Can you trick people into improving their lives? A behavioral economics professor is banking on it

 

Whether personal or professional, change is hard. And the cumulative data is not on our side.

Take something obviously detrimental, like smoking. A mere 4% to 7% of people successfully quit without the aid of medication or outside help. Even experiencing a traumatic event like the death of a loved one or being diagnosed with cancer only leads to a 20% success rate.

Not to be a killjoy, but as the Washington Post found, roughly 25% of New Year resolutions fall apart within the first two weeks. And even when it comes to our work where moneys on the line 70% of [management-led] transformation efforts fail.

So why is change such a struggle?

Dan Ariely, best-selling author of Predictably Irrational and professor of psychology and behavioral economics at Duke University, explains it like this:

Usually when people approach solving problems, they think, Lets just give people some information and then theyll make the right decision, he said.

As natural as this educational approach feels, it doesnt work. For example, posting caloric facts on the side of a Snickers bar does little to deter us when its 10 pm and the craving hits. Equally fruitless are traditional applications of so-called willpower.

Change, in Arielys words, comes not from the inside, but the outside. If you want people to lose weight, give them a smaller plate. You have to change the environment.

Today, our dominant environment is digital, which is why Arielys foundation The Center for Advanced Hindsight teamed up with Chris Ferguson, CEO of the Ontario-based design firm Bridgeable, and convened a three-day workshop last October with thirty different financial institutions from all parts of North America.

Their goal was to explore how technology could play a role in transforming borrowers into savers (i.e., positive social and personal change). However, dont let the financial scope fool you.

People are people and changing your own habits as well as designing apps and workflows for the good demand understanding how humans make decisions. So before digging into Ariely and Fergusons answer the one theyre banking on lets take a look at six psychological triggers that give us a fighting chance in the war on change.

Human decision making: 6 triggers for change

In his modern-day classic Influence, Robert B. Cialdini describes two models of human decision making. The first he calls controlled responding, a thorough analysis of all of the information. The second is known as “judgmental heuristics,” essentially “mental shortcuts,” also known as cognitive biases or “triggers” that allow for “simplified thinking.”

As much as we like to envision ourselves as controlled responders, human beings are far more prone to the second mode. In fact, prone is probably too light a word. The reality is, mental shortcuts run our lives: From the routes we drive, to the foods we eat, right down to the jobs and mates we choose.

Cialdini wasnt the first to notice this. Moneyball author Michael Lewis recent book, The Undoing Project, chronicles the multi-decade shift in both economics and psychology away from the thesis that humans are essentially rational creatures in cognitive control of their decisions. In its place, a new understanding of decision making has emerged, one in which heuristics, hardwired mechanisms, and triggers stand out.

For Ariely and Ferguson, six of these triggers bear special attention.

Default bias

In 2003, Eric J. Johnson and Daniel G. Goldstein discovered that the organ donation rate in two European countries Hungary and Denmark differed wildly. The first boasted 99.997% and the second, 4.25%. What explained this night and day difference?

Turns out, a box. Or rather, the language surrounding one box in particular. In Hungary, organ donation was the DMVs default option; its citizens had to opt out if they didnt want to participate. In Denmark, it was the opposite.

In other words, the easiest option is the automatic option and therefore whatever is framed as default usually wins.

Friction costs

People are easily deterred from taking action. We prefer the path of least resistance. And, of course, inertia doing nothing is always the easiest thing to do.

Friction costs refer to any obstacles or perceived speed bumps that complicate an action. Reducing friction costs has become a cornerstone of ecommerce giants like Amazon whove built empires around saving your payment and shipping information so that purchasing is as easy as one click.

But this also holds true interpersonally. One of the driving reasons people stay in unfulfilling relationships is that the cost of extricating themselves appears to outweigh the cost of one-off disturbances, despite the fact those one-off disturbances add up over time.

Anchoring

At the risk of stating the obvious, first impressions matter and not just in our personal lives.

When making decisions, people automatically elevate whatever information they encounter first, and anchoring means that this first impression isnt just more powerful than subsequent evidence, it also becomes the organizing principle (or, frame) thereafter.

For instance, if the first test in a job interview reveals an applicants strengths, then evaluators unthinkingly rate the applicant’s subsequent tests higher, even when they have little or nothing to do with the first. Humans latch onto first impressions, and letting go of them is harder than you think.

Pre-commitment

Consistency acting in accordance with our previous decisions and actions is a potent mental force. This is due partly to the fact that change is difficult (see Friction Costs). But it also stems from our desire to protect our egos as well as to simplify decision making.

In the 1960s, when two psychologists asked California homeowners to erect a public-service billboard on their front lawns reading, Drive Carefully, they were met with an average rejection rate of 83%. One subset, however, turned the tables on that average and complied to the request at 76%. Why? Because unbenounced to the two psychologists, one week earlier a separate organization had asked residents to place an unobtrusive Be a Safe Driver sign in their window.

Securing small, voluntary commitments is a cornerstone of any large and lasting change.

Present bias

Humans are myopic creatures. We live in the moment. Its not that we dont worry about the future or dwell on the past; fear and loss are the two most powerful human emotions. Its more that were terrible at projecting our current reality into whats going to happen next, especially when that next is five, ten, or even twenty years in the future.

Hyperbolic discounting turning a future positive into a present negative is one way of dragging those inevitabilities into the here and now.

Social proof

No man is an island, wrote John Donne. He was right. When it comes to making decisions especially decisions surrounded by high levels of mystery or insecurity we look to see what other people are doing.

The principle of social proof is why Yale University discovered that if you want people to reduce the amount of bottled water they consume, presenting facts about negative environmental impacts works best only when preceded by social proof that others have already started to behave pro-environmentally.

Each the above triggers, often called cognitive biases, work their way from outside in. Theyre extensions of Arielys basic contention that our best shot at change comes from our environment.

But can an app truly change human behavior?

Rigging the mind with an app

Naturally, the answer is yes.

As proof we need look no further than the plethora of examples Nir Eyal presented in Hooked: How to Build Habit-Forming Products. From social media platforms to free games like Candy Crush and Farmville, apps have the power to shape (and even reshape) our lives. In Eyals words: To build a habit-forming product, makers need to understand which user emotions may be tied to internal triggers and know how to leverage external triggers to drive the user to action.

The real question is: Can an app change human behavior for the good? After all, its one thing to hook someone with an app that delivers endorphins the way gambling or junk food does (neither of which Eyal argues for). Its another thing altogether to hook someone with an app aimed at changes we wat but struggle desperately to implement.

To answer that question, heres a sneak peek at Ariely and Fergusons current prototype and how theyre using the principles mentioned above.

Just remember: Each of these triggers are hardwired into the human mind. That means your own changes personal, professional, and technological should lean on them too.

 

Making good change easier

Its true: as humans, were terrible at change. But that doesn’t mean the fight is in vain.

Instead, the implications of behavioral economics alongside the broader sciences of human decision making weve touched on should push us in two directions.

First, on the personal front, change works from the outside in. If you want to lose weight, buy a smaller plate. We set ourselves up for success or failure not because of internal factors like willpower, motivation, and drive, but because of external factors. Lasting change isnt as much about moral fortitude as it is about arranging our environment the world we interact with to either trigger or inhibit our behaviors.

Second, on the professional front, products and services, apps and tools must all likewise adhere to the very same lessons. This applies to design and UX as much as it applies to marketing and management.

Whatever change youre trying to create whatever product youre trying to hook your audience begin with how humans actually make decisions:

1. Default Bias:
How can you make the opt-in process automatic? What can you pre-populate during onboarding or roll out

2. Friction Costs:
What can you remove? In the words of Nir Eyal, innovation is nothing more than understanding a series of tasks from intention to outcome and then removing steps.

3. Anchoring:
What do users, whether customers or employees, see first? How can you leverage that first impression at a meeting, in an email, or within an app to frame the rest of the process

4. Pre-Commitment:
Are you building on small, voluntary commitments? Small yeses early on lead directly to big yeses later, especially as change gets tougher

5. Present Bias:
How can you drag future results into present reality? What hell will your change save people from? What heaven will it deliver them unto?

6. Social Proof:
Who do your users look to for making their decisions? How can you encourage those influencers, or even just fellow humans, to share their own commitment and actions?
Unlocking human change is hard, but its not mysterious. Just be sure youre using all that power for the good.

 
 

Aaron Orendorff is the founder of iconiContent and a regular contributor at Entrepreneur, Lifehacker, Fast Company, Business Insider and more. Connect with him about content marketing (and bunnies) on Facebook or Twitter.

Read more: http://mashable.com/2016/12/31/app-change-human-behavior-economics/

Social Media Marketing Workbook: 2016 Edition – How to Use Social Media for Business Reviews

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Why American ad agencies are being accused of having secret agendas

Image: Getty / Robert Machado Noa

American ad agencies routinely use hidden business arrangements to boost profits without their clients’ knowledge, according to an explosive new report from the Association of National Advertisers.

The report says that these undisclosed dealings, such as rebates awarded by media companies based on how much agencies spend or pressure to do business with agencies linked to a parent company, are “pervasive” across the U.S. media-buying industry.

For the brands buying the advertising, the concern is that these secret incentives might cause agencies to spend their money in a way that puts the agency’s own best interests before that of their clients.

That’s whythe ANA, a marketing trade group that represents big global brands like Coca-Cola, Procter & Gamble, General Motors and AT&T, has an interest in uncovering these practices.

A research firm called K2 Intelligence prepared the report on the group’s behalf based on interviews with 150 anonymous sources. Of the 117 of those sources with a direct role in the media buying process, 59 said they had been involved in undisclosed dealings of this sort in at least one instance.

The highly-anticipated release stirred up plenty of debate across the industry on Tuesday. Though the report avoided naming any individual agencies or cases for the sake of protecting anonymous sources, several agencies and their holding companies lashed out at its findings in statements.

“A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry-wide approach and that is precisely the opposite of what the ANA has pursued,” a spokesperson for the American Association of Advertising Agencies said in a statement that captured the sentiment among many of the agencies responding.

We call upon the ANA in the strongest terms to make available to specific agencies on a confidential basis all of the materials related to them,” the statement continued.

At the very least, brand marketers are likely to come away from the report with some questions for the agencies that spend money on their behalf. Agencies will in turn have to reassure them that they are not doing anything unethical.

But there could also be serious consequences; in the past, ad execs have even served jail time for anti-competitive practicesand overcharging clients.

How rebate schemes work

When brand marketers at corporations like McDonald’s or Ford want to buy a television commercial, magazine spread, billboard, online banner or any other type of ad, they usually turn to an agency or an agency division that specializes in buying media space.

As part of this transaction, they expect these agencies to buy whatever slots are needed to meet their demands at the best possible price for the client. They also expect agencies to be transparent about how they go about it.

According to the report, however, many of the media suppliers selling the advertising space regularly offer to pay the buyers rebates of anywhere between 1.7% to around 20% of their spending if they agree to take a certain amount of their total business to them.

Sometimes these rebates are paid in cash or free ad space; other times in the form of cheaper rates for services like consulting or research. But the report found that these services were oftentimes “of minimal utility, significantly overpriced or not provided at all.”

Media buying agencies generally work on behalf of a roster of different brands. So when one buyer gives preferential treatment to any one supplier, there’s a chance it could serve its own bottom line which is rooted in the aggregate interests of all of its clients but not necessarily that of any of its individual clients.

This chart shows how the savings from a 10% rebate might not benefit all an agency’s clients equally. In this case, the agency’s incentives are skewed.

Image: k2 intelligence

Advertising rebates and other such bonuses are common practice in Europe and much of the rest of the world, according to various surveys, but U.S. ad execs have claimed for years that they aren’t used here.

An industry of empires

The advertising industry has consolidated at an accelerating pace in recent years to better compete with deep-pocketed tech giants like Facebook and Google.

As a result, the industry is currently dominated by six big holding companies: WPP, Omnicom, Publicis Groupe, Interpublic, Dentsu and Havas. Together, they control nearly half of the world’s $6 billion ad market.

Each of those companies owns dozens of agencies that operate at every conceivable level of the advertising supply chain. Those resources allow them make the case to shareholders and clients that they can meet all of a brand’s advertising needs within the same company.

But the probe also pointed to some conflicts of interests that come with having so many tentacles.

For instance, the report alleges, some holding companies will buy media at one rate, hike the price by anywhere between approximately 30% and 90%, then resell it to clients through another agency without ever disclosing the original cost. Essentially, they act as their own suppliers.

The flow of money if holding companies use hidden markups to sell media space at inflated prices.

Image: K2 Intelligence

Media buyers are also reportedly pressured or incentivized to buy through these in-house channels, even if doing so is not in the client’s best interest. In other instances, agencies might have an undisclosed stake or an advisory role at a media supplier.

These hidden business practices aren’t just limited to big holding companies though; evidence of such dealings was also found at small independent agencies and across all types of media.

Fierce reactions

As noted above, ad agencies have responded to these findings with anger, arguing that accusations should have been made on an individual basis or as a collaborative effort as to not condemn the entire industry.

“We believe that the key findings neither quantified nor qualified, and based on a small sampling of unnamed sources do not accurately portray how Omnicom’s agencies work on behalf of our clients,” an Omnicom spokesperson said in a pre-emptive statement. “In so doing, it does not serve the best interests of the clients that the ANA purports to represent.”

Accusations of corruption in the advertising industry aren’t entirely new, and some have argued that they are becoming a problem in attracting talent.

Marco Bertozzi, global chief revenue officer at Performics and formerly of Publicis’ Starcom MediaVest Group, wrote in a blog postpublished days before the report was released that “blanket accusations” make it hard for the “kids who are working their socks off” and tarnish the industry’s image when it’s already struggling to lure new workers.

Pivotal Research analyst Brian Wieser factored in early reports of the ANA probe to his somewhat muted growth forecast for the holding company stocks earlier this year.

Brand marketers, meanwhile have been predictably more receptive to the investigation’s findings.

P&G said it relies on regular audits to root out any transparency failings on the part of its agency relationships.

“We have a ‘trust but verify’ approach that includes having clear and thorough stipulations in our contracts, regular audits on performance, and third party verification that ensures transparency,” a company spokesperson said in a statement. “If we find irregularities, we will take remedial action.”

Most reactions in the corporate marketing world seemed to focus on assessing the findings in terms of their own business relationships.

“Trust and transparency are critical to any relationship, so we take the ANAs findings very seriously,” a Unilever spokesperson said in a statemtent. “At Unilever, we are actively engaged with our agencies and the industry at large to exert greater control and responsibility around media transparency.”

The full impact may not be felt until the investigation’s findings have more time to reverberate the industry.

Have something to add to this story? Share it in the comments.

Read more: http://mashable.com/2016/06/08/ad-agencies-report-rebates-scheme/

7 apps to help your business grow on Facebook

Image: Ellagrin/getty images

With over1.6 billion monthly active users, there is no doubt that Facebook is the place to be when it comes to looking for platforms to scale your growing business. But how can you leverage this dominant social media channel to make the most of your impressive business efforts?

Heres a list of seven apps that your company should consider if Facebook is a part of your growth strategy.

1. Yotpo

Image: yotpo

While Facebook has been known to be a brands go-to marketing channel, oftentimes your actual customers can generate enough hype around a product to drive sales. Indeed, leveraging user-generated content (UGC) such as customer reviews or user-uploaded images on Facebook can help your business immensely.

With Yotpos Dynamic Ads feature you can use tools to share customer reviews and photos organically, as well as incorporate them into paid adsa tool so valuable, Facebook used it as a casestudy.

2. ViralStyle

Facebook dwarfs all other social channels when it comes to active users, content sharing and referred click-throughs to websites. But the average Facebook users dont spend their time looking for business opportunitiestheyre there to see amusing content and keep upwith friends and loved ones. To effectively take advantage of Facebooks immense marketing potential for business, therefore, companies need to keep their messaging light and fun.

ViralStyle provides a solution for fan community monetization that takes the friction out of selling branded merchandise. This social ecommerce platform lets you offer t- shirts, hoodies, iPhone cases and other products with your own art, and because its all printed and shipped to order, theres zero hassle for inventory or fulfillment.

Using ViralStyles marketing tools, its easy to set up a campaign, which adds a ticker to product pages for a sense of purchase urgency. The platform also integrates with Facebook ads (soon with Shopify as well), to allow users to seamlessly promote creations to highly relevant and targeted buyers.

3. Desk

Image: Desk.com

Today, business owners and marketers are expected to always be reachable and ready to address customer inquiries. While this may seem overwhelming, there are great tools that help facilitate better and more frequent communication between prospective buyers and sellers.

For instance, Desk.com integrates with Facebook as a highly-effective engagement feature that will help address immediate customer questions and concerns. I personally use them for my payments support and it’s helped us manage our thousands of customer tickets each month, a large portion of which comes through Facebook.

4. GetResponse

With so many different marketing options on Facebook, sometimes it is difficult to get the most out of your campaigns. Thankfully, there are solutions such as GetResponses Facebook Web Form App that embeds sign-up forms on your Facebook company page. This allows prospective leads and/or interested page visitors to easily sign up for more information.

5. Cyfe

For businesses, being able to stay ahead of all the marketing tasks can be daunting, especially when data plays a major role in your scaling efforts (as it should). Visuals can help make sense of this mess.

Cyfes business dashboard, for example, displays various metrics that are often indicative of successful or poor marketing campaigns. With this information at hand, marketers can look to scale based on specific benchmarks.

More specifically, you can track your entire social media and Facebook data, to instantly assess your overall campaign performance, cost, CTR, impressions and more.

6. Shopial

Image: facebook

For ecommerce businesses, Facebook is often considered a second priority to your company’s online store. Being in the payments space, I’ve found that most business owners don’t even consider Facebook for ecommerce. Having just discussed the dominance of Facebook usage, you may need to reevaluate your relationship with this outlet.

The Shopial app is a timely one for ecommerce, as it essentially acts as a bridge between the store’s website and Facebook store, allowing you to easily add and advertise specific products to boost engagement and eventual conversion levels.

7. Leadfeeder

On Facebook, B2C engagement outshines B2B prospecting, but savvy business leaders know how to use the ubiquity of Facebook to their advantage. In the B2B space, the journey from curious website visitor to converted customer is complex and rarely predictable. As buyers transition from sales-driven product education to self-service content discovery and become more guarded with their contact details, it isnt always possible to capture email addresses and use prospects inboxes as hubs for lead nurture messaging.

Todays B2B marketers therefore employ a litany of tactics to track prospects across devices and marketing channels, engaging with potentially interested parties wherever possible. With Leadfeeder, you can circumvent the need for lead capture and instead see a dynamic list of anonymous visitors to your website, along with intelligence on the companies they work for and logs of pages they click on. Now here’s where it gets interesting. Because the system integrates with your customer relationship management (CRM) and you can use it to export segmented lists of contacts, the B2B growth hackers out there can easily use Leadfeeder as en engine for creating hyper-targeted Custom Audience ads on Facebook.

Do you have suggestions for other apps that help grow your business on Facebook? Share them in the comments below.

John Rampton

John Rampton is an entrepreneur, investor, online marketing guru, and startup enthusiast. He is the founder of online payment company Due. John is best known as an entrepreneur …More

Read more: http://mashable.com/2016/05/21/7-apps-grow-business-on-facebook/

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