Why are things like previews, trailers, or teasers effective? In a commercial market why does it make sense to give samples away for free? And it keeps happening, so it must work. Is it a disinterested attempt to appeal to the public’s unbiased decision making process? Are we simply adding new numbers on a menu to choose from? Is it like adding new balls to the hopper of a lottery ball machine, each equally weighted?
Clearly the attempt is to make that decision more weighted in favor of that particular choice. Its an attempt to forge some sort of personal connection between the customer and the product. And artists hoping to find homes for their work are in no different a position than the major movie companies, the top brands of dish soap, and all others to whom the marketing of their products is an issue. But how does this work, and why?
A few times in posts this past year I’ve referred to what is known as the Ikea Effect, which broadly states that we don’t so much do what we like but like what we do. The upshot being that what we like isn’t so much preprogrammed, but can attach itself to almost any activity. In a sense, the experience of doing something is linked in our minds with a more intimate sense of ownership. Here’s a bit from the current wikipedia page:
The experiments performed by Michael I. Norton, Daniel Mochon and Dan Ariely demonstrated the impact that self-assembly had on the value of a product. The Ikea theory suggests that when one uses their own labour to constructing a particular product, they value and love it more than if they didn’t put any effort in building it. Even if badly assembled, individuals will still place a higher worth on an object that they built themselves.
Its the sense of personal investment that transforms the experience. Rather than something indifferently anonymous, there is something intimately personal tied up with our own activities. Its a manifestation of us, of who we are. How can we not love these things more? Our own children more than someone else’s? Our own school more than other ones? Our home town team more than ones across the country? Maybe not in all instances. Human life is confusing and scattered. We are inconsistent creatures. But the point is that we often seem to have a poorly understood underlying incentive. And the reality is that we are tempted in ways that are even more basic to our experience and more alarmingly insidious.
Part of this perhaps has to do with what Psychologists refer to as ‘the sunk cost fallacy’, connected to our biologically inherited sense of risk aversion. And maybe this explains why ‘free’ things are so enticing, and why we seldom are aware of the hidden strings attached…. Read THIS post by the “You are Not so Smart” guy, David McRaney. Here is some of the insight as it relates to this issue:
In one of his experiments, Ariely set up a booth in a well-trafficked area. Passersby could purchase chocolates – Hershey’s Kisses for one penny a piece or Lindt Truffles for fifteen cents each. The majority of people who faced this offer chose the truffles. It was a fine deal considering the quality differences and the normal prices of both items. Ariely then set up another booth with the same two choices but lowered the price by one cent each, thus making the kisses cost nothing and the truffles cost 14 cents each. This time, the vast majority of people selected the kisses instead of the truffles.
Interesting! It also seems that once we have invested in a particular thing the threat of its loss far outweighs other considerations. It becomes disproportionate to how much we’ve already invested. Here’s McRaney again:
Sunk costs drive wars, push up prices in auctions and keep failed political policies alive. The fallacy makes you finish the meal when you are already full. It fills your home with things you no longer want or use. Every garage sale is a funeral for someone’s sunk costs.The sunk cost fallacy is sometimes called the Concorde fallacy when describing it as an escalation of commitment. It is a reference to the construction of the first commercial supersonic airliner. The project was predicted to be a failure early on; but everyone involved kept going. Their shared investment built a hefty psychological burden which outweighed their better judgments. After losing an incredible amount of money, effort and time, they didn’t want to just give up.
It is a noble and exclusively human proclivity, the desire to persevere, the will to stay the course – studies show lower animals and small children do not commit this fallacy. Wasps and worms, rats and raccoons, toddlers and tikes, they do not care how much they’ve invested or how much goes to waste. They can only see immediate losses and gains. As an adult human being, you have the gift of reflection and regret. You can predict a future place where you must admit your efforts were in vain, your losses permanent, and when you accept the truth it is going to hurt.
A while back I related the serious wisdom imparted by Tony Clennell in his visit to Athens this Spring. One of the great points he made was that our commerce has moved from an industry of invention (build a better mousetrap) to one of service (what sellers can do for their customers) to one of experience (what personal takeaways the customer will have from the interaction). Recent studies have pointed to the value of hands on experience in commercial situations, and how this affects an ‘ownership experience’ even prior to the actual legal transaction. What happens is that people who simply handle items already have a strong connection established which then often justifies them spending more money to acquire the objects. They place greater value on these things in a way that is similar to the disproportionate valuation seen in the Ikea Effect.
Interestingly (for potters), one study is based on customers handling pottery mugs before an auction. The conclusion winds up with these implications:
Traditional retailers have long known the value of enhancing the attachment between buyers and their products. It is partially for this reason that GM and other automobile companies offer 24-hour test drives to their customers. Car dealers intuitively suspect that if a customer drives a car home, they will be more likely to develop an attachment to the vehicle having ascertained its quality and ultimately would be more likely to purchase. This phenomenon is not exclusive to car buyers, and one can easily see examples in a variety of retail sectors. For example, pet store owners set aside special areas so customers can play with the puppies, and bookstores often provide customers with comfortable places to sit and read. This work suggests that retailers may want to expand the opportunities for customers to interact with their products and to permit longer durations of interaction.
In addition, duration-of-exposure may have implications for retailers interested in determining optimal duration for trial periods. Retailers in several industries (for example, computer software, mattresses and home exercise equipment) commonly allow potential customers to try their products for extended periods before making a purchasing decision. Product trials allow customers to ascertain product quality and determine if it functions as advertised. Software manufacturers commonly provide potential customers with trial versions of their products. These trial versions allow free use of the software for a limited duration (often 30 days). Similarly, the Bose Corporation offers 30 day in-home trials of its Acoustic Wave music system, and Select Comfort offers a 30 night trials of its Sleep Number mattress. This work suggests that these retailers may be able to increase consumer valuation and hence the number of people that purchase the product at the end of the trial by increasing the length of the trial period. Finally, in online markets, buyers cannot “touch and feel” the physical merchandise before purchase. Our findings also suggest that the implications of buyer’s inability to inspect an item offered for sale online go beyond the classical “lemons” problem (Akerlof, 1970).
So lets assume that the ownership experience starts at its weakest at a point where there is simply an awareness of a desire or need. Putting an object in our hands seems to further influence how intimately we feel that thing embodying or expressing our need. But this is still a weak investment on our part. It becomes stronger the more ways it is linked to our lives and our experience. If simply handling something engenders a sense of ownership, then using that item for its intended purpose seems to ratchet up that investment. Touching and using become a part of that experience in a deep and meaningful way. Stick a little DIY experience in the equation and the deal is almost sealed.
Unfortunately we also live in a disposable world where we are being trained in the opposite direction. Our sense of ownership and identity is perpetually at war with an alienation from our actions and our environment. We look at short term effects and selfish goals as entirely justified, no matter the costs further down the road. Because we don’t yet own the future. The future doesn’t yet exist, so how could we own it? Our future selves simply can’t be trusted. We have this inevitable seeming present bias.
Well, by caring about it, for one. And we can care about it abstractly, or we can care about it because our sense of identity isn’t simply immediate gratification, but is tied to what we did in the world, what things stand because of us, what things have taken their place in the roster of things in the world by our efforts. If we care about these things disproportionately we are potentially more invested in their future. As expressions of ourselves these things extend out into the future and we are rightly saddened when they break, or fail, or are discriminated against. Why else would teachers defend teaching practices, coal miners defend coal powered energy, bus drivers defend the public transportation industry, artists defend the arts, mothers and fathers defend children’s issues? Obviously not perfectly, not uniformly, and not in all cases, but you can see the connection, can’t you? Our sunk costs keep us toeing the line of our current investment in things. We continue to build the Concords of our lives because there is so much momentum already pushing us forward.
One last thought: These values are further reinforced by the human tendency for motivated reasoning. Or, at least, they seem interrelated. This is the situation whereby our identity investment in an issue or object serves as the basis for further and compounding irrational attachments. Here’s Dan Kahan to describe some of the current research being done:
Identity-protective cognition, like other forms of motivated reasoning, operates through a variety of discrete psychological mechanisms. Individuals are more likely to seek out information that supports than information that challenges positions associated with their group identity (biased search). They are also likely selectively to credit or dismiss a form of evidence or argument based on its congeniality to their identity (biased assimilation). They will tend to impute greater knowledge and trustworthiness and hence assign more credibility to individuals from within their group than from without.
These processes might take the form of rapid, heuristic-driven, even visceral judgments or perceptions, but they can influence more deliberate and reflective forms of judgment as well. Indeed, far from being immune from identity-protective cognition, individuals who display a greater disposition to use reflective and deliberative (so-called “System 2”) forms of reasoning rather than intuitive, affective ones (“System 1”) can be expected to be even more adept at using technical information and complex analysis to bolster group-congenial beliefs.
So, getting our customers to invest in our work can be a labor of tiny efforts in reinforcing behavior and appreciation. Give your customers teasers. Let them take it for a test drive. Give them reasons to already feel like it is something they would miss if they lost out on. Skew the lottery in its favor. No guarantees, just smart business.
Something to think about, at least….
Make beauty real!