Here is an idea that I should have realised sooner:
Great businesses are great because they know how to change the behaviour of their target audience to fulfil their business goals and objectives.
Think about it. You’re competing in a market with hundreds of businesses and thousands of customers. If we compare it to dating, we can see that some of those customers are single, others are committed, but only few are truly happy.
A great business knows this. They know that with the right ingredients, any customer can be brought over to their side. Great businesses, therefore, are in the behaviour change business.
These include easy behaviour changes like deciding which bread to buy to more complicated ones like which sales CRM will be rolled out to 20,000+ employees?
Merely changing behaviour is not enough – this behaviour change needs to happen at scale.
And what better scaleable model than human psychology? A discipline that goes to the very heart of desires, passions, ambitions and everything in between. Take these principles and apply it in an economic context, and you’ve hit gold. If familiarity is the breeding ground for scalable solutions, then human psychology is the seed that makes it happen.
You can change anyone’s behaviour (even your harshest critic) with two elements: (a) Motivation and (b) Ease.
We’ll cover ease in the next issue. Today, we’ll focus on motivation and it’s core element: Incentives.
Charlie Munger famously said – “Show me the incentive and I will show you the outcome.”
He was not wrong. Over the years, many people have tried to understand the power of incentives, including yours truly.
Let’s say you desire a behaviour Y and the person currently is exhibiting Behaviour X. How do you make him change to Behaviour Y?
Depends. What are you using as bait?
To answer this question, we need to understand something known as Operant Conditioning.
Operant conditioniong helps change behaviour using reinforcements.
And what are reinforcements? It’s just a fancy word for incentives.
Let’s say you ask your friend to water the plants at your apartment while you’re away on vacation. Your friend, being a lazy snob, says no.
This “no” is what is known as the default behaviour, the one you’re trying to change. In more technical terms, this is known as free operant level.
Now you could stay back and not go on vacation – that could be one way to go.
But, you also don’t want to piss off your partner who has been wanting to take a vacation with you since dinosaurs last roamed the planet.
Here is where operant conditioning becomes powerful. If you know your friend, you know what (s)he likes, what (s)he hates. In my case, I have a friend who is a football addict.
Now what we do is we reward him for coming in to water the plants. Each Wednesday, I text him saying “Hey make sure to water the plants man”.
This act of sending him a text is what is known as an antecedent stimulus.
Now, if my friend comes on time, I’ll gift him a ticket to watch a football game on Saturday. Since he likes football, he’ll come back for more. He comes in to water my plants again, I send him yet another ticket.
The desired behaviour is reinforced through positive feedback loops. This desired behaviour change is known as Terminal behaviour.
Reinforcement is anything that increases the probability of a response or particular behaviour occuring.
What will happen over time is that the feedback loop will become so imprinted in the reward centres of his brain that he will come in to water my plants as soon as he gets my text – or better – even before he gets my text.
So what does the algorithm for operant conditioning look like?
If a person does X and it is the desired output, then in order to increase the frequency and the intensity of the output, you can use the reinforcement principle.
So how do you use operant conditioning in your own marketing campaigns or your landing pages?
First: Define your desired behaviour.
Second: Find the rewards and punishments of engaging in the new behaviour. Find out to what degree your audience care about the rewards and punishments.
Third: Find out what benefits or rewards you can give him to make him feel good about his decision? And make him come back for more? And better yet spread the word about your business who offers loads of rewards to their customers.
But what if they don’t care about the rewards? Do you make them care about the rewards? Or work with what you’ve got?
It’s the latter. Find out what rewards he wants. This will happen when you know your customer, or better yet ask him.
Also consider the switching cost of moving from default behaviour X to new behaviour Y. What is he missing out on my shifting from X to Y? Can you make him whole?
Here’s the technical version:
– Positive reinforcments add or increase a pleasant stimulus.
– Negative reinforcements: Reduce or remove an unpleasant stimulus.
Here is how I would appy those principles to a landing page, using a hypothetical example.
Let’s say you run a SaaS business helping small business install chatbots on your website.
The sub-headline on the landing page reads something like this:
Chatter is a chatbot tool that helps you solve customer feedback at scale.
Here’s something I would experiment with:
I would add a small link at the bottom of the sub-headline that asks them to answer a short spaced-repetition quiz. Something as simple as fill in the blanks. Once they do, they will be rewarded with a prize. This is the bait – our antecedent stimulus that prompts our prsopects to perform a certain action.
The prize? A 14 day free trial option. Rather than offering them the free trial right away, I engaged my prospects and played a nice fun game with them. Not only will they remember me, but my quiz has also imprinted my brand name in their memory. Since they have stayed on my page for more than 1 second, my brand recall went up by more than 60%. That’s perfect for us.
Let’s take it to the next stage – reinforcing the behaviour. You want to reward them for taking that action “signing up for the free trial”.
You want them to do you one better – become a paying customer. Within the thank you email you that I send him, I’ll add another game in there. This time, I will ask them to guess which pricing plan do they think is the most popular among the customers?
They answer Tier 2. If he is right, I reward him the Tier 2 pricing plan at a discounted price. Since he is right, he will appreciate the gift. If he answers Tier 3 which is the wrong answer, I gift him Tier 2 at a discount. That will make him feel good because he has won a “participation prize”.
You can always add more more conventional operant conditioning nudges in your campaigns:
– Free e-book
– Free acess to a webinar
– Refer a customer and get rewards.
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