Behavioural Economics: A Little Nudge Can Go a Long Way

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!

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Welcome to Tenant Service In Action

I’m excited to introduce the brand new Tenant Service In action blog, which I’ve launched in an effort to share information on the latest and greatest in tenant service. Before I launched Eservus in 1999 – if memory serves! – I worked in tenant services at both Cadillac Fairview and Marathon Realty (which was acquired in 1996 by Oxford), and I still have a keen interest in all things related to tenant service. In fact, that’s one of the reasons I launched Eservus back in 1999 – I knew that a concierge was a great tenant service, and by taking advantage of the Internet, I knew I could deliver it at a price point much lower than a traditional lobby-based concierge.

More and more property managers are making tenant service – and tenant retention – an important part of their overall business strategy. It’s hard to argue with the value of tenant service when you look at the statistics: It costs five times more to attract a new customer than to retain an existing one. Happy tenants are more than three times more likely to renew their leases than unhappy tenants. A five percent increase in tenant retention can result in a 40% increase in profit. Keeping tenants happy isn’t just a nice idea … it’s good for business.

With that in mind, I hope you enjoy the articles and features I’ll be putting together for Tenant Service In Action. I’ll be including content that I think will be of interest to those of you in the commercial real estate community who value tenant service and believe that happy tenants are good for business. If you come across an article that you think provides an interesting angle on tenant service, please send it along and I’ll do my best to work it into the blog.

I look forward to connecting with you!