Behavioural economics for beginners
It really doesn’t matter whether you are the ultimate consumer or the gatekeeper, you don’t optimise economically the way you buy. You respond to what you see based on cues that you have grown to know, and pick out when you see them.
A bit like the cocktail party effect for eyes.
So actually if you want people to change what they buy, you need to change what they see.
The easiest place to change what people buy is actually at the point that they make a buying choice. They may be at the point where they still have a great deal of choice, such as the supermarket, or just at the tail end of a selection process. It matters not.
At which point you can offer them an incentive to change their mind, or assist them to make it up. This can be a cut price that they can claim at the checkout (in store or on line) but you can see how well an individual offer stands out in the picture. Or you can offer something else of value that costs a lot less but has a high intrinsic value. OR they have to send away for. They have the intent to redeem but, mostly, they don’t.
This does not, of course, lessen the value of the offer at the time that you made it. That’s freedom of choice. You can judge the value of this because Which? don’t like it. So it obviously works.
If you want to trigger serious change, you need to seriously stand out. Through our siteyousay.org we run on pack (or any other communication) offers that change minds. We also track through both sales performance and shopper response.
Looking back over 10s of thousands of redemptions and the sales uplifts and feedback that delivered them from on pack offers we notice the following;
- A useful offer has delivered the sales uplift which was the equivalent of an 80p drop in price for the cost of .05p per pack
- The average uplift was 20% in sales, with the average redemption under 3%
- Analysis of the results showed that this brought people into the brand untouched by price discounts. Over half of all claimants were new and came in from competitors. Despite running alongside price promotions.
- Claimants actually proved to be remarkably loyal. A tracking study showed that 50% more first time claimants were still buying 6 months later compared to existing users along for the ride.
- Claimant loyalty reports (the Ultimate Question) have proved to be remarkably prescient. As witness the sweetener that people didn’t like the taste of, that was discontinued a year later. It was the only one we have found with a negative NPS score.
You do, of course, need to know your market to select the offer you make, since some people are very much more sensitive to this kind of approach than others.
But when you can get benchmarked reports, really good value lasting sales uplifts AND an e-mail list of confirmed supporters, ALL for much less than the average cost of a discount, why do brands not use it more.
Unfortunately no one has yet written a treatise on the behavioral economics of owning a brand.