What the new-and-improved subscription page from The Economist can teach us about making healthier financial decisions.
In this article, I intend to shed some light on how we can prompt ourselves to think more carefully about what we buy when faced with a choice among multiple options. The hope is that we can all take better charge of our decisions and be more financially healthy in the process.
The Economist is at it again, and this time they have thrown a few new behavioural science insights at both their call-to-action advertisement and their subscription page.
The Economist’s subscription page first came to light as an example of well-designed behavioural marketing in Dan Ariely’s book, Predictably Irrational. Ariely admits that he too would have succumbed to the marketing manipulation at work, had he not chosen to activate his system 2 and think through the logic.
The cognitive bias that is cleverly used by The Economist’s marketers is called the Asymmetric dominance effect (Huber, et al., 1982). This bias (appropriately called the Decoy effect by Ariely in Predictably Irrational) is typically found to be applied within the consumer behaviour context, with the purpose of shifting peoples attention towards buying one product over another.
The decoy in this advertisement is the print subscription. Do a quick experiment; remove the print subscription and re-evaluate the options. When the print subscription is removed, the Economist.com digital-only option seems more attractive. For the price tag, subscribing to both the print magazine and a digital version seems expensive, especially when you would be happy to have access to The Economist’s articles in only one medium, digital or print. I do most of my article reading online anyway, so to me, having the print subscription seems redundant.
If you have two products you would like to sell, the principle of asymmetric dominance is achieved by adding a third option that is similar, but slightly inferior, to the one you want people to buy but that is superior to the other option in the choice-set. In this way, the target option is made to look more attractive.
According to traditional economic theories, the addition of this third option shouldn’t change anything. The option that people preferred before the third option was added should still be their preferred option after. Especially since the added option is inferior to the option that was already there! So then how can the marketers using this effect change our behaviour in predictable ways?
People have difficulty telling how much an option is worth, especially when the attributes of the options differ. The human brain prefers to compare ‘apples against apples’ and finds it difficult to compare how much more valuable one option is over another when they don’t share the same attributes.
When facing an uncertain decision between the value of two similar options, however, we shift our focus to evaluating the relative advantages that one option has over another. The decoy serves this exact purpose, it offers our brains a cognitively easier decision between two options that are similar (whose attributes are more easily compared) and in doing so, we ignore the other options completely. In the above case, adding the decoy shifts our attention to the two options that are similar in price; the print subscription ($125) and the print & web subscription ($125) and so we ignore the Economist.com subscription. When our attention is focused on the similar prices, the print & web subscription looks much better than the Print subscription, in fact, it looks like you are getting the web subscription for free in the package!
The subscription page serves its purpose, without even thinking we’re more likely to spend more money on a subscription that gives us access to, not one, but two ways to read the same article.
But wait, there’s more. Now let’s have look at how The Economist has used behavioural science insights to shift consumer behaviour in their new-and-improved subscription page and call-to-action. First, they need to draw attention to their subscription packages using a call-to-action advert, so let’s start there. The advert below was posted to my Linkedin page at around Christmas time last year.
The timing of the call-to-action takes advantage of the “Fresh start effect”. This effect states that we are more likely to set goals and aspirations for ourselves at milestones in our life. These can be on birthdays, starting a new job, moving into a new house or at the beginning of a new year. Typically, as the year comes to an end, people begin to consider all the goals they failed to achieve that year, and all that they would like to achieve in the year to come. One of the most common resolutions (and also one that many feel that they would have done more of) is to work out more.
Health and fitness are hugely emphasised in today’s society. The Economist, uses this to prime individual’s thoughts into goal-setting mode and then leverages off that to introduce another goal that many people have, to become smarter, better read and more knowledgeable. Once in a resolution building frame-of-mind, it’s far easier for the human mind to begin to develop all sorts of other goals for itself. These other goals create a picture of our “ideal self” that we strive towards.
In case placing people into a goal-setting frame of mind and motivating them towards their building a picture of their ideal self was not enough to motivate them to sign-up for a subscription, The Economist’s marketers added a cherry on top, a free notebook, to sweeten the deal. Now the subscription seems all-the-more worthwhile, because you also get something free with it. Adding the notebook increases the overall value of the subscription, which now feels even more like a good deal. Why is the case?
Offering something “free” is a powerful behavioural influencer because individuals only see the benefits of the free object, and not the costs, and so, we become overly attracted to it. Known as the Zero price effect, a free product has been shown to not only be seen as a lowered cost to buying a product, but it is also given a higher value, simply because it is free. Studies have shown that, in fact, people are willing to forego a product that should be preferable to them, instead, choosing to take the product that is free (Shampanier et al., 2007). Not only this, but adding the free product reduces the pain of paying that individuals feel when they make a purchase. The pain of paying is felt as a “moral tax”, a kind of guilt that is felt because we are spending money.
Another behavioural tactic that they have employed involves using weeks instead of months. Twelve weeks converts into 3 months, yet, looking at these two time duration's together, 3 months doesn’t seem to be quite as long as does 12 weeks. If you wanted to get a great deal on a subscription, you would also want the one that allows you to continue to pay a cheaper price for as long as possible.
This clever conversion also has a secondary effect on human judgment and decision-making. We might be more influenced to generate even more reasons as to why this deal is a good one. If we break down $30 into weekly chunks, we are now only spending $7.5 per week! That certainly seems pretty good.
The Economist have also made good use of trigger words. They create a sense of urgency by making the statement, “subscribe today…”, and emphasise that the readers are in for a money saving deal by adding, “…for just $30…”.
All of this is absorbed by the human mind in seconds, and already they have us on the hook, we click the link that directs us to the subscription page, this deal sounds interesting.
Looks familiar.
Even before reaching the subscription page, The Economist’s marketers also cleverly used Anchoring in their call-to-action advert. In the advert, the subscription price is tagged at $30. When viewing the subscription choices against one another on The Economist website, our price reference point (from which we compare the value of subsequent other similar options) has already been anchored on $30, making the jump to $70 for the print-only option seem very large. This large jump in price makes the cost of the print subscription seem well above its worth. Using anchoring, they cleverly managed to strengthen the effect of the decoy even further.
Moreover, the inclusion of the phrase, “Introductory offer”, has the effect of making this deal seem new and unique. Humans have an internal need to be unique, to have things that others do not. Marketers take advantage of this fact by inducing a “false scarcity” around an objects availability. When we believe something to be rare, unique or in scarce supply, we flock to own it. Using this phrase, the marketers at The Economist create this urgency to get in-line to own the deal with the free notebook, before they run-out.
Lastly, once again, timing is of the essence. If you hadn’t yet thought of what gift to give a friend, colleague or family member during the festive season, The Economist made the choice easy for you. The Economist’s marketers added the phrase, “student and gift options available” to make additional sales, or even, to reduce peoples pain of paying by buying it for a family member and then making use of it themselves.
When faced with an uncertain choice among alternatives, it is best to think through the options available to you critically, selecting the one that is the best for your situation. The human mind is lazy, and so it is likely to prefer to make the easy choice, rather than the one that requires more effort. These are the times when our decisions can be swayed in one direction or another. In many cases, the easy decision is a good one and our brains have, through years of evolution, been molded to make quick and efficient decisions when available information is limited, but in other times we make mistakes. Here, the mistake is that we can be led by clever marketing to choose an option that has us paying more, for things we potentially don’t need. Paying more careful attention and considering the regret we might feel after having decided to buy something can help us to make the more financially healthy choice, rather than the one that makes us feel good in the moment.
