We all like to think we make logical choices. We all like to think we objectively weigh the pros, cons, costs, and benefits and make decisions that maximize our outcomes.
We’re adults: We’re reasoned, thoughtful, self-aware, and smart.
Consider these examples from the new book Behavioral Insights by Michael Hallsworth and Elspeth Kirkman:
- Adding a salad to a fast food meal caused people to estimate that the same meal suddenly contained 12.6 percent fewer calories. Why? We’re conditioned to view “salad” as a proxy for “healthy.”
- Ten million more employees started saving for a U.K. workplace pension over an eight-year period when the default option was changed to automatic enrollment. Why? When given a choice, we tend to go for the preselected option.
- Sales of a sugared soft drink declined when that item was moved from first to third in the list of options on McDonald’s touchscreen kiosks. Why? Order of options presented often matters more than preference.
Clearly decisions like those aren’t reasoned or thoughtful. Instead, they’re often unconscious. Or habitual. Or influenced by context and cues.
Which makes sense: Reacting relatively automatically is much more efficient. Weigh each of the hundreds of decisions you make every day and you’d never get anything done. Habits, patterns, routines: Fast thinking — in fact, nearly unconscious thinking — allows us to act, not deliberate.
The problem is, we often don’t know why we’ve settled on those habits, patterns, and routines. Which means what we often do, if we took the time to really think about it, might be in our interest — but not in our best interest.
That’s the basis of the behavioral insights approach: Applying evidence on what influences behavior to address practical issues.
It’s also the basis of Behavioral Insights: Helping you, as a small-business owner, take smart steps to influence the behavior of customers and employees.
One possibility involves middle option bias, the phenomenon in which people presented with a set of three options tend to settle not on the most or least expensive, but the one in between. (And may be one reason why offering too many options makes it more likely that people won’t select any.)
When I first changed careers, I supplemented my income by starting a wedding photography business. Raising the price of all packages — and adding a very expensive package to the original three package options — immediately boosted the average sale price.
Some couples selected that package, which was nice, but many couples selected the next most expensive package, even though it was more expensive than it had been.
Of course you can’t go crazy with middle option pricing schemes. (Clearly I had been undercharging for the value provided.) Customers are smart: Adding an expensive option and raising all other prices in hopes of selling more higher-priced middle options only works when the value proposition works.
But when you provide great quality and service at fair prices, customers can often be nudged in a desired direction.
Another example: A 2016 study showed that a prescription drug with seizure as a potential side effect is viewed as less likely when it also comes with less significant potential side effects like congestion and fatigue.
In short, add some “smaller” side effects and people will think of the “big” outcome as less likely.
If you’re trying to improve employee safety, don’t be tempted to pile on every potential negative action. Focus on the big stuff — that will make a bigger impact.
The same is true when you run employee or customer prize promotions. A contest to win an iPad is viewed as less attractive when it includes smaller prizes as well — even though the odds of winning the iPad are still the same, and the chances of winning something are much greater.
Or say you want more employees to sign up for your company sponsored 401(k) plan. Simply make enrolling the default option. The rate of sign-ups will almost surely increase.
Want to solve practical problems? Want to influence the behavior of people around you in a positive way?
Want to find ways to make the decisions most likely to help you realize your intentions and achieve your goals? Behavioral Insights might be just the book for you.
If nothing else, it will make you think.
And that’s always a good thing.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.