Wednesday, April 09, 2008

All Behaviour Is Incentive Lead.

Customer behaviour is an interesting thing. That's why I read Gerard O'Neill's blog Turbulence Ahead, Seamus McCauley's Virtual Economics, and Tyler Cohen's Marginal Revolution. What do these have in common? They all take a micro-economic view of human behaviour in that people are basically, incentive led. The problem, is that we don't build the right incentives. I was much taken to day by a lead provided by Gerard to Nudges where they show examples of where small "nudges" to your behaviour can have dramatic effects. One trick is to put the "nudge" near a decision point: for instance, putting a sign "why not use the stairs" near the elevator increased use of the stairs by 200%. Marketers have known this for a long time but it still makes me wonder why we don't always put the right information or action choices near key decision points. If someone is late paying their bill, they know they are approaching a late fee, they are often making a decision to "not pay", to "forget to pay", to "re-prioritise" payment options. You can send a call / SMS / Nudge to them and just remind them that this is a decision point, and that it has consequences. I am also thinking about how all these "nudges" and "micro-incentives" could work in terms of social media. Given the liquidity of digital environments, it has to be a huge new area.

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