Happy New Gym Membership

This is the week that gym memberships swell to match our post-Christmas waistlines. Filled with mince pies and good intention thousands of guilt ridden folk sign on the dotted line for a year of spinning, rowing and swimming. Come February, an inch thinner and over the guilt, these same people begin to conveniently forget their gym kit in the morning and slowly drift from a life of peddling to one of pizza.

So it is with great timing that gym-pact.com launch a service that offers to ‘incentivise your exercise’ (their words not ours). The service operates via iPhone and lets you set a financial stake for going to the gym. If you fail to make it to the gym you pay out real money via your credit card. But you can also earn real cash for every workout you do - courtesy of the other users who didn't manage to make it to the gym! The idea came after Yifan Zhang, an economics major, took a class in behavioral economics and noted the power of loss aversion (that losing money is a stronger motivator than winning money) and decided to put it into practice.

We have also seen an anti-smoking initiative based on the same principle, in which aspiring quitters commit to make financial payments over a period of months. For them, a nicotine test at the end determines whether or not they get to keep their money.

These approaches are exciting because they recognise that cost - and financial value - is not fixed, but experienced highly subjectively. There is a keen psychological difference between gaining a reward from a third party, paying a ‘sunk cost’ like gym membership and experiencing the ongoing risk of financial loss. If the concept works as a motivator for the gym, how can the same thinking be used to encourage other positive behaviours?

Rory Sutherland on BE - part 2

Listening to Rory Sutherland’s comical and pithy oratory, it is easy to find yourself nodding along in a happy, unquestioning manner. It reminded us of belief bias, where a conclusion seems so plausible that the logical basis of the argument isn’t fully analysed!

That said, there were some lovely nuggets in Rory’s talk last week – and although we can't do him justice here, we’re delighted to share a few notes:

A double-standard. In a Midwestern office block, the slow lifts were causing frustration. A complex engineering solution would improve the speed of the lifts – but the cost would be significant. One bright spark came up with an alternative: putting big mirrors on each floor. This induced grooming and mild voyeurism, and consequently people didn’t mind waiting for the lifts anymore. A fantastic, counterintuitive solution. But it points to a double-standard. Why is creativity policed by logic, but not the other way around? Creativity is judged by the standards and metrics of accountants. Yet engineers implementing a costly technical solution don’t get penalised from not coming up with a creative, cheaper alternative! Why is no-one is fired for being unimaginative?

Time. The lift example also points to the subjective nature of time. Time is not fixed but experienced according to our context, emotional state and so on. Psychology provides us a different way of viewing problems – and so leads to some simple and economical solutions. Why spend a load of money improving the speed of trains in the UK? Just give people Angry Birds and time loses all meaning! What’s an extra few minutes with comfy seats and free wifi?!

Language. Talking about marketing is a bit like talking about astrology. You’re fine doing it with a fellow believer. But talking to finance guys about brand iconography is like going to a physician and talking about crystal healing. With BE, we can challenge existing financial models, while speaking in a language that comes much more naturally to the finance guys. BE provides a cogent model and language.

Rory Sutherland on BE

We're excited to be hearing from Rory Sutherland again this week. Rory is Vice Chairman of the Ogilvy Group and a long-time advocate of behavioural economics (BE).

 

In past years, Rory has given some classic speeches on the topic - with his words ringing out from the heartland of UK advertising. Championing BE also characterised his Presidency of the Institute of Practitioners in Advertising (the IPA) in 2009.

 

He once stated:

“The great issue in our industry over the last 15 years is that, while there has been an explosion in the technologies and media available to marketers, our models and metrics describing human behaviour and decision-making have often been left stuck in the 70s. The emergence of behavioural economics changes that and at last provides the marketing industry with a framework fit for purpose for the next century”

 

Now that perspective resonates strongly with us - not least with respect to B2B Marketing.

For those of you who haven't seen Rory's TED Talk, 'Sweat the small stuff', we highly recommend it!