Scrutinize Default in Sequential Decisions

Defaults ease the decision making in the face of an overwhelming number of options. Researchers at University of Alberta and University of St. Gallen have recommended developing a limited number of combinations of the major item attributes, then encouraging the consumer to choose one of these defaults and customize it.
     However, doing this risks another problem. The fault with a default is that it can contaminate the next steps when, as often occurs, a sequence of decisions is being made. Accepting a default choice in an early step might lull consumers toward lazy inattention to the subsequent steps or arouse resistances to following advice in subsequent steps.
     In studies at Erasmus University, Monash University, and University of Alberta, when participants accepted the default higher-quality alternative for an initial decision, they became less likely to select higher-quality alternatives in subsequent decision steps. When the default was the lower-quality alternative, those who accepted it were less likely to select lower-quality alternatives in subsequent steps.
     These findings run counter to the usual one that when people select higher quality or lower quality at the start on their own, they’ll stay with that preference. It is in line with the finding that when people accept a default rather than deliberate on their own, this strengthens their wish to change to a different option afterwards.
     The researchers emphasize that in their studies, both the higher and lower quality options were attractive. The pattern of findings might be different if the choices are between excellent and insufficient caliber choices.
     A way around the default choice’s contamination of next steps might be to offer an opt-out. Researchers at Northeastern University, Indiana University, and University of Cincinnati conducted a series of experiments involving opt-out configurations for food choices, financial incentives, energy usage, and privacy permissions.
     Rejection rates for the default option were about the same whether or not the consumers were told the purpose of the opt-out structure was to encourage them to accept the default. As long as consumers feel in control, they usually prefer simplicity, and accepting the default keeps things simpler.
     But the assertive disclosure did make a positive difference in another way: Those given it developed higher trust in the seller and were more likely to say they’d give the seller future business. This argues for employing defaults while making prominent disclosure to consumers that they have opt-outs.

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Tempt Shoppers with a Template 

Unbox the Resistant Customer 

Opt for Full Disclosure of Opt-Out Defaults

Promote Procrastination Protocols

Consumers regularly put off taking an action they’ve clearly decided is a good idea. Before agreeing to an attractive investment plan recommended by their financial advisor, the client wants to think about the move and discuss it with others. The store customer is drawn toward purchase by a surprise discount, but wonders if the price will drop even further next week.
     Slowing down the final steps might benefit the shopper, researchers at Loyola University Chicago and University of Massachusetts admit. But they point out it also could lead to lost advantages and, consequently, inaction regret and negative associations with the marketer. Moreover, the financial advisor and the store owner want to reduce needless delays.
     The researchers find that consumer procrastination is more likely when the cost/benefit tradeoffs are uncertain, the shopper is placing top attention on costs, or there are long time limits on the decision. To handle the first two of these, the salesperson can emphasize the benefits of both what is being considered in the decision and of getting the decision over with promptly. Price match guarantees also work. “Find a better price on the same item at another store or at our store during the next two weeks, and we’ll honor that difference.” “Change your mind about the investment decision in the next two weeks, and we’ll cover any total portfolio losses incurred during that time.”
     As to the third one, setting shorter time limits was found in the studies to be the most powerful single remedy for the procrastination. This might mean encouraging the procrastinator to establish shorter decision time limits for themselves. But more commonly, it consists of the marketer setting short time limits on an offer.
     The objective is to help your customers and clients set protocols for themselves in determining when it’s wise to move slowly toward a final decision and when it’s best to conclude swiftly. At the same time, we don’t want to punish those who have missed an opportunity. They’ll be doing enough of that on their own.
     Studies at University of Miami and University of Kentucky uncovered two ways a retailer can shortcut consumer irritation at missing a big sale: 

• Before returning the item to its regular price, offer additional discounts, each at a progressively lower percentage. 
• Advertise another opportunity to purchase merchandise on sale. The discount does not need to be nearly as deep.

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Whack Price-Beating Policies 

Follow Big Discounts with Smaller Discounts

Motivate the Rushed Toward Motivated Reasoning

Skewer Status Appeals to Seniors

People enjoy having a higher standing in the social hierarchy, with the privileges this brings. That’s why marketing appeals to status are used so often and work so well. But studies at Leipzig University indicate such initiatives are wasted when addressed at older adults. Seniors care substantially less about social standing than they did when younger.
     Seniors do want to know where they stand. One reason people continue employment beyond the time they could retire is that they enjoy the structure of the workplace and any status they’ve achieved as the old hand.
     That status might not be much, though, and there’s a likelihood the older worker will experience discrimination because of their age rather than respect for their achievements and wisdom. In Western cultures, the relationship between age and social status generally plots as an inverted U. In middle age, we feel higher status than we do when young or old.
     Both on the job and off, the discrimination is painful, and it can be illegal. But the desire to know where they stand in the social hierarchy does not mean they’ll respond to marketing which promises to give higher status or protect against drops in status.
     In the studies, self-perceptions of decreased social standing led to less negative affect and rises in social standing led to less positive affect than was the case when these people were younger. This research was a longitudinal study, so it tracked the changes from middle age to old age over time in the same set of individuals.
     With seniors, appeal to values other than social status. Older consumers place relatively higher importance on self-direction, tradition, security, and benevolence. They prize independent thought and action, respect long-standing customs, seek safety and stability, and welcome opportunities to attend to the welfare of others similar to them.
     Compared to salespeople, who are usually younger than them, the elderly place less importance on accumulating power or demonstrating expertise. Seniors are relatively less sensitive to peer pressure. That’s perhaps most clearly true for the oldest old. When you’re 98 years old, let’s say, there simply aren’t that many peers around.
     University of Stuttgart analyses concluded that older people make purchase decisions too impulsively. The reviewers attributed this to the trouble the aged brain often has in filtering out irrelevant thoughts and maintaining focus. The freedom from social status constraints might also contribute to the impulse buying.

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Value Different Values Systems of Seniors 

Long for Longitudinal Looks at Seniors 

Peer into Pressure from Obligation 

Keep Senior Shoppers From Worst Impulses 

Generate Seniors’ Generativity Now

Risk Stringent Return Policies

Let’s question assumptions about item return policies. Do those policies always need to be lenient in order to keep customer good will? No, reports a team from University of Wisconsin, University of Arkansas, Tennessee State University, and Portland State University.
     When the value image of the store or merchandise is highly positive, the return policy is a relatively minor consideration in shoppers’ purchase decisions. In those circumstances, enforcing a stringent policy lets you reduce costs of checking returned items for defects, damage, or usage and then disposing of them. Such costs are especially high from fraudulent returns, which are more likely with merchandise of high quality or fashion.
     In these studies, the signals of high value which reduced sensitivity to return policies came from highly positive user ratings. A deep discount on merchandise also might signal high value. In one of the studies, purchase intentions for a deeply discounted item were actually higher when the return policy was stringent than when it was lenient. The combination of deep discount and tight restrictions seemed to portray high value.
     Because item ratings and price discounts will differ among the items in an individual store, the researchers propose that retailers have a tiered set of policies. For instance, you could have a “no returns or exchanges” policy on closeout merchandise being sold at a deep discount; a generous “money back guarantee” policy for items newly introduced to the marketplace, including consumables you can’t restock; and policies of varying strictness in-between. Just be sure details of the policies applying to a specific purchase are apparent to shoppers in easily understandable language both at the time of shopping and the time of any item return.
     Take the sales channel into account. Because additional uncertainty often is associated with online transactions, return policies are a more important consideration for shoppers. Online retailers can multiply customer spending by offering to pay for shipping back returned items for whatever reason.
      University of Virginia and Washington and Lee University researchers tracked shopper interactions at online retailers instituting a policy of free return shipping. Following such a return, the average customer spent much more money with that retailer. Increases ranged from 158% to 457%. At least more than doubled, and at the maximum more than quadrupled, sales revenue. But when customers had to pay for shipping items back, post-return spending with that retailer dropped at least 75%, on average.

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Run a Store, Not a Public Library 

Return to Reconsider Your Return Policy 

Credit Those Money-Back Guarantees 

Hassle Less About Item Returns

Combine Competence with Warmth

Shoppers for services want both technical competence and interpersonal warmth from marketers. But as those shoppers sense greater competence, they tend to sense waning warmth.
     Nonprofits are seen as more warm and less competent than profit-making organizations. A broadly smiling face on an item or salesperson communicates warmth while disrupting impressions of competence. Politicians perceived as highly empathic tend to be perceived as less businesslike.
     The most influential point along that dimension depends on the consumer’s stage in the relationship with the marketer. Research findings from Vienna University of Economics and Business, Imperial College London, and South Westphalia University of Applied Sciences indicate you should: 

• Emphasize the competence in order to acquire customers, clients, and voters in the short-term because it enables the consumer to justify spending their money, time, and attention with you. 
• Emphasize the warmth in order to retain them for the long-term because it strengthens the identification of the consumer with the marketer. 
• Over all, emphasize warmth because it has a greater persuasive effect than does competence. The extent of warmth is sensed more quickly than is the extent of competence.

     For the studies, competence was defined as intelligence, efficiency, and capability to complete tasks. Warmth was defined as friendliness, authenticity, and interest in being of assistance.
     Competence is communicated by having answers or knowing where to quickly get them. A touch of humility makes it more likely you’ll be considered an expert. An image of competence also can be built with an image of the salesperson: When we see a portrait-style photo of someone posted in a public location, and then we meet the person face-to-face, we subconsciously grant that person additional respect. You could benefit from this by including in advertising photos of your employees or posting an 8 x 10 in the department where the employee spends most of their time.
     Warmth comes across with a smile, particularly when that smile is in response to one from the shopper. Certainly, a smile is sometimes all wrong. When a customer is distraught, and a smile would make you look uncaring. When you’re delivering corrective discipline to a staff member, and a smile would make what you’re saying seem unimportant. Or when a prolonged smile threatens to make you look simply dopey.
     Do configure these recommendations to fit the situation. A shopper might be expressly looking for competence over warmth or the other way around.

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Sell More by Being Less Certain 

Smile Often 

Warm Up Cold Calls 

Kill Elder Abuse by Slaying Elder Stereotypes 

Attack with Credibility

Call Up Mettle with Middle Names

Hey, call me Bruce and if I don’t wince, you’ve fostered a familiarity which could build trust. Hey, call me Bruce David Sanders with me wincing, even if only inside my mind, and you’ve activated my ability to preserve self-control in the face of temptation. It’s the middle name which mobilizes the mettle, according to studies at Virginia Tech, McMaster University, and The Hong Kong Polytechnic University.
     The explanation is that as is true for most Americans, authority figures included my middle name when disciplining me as a child. The middle name is associated with guilt, and this subconsciously perseveres into adulthood. Note that the effect might be limited to U.S. consumers. The researchers did not see it in study participants from India, but did observe it with American participants.
     When consumers were given a form with their full name on it, they were less likely to say they’d spend money on a “fun pair of headphones.” When a different set of consumers was shown how their full name would appear on a gift card, they became more likely to choose the Subway one instead of a Dairy Queen one. When asked to imagine how their full name would look when engraved on a bottle, that set of consumers was more likely to favor the bottle holding a water-based drink rather than a sugary drink. Comparisons were to study participants asked to consider a first-last-name rather than first-middle-last-name format.
     The effect could be used to nudge people toward making better consumption choices at retail and beyond. For instance, when a health care provider induces guilt in a patient for noncompliance with instructions, the patient builds respect for and satisfaction with the professional’s technical expertise and communication skills, according to studies at University of Northern British Columbia. This was true for nagging about medication regimen adherence, maintaining lifestyle changes, and keeping appointments. Patients expect negative regard from doctors about noncompliance. Calling the patient by their full name would help call up the guilt.
     On the other hand, use of the first name personalizes the selling message by referring to a characteristic of the consumer. Researchers at Universiteit Leuven in Belgium found that across languages and cultures, people’s self-esteem is heightened at least a bit not only when their name is used, but also when they are shown or given products with brand names starting with the first letter in their own name.

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Name Your Customers 

Show Impatience to Noncompliant Patients 

Praise Your Customers 

Offer Late Alphabet Customers Head Starts 

Step Away from Calling Stephen Stephen

Charge $0 Instead of Saying Free

In my retailer workshops about pricing, I’ll usually include a classic consumer psychology finding that if a product is offered for free in a promotion, the shopper becomes less likely to buy the product at full price afterwards. Researchers explained this by saying that when getting it at no charge, consumers conclude consciously or subconsciously the product must be of low quality.
     Frequently, one of the participants in the workshop will reply, “If that’s true, why do so many marketers keep using ‘Buy One, Get One Free’ promotions?” My flippant answer is, “Because they’ve not been smart enough to take my advice.”
     But I’ll than follow this with the more accurate answer that consumers have a complicated relationship with zero. The positive feelings about getting a free item can increase sales, but the way in which the offer is presented influences the degree of positivity.
     More recent research results, from Korea University and Pukyong National University, recommend using “Get it for $0” rather than “Get it for free.” Here, the researchers’ explanation is that the $0 phrasing does a better job of drawing attention to the cost savings.
     Supporting this explanation is that the difference between the two phrasings was greater for shoppers who are highly price-sensitive and when purchasing an item for oneself rather than as a gift for someone else. If you don’t pay much attention to price, the cost-savings means less, and to preserve the emotional value of a gift, we might actually resist high attention to saving money.
     As to why the $0 phrasing does a better job of drawing the focus, other research suggests to me it might be because that format is unusual. Consumers see the “free” phrasing much more often in promotional offers such as BOGO and gift cards.
     Statements using unexpected units increase the consumer’s interest in understanding reasons to make the purchase and distract the consumer from thinking of reasons not to buy. Researchers at University of Cincinnati, University of Indiana, and University of Twente told study participants that a candy bar would cost 100 cents, membership in a student interest group would cost 300 cents, and a tuition increase of 7500 cents was slated.
     The participants given this information, rather than the amounts in more conventional dollar figures, became increasingly anxious to make a purchase decision and increasingly certain of any positive judgments of the product, activity, or cost.

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Give Shoppers a Comparison Point 

Label Freebies as Samples 

Go for BOGO Free Over BOGO Discounted

Age Vaccination Credentials

Vaccinating the world’s population against COVID-19 was more than a pharmaceutical and logistics endeavor. It also required the psychology of persuasion.
     Research at China’s Sun Yat‐sen University on American consumers hints at one tip for increasing acceptance of a vaccine: Emphasize aspects of it which have been around for a long time. How is it similar to vaccines developed in prior decades which have proven to be successful and safe?
     The general finding is that people prefer pharmaceuticals which have a longer history. The studies did identify a consumer segment which opts for newer potions, thinking this signals increased effectiveness. It happened even when these people were told the newly and formerly developed medications were equally efficacious. But given those claims, most of the study participants expressed a preference for the treatment with the longer tenure. In a supplementary study, the researchers found that physicians, too, prefer to prescribe medications which have been around longer.
     An international survey led by researchers at GSK in Belgium reported that seniors are not sufficiently conscientious about following vaccination recommendations. As we age, our immune system becomes less effective at generating the antibodies afterwards. Using a vaccine with higher doses of the antigen does not overcome the problem.
      We can help elderly health care consumers by encouraging them to enter the situation calmly, to maintain calmness during the transactions, and to insist on enough time to calmly consider all the trade-offs prior to finalizing a decision. This holds for the length of time we should expect them to take in accurately balancing the benefits against the risks of inoculation.

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Vaccinate to Encourage Seniors’ Vaccinating 

Retire Impatience with Seniors’ Price Decisions 

Hear About Herd Immunity 

Introduce Unfamiliar Products Like Old Friends

Coin Small Gifts Donation Drains

A pre-giving incentive (PGI) such as a coin or a small pack of greeting cards is included in about 40% of direct mail charity solicitations, report researchers at University of Kansas and John Carroll University. How effective are such PGIs for increasing the frequency and amount of donations? the researchers went on to ask. The inquiries consisted of field studies in which actual solicitations were mailed out and laboratory studies in which the researchers could observe participants’ behavior. 

     The results of these studies indicate greeting cards, address labels, or stickers might attract donations, but a small-denomination coin actually decreases the yield from the campaign. The researchers illustrate their interpretation of the findings with a question: “(I)magine a situation in which the person you have a burgeoning romantic relationship with gives you a $20 bill before asking you to attend a family function with them…. But what if, rather than cash, your partner gives you a gift like a bottle of wine or heartfelt greeting card?”
     Their point is that we think of charities as friends to the community. Address labels for our letters, a calendar for scheduling our meetings, or cards we can use to share our sentiments all support these communal norms. That’s true even if we prefer digital to handwritten and postal communications these days.
     That’s not to say these non-monetary gifts increased the net yield of the campaign compared to including no PGI. They didn’t, in large part because the gift costs money and response rates to charity solicitations are so small overall.
     Worse though is that a coin signals an impersonal exchange relationship. Compared to the study condition in which no PGI or a non-monetary PGI was visible through a clear window on the envelope, when a quarter was shown, recipients were more likely to open the envelope. We’re uncomfortable considering cash as trash. But the actual donation amounts were lowest with the monetary PGI. Most of those who did respond simply mailed back a quarter, doubtless the same one they’d been sent.
     A monetary PGI might be suitable for bringing attention to a new charity and its appeal. In the laboratory studies, those who opened the envelope did often read the solicitation letter. Non-monetary PGIs could serve as reminders of the charity and of the value of community each time they’re used, if they’re used. But simply making your case sans gift seems best.

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Cause Donations to Enhance Business Credit 

Enhance Variety in Nonprofit Donations