Behavioural Economics in B2B marketing: To BE or not to BE?
- 06 Oct
Behavioural Economics in B2B marketing: To BE or not to BE?
"Follow us!" "Come to this event!" "Download this!" Let's face it - we are in the business of constant persuasion. And, as a result, many companies believe they should be providing their audiences with rational reasons to do things by explaining their technical superiority or business benefits, just to name a few.
So far so good, right?
People do not always go with ‘the best option', do not take the time to weigh up all the pros and cons, or often simply choose to do nothing at all (although it is quite obvious that they should be). The fact is, both in personal and business decisions, people do not always act in a way that is strictly rational or even beneficial to them. This is because human actions are largely driven by emotion. We tend to say one thing and do another.
In business, we are all under pressure for accountability, dependent on data to tell us WHAT works. But we also need something that helps us understand WHY customers are behaving the way they do. This is where behavioural economics comes in. In essence, behavioural economics applies the human factor while taking traditional economic findings into consideration. Its key focus is to understand the impact of emotions within the process of decision-making and choices.
Behavioural economics contributes in making irrationality more predictable and helps shape consumer behaviour. Although companies and even marketers often successfully yet unknowingly apply techniques from behavioural economics, understanding exactly how small changes to the details of an offer can influence the way people react is crucial to unlocking even more significant value, which can often be done at very low cost.
NEF has listed 7 BE insights that you should be taking into consideration when creating a marketing strategy for your company:
- Other people's behaviour matters: people do many things by observing others and copying. People are encouraged to continue to do things when they feel other people approve of their behaviour.
- Habits are important: people do many things without consciously thinking about them. These habits are hard to change. Even though people might want to change their behaviour, it's not easy for them.
- People are motivated to ‘do the right thing': there are cases where money is demotivating as it undermines people's intrinsic motivation. For example, you would quickly stop inviting friends to dinner if they insisted on paying you.
- People's self-expectations influence how they behave: people want their actions to be in line with their values and their commitments.
- People are loss-averse and hang on to what they consider ‘theirs': this can lead to what could be described as irrational decision making to avoid any perceived loss.
- People are bad at computation: when making decisions, people put undue weight on recent events and too little on far-off ones. They cannot calculate probabilities well and worry too much about unlikely events and they are strongly influenced by how the problem/information is presented to them.
- People need to feel involved and effective to make change: just giving people the incentives and information is not necessarily enough.
Next time you are planning next quarter's activities or writing a brief, try to consider how point 1 could influence a social media strategy, or how point 5 could support free trials instead of discounts. Keeping point 2 in mind, we should constantly remind ourselves that it is crucial to deliver clear strategies that will have a genuine impact on the greatest change in customers' buying behaviour.
Update - 7 October 2014
AccountancyAGE reports that HM Revenue & Customs (HMRC) has recruited a team of psychologists to help them to get tardy taxpayers to pay their taxes. The wording of thousands of letters from HMRC to delinquent taxpayers has been "subtly altered" with the aid of these psychologists to inspire guilt. The chief secretary to the Treasury Danny Alexander has revealed all at the Liberal Democrats' party conference. Apparently, HMRC has "pinpointed the exact words and concepts" which trigger people to pay what they owe.
Speaking at the Liberal Democrat party conference, Mr Alexander said: "We are using psychologists and behavioural economists in HMRC to get the money quickly. Tax dodgers beware - we know where you live, we know how much you owe, and now we know how you think. Your behaviour is unacceptable, and we are coming for our money."
At The Marketing Eye, we specialise in offering tailored marketing solutions to a range of financial and professional services clients. If you would like to find out more about how we can help with your business, please contact us.
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