Sunday 26 July 2009

Too good to be true

free_sign_med A phrase i’ve heard a few times this week is “it’s too good to be true” – and I’ve not just heard it, I’ve said it.

When speaking with a potential supplier of kiosks we we’re discussing the business model. Basically, the model was defined as “you pay a monthly rental and we pay you a guaranteed monthly ad income which is more than the rental”. My first reaction was “why isn’t the UK plastered in these kiosks if they are essentially free” and secondly “it sounds too good to be true”.

Another occasion where this phrase raised it’s head was at some consumer focus groups we were doing. In the groups the proposition was presented and there was an obvious positive reaction, even a “wow” from one or two and then the dreaded phrase - “its too good to be true”.

Why is it that when presented with a fantastic offer we sometimes actually push it away. Well to answer this question it may be good to look at it from the other way – why do people fall for offers that are too good to be true – or scams. The Office of Fair Trading in the UK published a report recently looking at this.

In the report they point out a number of techniques that scammers use.

Scarcity Cues - whereby scammers make the offer seem in some way personalised to the consumer – making them feel as if they have done something special (or need to do something) to obtain it.

Induction of behavioural commitment - which uses small types of compliance to draw the consumer in - thereby causing victims to feel committed.

Visceral triggers – focusing on basic human desires and needs - using triggers that make potential victims focus on the huge prizes or benefits on offer.

Whilst I’m not suggesting we should be acting as scammers, it interesting that the report states “A successful scam involves all the standard elements of the 'marketing mix' and the building of a relationship between marketer and customer – that is, between scammer and victim.”

Unlike scammers, loyalty marketing does actually have a genuine offer and benefit – however it still needs to break through to consumers who may be wary of anything that looks like something for nothing.

When designing a loyalty proposition it’s important to balance innovation and generosity with what is perceived as realistic and appropriate. There are ways however to “soften” the programme.

Get people involved with small steps that introduce a “commitment”

Nunes and Dreze showed in their now famous loyalty marketing research on “Endowed Progress” that giving people a points bonus upfront – even where these points didn’t take them any closer to a reward in real terms – made consumers more motivated.

Essentially the consumer feels they have already committed to the programme and have invested value and so are more likely to want to complete the process. A small step that makes the “too good to be true” offer suddenly seem achievable.

It’s because of you…

What the Endowed Progress report also showed was that, at least for initial programme participation, people were more motivated when they we given a reason for any initial points bonus.

Even where this reason was “seemingly arbitrary” (i.e. “because you came to the store today"), it made them feel they had in some way earned it; that it was in a sense “because of them”.

Allow people to feel they are “gaming” the scheme

People like to feel like that are out-smarting “the system” – this illusion of control was found within Casinos when people were playing craps and it was shown that people tended to throw harder for high numbers and softer for low numbers - feeling they could in some way outsmart the randomness of the dice.

Letting people feel they have control over acheiving the rewards, whether this is reality or not can help turn it from something that is “too good to be true” into something which can be earned or acheived.

Avoid visual clues which might cause people to think something is too good to be true

Blogger Rowan Wilde discusses the issue of using an asterix when marketing a product or service saying “nothing else quite says ’serious strings attached’ like an asterisk…Instantly your offer is too good to be true”.

Obviously when an offer is presented it may have restrictions attached, either due to legislation or simply to balance supply and demand.

Consumers aren’t however fools - they understand that if the promotion seems to offer more value than the product itself can support, then a restriction like “1 per household” is “fair”. However as Rowans points out, it is better to be open and honest about these restrictions rather than trying to hide them away in the small print, going on to say:-

Loyalty only comes through trust > trust is only gained by honesty > honesty can only be built by being as open as possible. Being as open as possible means that sometimes you need to display things the way the consumer really wants them.

To ensure that your marketing programme is not dismissed out of hand as being “too good to be true” you need to consider how consumers will position it and provide perceived hurdles and positive validation to ensure they see it as accessible and deserved.

In psychology there is a term known as “confirmation bias” which is essentially the tendency to interpret new information based on preconceptions and to avoid conclusions which contradict prior understanding.

In essence, if consumers already have an understanding of what a loyalty programme is, how it operates and what the value exchange is, they will look at any new proposition through this lens. This means that if you have a significantly new approach, you need to consider how this is communicated in the context of existing programmes otherwise it is likely to be written off as too good to be true. In the words of Tolstoy:-

The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.

Do you agree? ;o)

No comments: