King & McGaw Developers

Colin Strong from GfK did a great presentation at Digital Shoreditch yesterday on behavioural economics called The lesson of jam sandwiches for service developers and marketeers which ties in with a lot of things we’ve been discussing internally. Here are my takeaways:

Avoid choice overload

In the Jam sandwich study, customers were presented with 24 jams, which resulted in a 3% takeup. When the number of jams was reduced to 6, the takeup jumped to 30%. Reduce choice to increase conversions.

Decoy options

Introducing options in a product mix can have an effect on the percieved value of the other options. As an example, when consumers were shown three options for Economist subscriptions…

1. Online only for $59
2. Print only for $125
3. Print and online for $125

…nobody picked option 2 and 84% choose option 3. That’s because option 2 is acting as a decoy option 3 more attractive. When option 2 was removed, only 32% selected Option 3.

Encourage a sense of ownership

Once consumers feel they own an item they are reluctant to part with it. On Ebay, the highest bidder often starts thinking about possessing item, leading to more aggressive bidding. Amazon Prime’s limited trial makes customers focus on what they will lose if they cancel their subscription.

Social influence

Consumers are hugely influenced by the behaviour of others. Stock levels create a fear of missing out. I also think that positive social reinforcement - showing that other “real” people are buying an item - can be a huge influence also.

Create magic moments

Overall assessment is not key, only if the customer had a very positive or very negative experience. Create “positive peaks” through magic moments to leave a positive impression. Add something for free. It’s inexpensive and has a disproportionate impact on satisfaction.