A few months ago I came across this article in the Globe and Mail on behavioural economics. Now before you nod off, it’s more interesting than it sounds! Behavioural economics (BE) combines psychology and economics to show how people make decisions in real life. By using BE, companies can influence the way people make decisions and increase the likelihood of purchase.
Companies should keep BE in mind as they craft their e-mails and website content. As the article mentions, “marketers are using BE to examine how customers select products, how they consume them, and what features, prices and designs could be improved to enhance the way consumers make choices.” It’s all about “nudges” … subtle cues that coax people to, among other things, make purchase decisions that work in the retailer’s favour.
One simple example of BE: Since people tend to “follow the herd,” companies label products as “Most Popular” or “Top Seller” to nudge people to jump on the bandwagon and make a purchase. (This is an example of social proof, a popular element of BE.) In addition to trying some of the tactics in the article, companies should give some thought to what offers they can label as “most popular” or “top sellers” and put behavioural economics to the test!
The impact of BE is profound: According to the Globe article, “firms employing BE principles have outperformed their peers by 85 per cent in sales growth and by more than 25 per cent in gross profitability.” Clearly a little nudging can go a long way!