insightful and successful solution than the advertising agency. Using the concept of “loss aversion”, they created a pension plan where investors signed up for a pension that only deducted money from their earnings when they received a pay rise. By ensuring that the saver never witnessed a reduction in their disposable income, the plan was both brilliant and highly effective: pension contributions among this group increased by 200%. There is no reason why an agency couldn’t have come up with this strategy. We simply need to embrace the power and value of greater human understanding.
We live in a hectic world. Making informed and rational decisions for all purchases is nigh on impossible so we use a variety of heuristics, approximate rules of thumb, and cognitive and perceptive biases to simplify the decision-making process and allow time for all the stuff in life that happens in between buying things. By better understanding these psychological and behavioural shortcuts, we can begin to truly understand how our customers make decisions, help simplify the process, and maximise the impact and effectiveness of our communications.
Thanks to Dan Broadwood. Dan can’t smell in France.
