Four reasons why you buy your regular morning coffee
Have you ever wondered what goes on in your brain when you buy something? Why did you choose the leading brand mayonnaise over the supermarket own brand? Why did you buy the expensive shampoo? Why do you still buy your morning coffee at your regular shop in town rather than trying the coffee at the café that just opened next to your office?
Phil Barden is the man who can help you answer these questions. At a recent conference Phil captivated us with scientific insights from psychology, neuroscience and behavioral economics that explain our decision-making, with a particular emphasis on why we buy what we buy.
Phil’s experience is from a corporate marketing environment, yet his insights as to why people make decisions are equally relevant for our fundraising and campaigning organisations. After all, isn’t our job to help people make decisions about how to support the causes they care about?
The autopilot and pilot
Phil explained about two systems that are used for decision-making based on Thinking Fast and Slow by Daniel Kahneman. (see my blog on thinking fast and slow for a little more background)
- System 1 is the autopilot: it is fast, automatic, intuitive and geared for action – it is an implicit process.
- System 2 is the pilot: it is slow, rational, controlled and geared for thinking – an explicit process requiring effort.
Your autopilot allows you to act without really thinking. For example a strong brand (like Starbucks) is processed in system 1 – you know what the brand is, you don’t even have to think about it. The brand acts like a short-cut, which might explain why, if you are in a new place and want a coffee you might choose to go to Starbucks rather than try somewhere new. To be successful in influencing purchasing decisions you must be aware of how both systems work together and how to appeal to both, but with particular focus on activating the system 1 autopilot.
Net value = reward – pain
According to Phil, when we buy something it involves a decision between reward (a psychological ‘value’) and pain (price): the brain offsets the two to create a ‘net value’. The higher the net value the more likely we are to purchase. Value and cost are relative and therefore can be influenced by the context that we are in.
For example in experiments, more products are sold from price lists that do not have pound signs. This is because the monetary symbol triggers pain. Remove the pound sign and you reduce the pain and increase the net value. It’s incredible that such a small change in how an item is presented could have such an impact on the decisions that people make. I wonder what would happen if you tested this with your next direct mail campaign? If you removed the pound sign when you ask for a donation, would it make a difference to results?
‘Perceptual fluency’ is the autopilot ability to process something that is familiar more quickly that something that is not. This can be incredibly subtle, like in the case of an advert for a cake. A picture of the cake with the fork on the right hand side, when tested, sold more than the exact same picture with the fork on the left. This is because most people are right-handed and therefore the right-handed placement of the fork requires less effort to process. How many of these subtle nudges are you being influenced by all the time? Why did you really pick the own brand mayonnaise, or the more expensive shampoo, or your regular morning coffee? If you applied these subtle nuances to your marketing and communications, I wonder if it would make a difference to your results?
Finally we learned about the importance of triggering ‘process endowment’. This is how starting someone on a process towards a goal influences purchasing decisions. In an experiment*, a car wash company issued two types of loyalty cards. An 8-stamp card and a 10-stamp card with 2 stamps pre-stamped. When a customer completed a card they received a free car wash. Both cards required 8 purchases to complete the card. Yet sales from the customers with a pre-stamped card were 79% higher than those who started with the un-stamped card. Framing the task as partially completed lead to faster completion and greater commitment. Cafes often have a system where you collect stamps for a free drink. Do you have one? Is it pre-stamped?
You already know and use a lot of these techniques in your fundraising, for example seeding online fundraising pages with donations before you ask your wider networks to support them. Perhaps you have never labeled it ‘behavioral science’ before – just common sense.
That said, in an increasingly tough environment, if we more rigorously applied the techniques that Phil has evidenced to work in the corporate world to our fundraising, could it provide a greater opportunity for us to help more people give time and money to the causes that they care about?
Phil is the author of Decoded – The Science Behind Why We Buy and it is packed with evidence-based practical examples about why people make decisions, that you could apply to your fundraising. It is well worth a read.
*Nunes JC, Dreze X. 2006. The endowed progress effect: how artificial advancement increases effort. Journal of Consumer Research. 32:504–12