In our latest blog series, we’ve been talking through behavioral economics principles and how they can impact the way we behave. Behavioral economics is the foundation of programs that will have lasting success and motivate the behaviors we want, like an architect using their degree to build homes.
Within behavioral economics there are principles or areas of focus that help us narrow down specific behaviors we’d like to target. If you’d like a deep dive into better marketing and communications tactics, check out our dive into the principles Framing and Anchoring coming soon.
But for this article, let’s dive into Choice Architecture, the pricing manipulation we all fall for.
Choice Architecture: What Is It?
Simply put, Choice Architecture is the deliberate way we design and display options to choose from in order to impact the way that people make those choices. Most commonly used with pricing, Choice Architecture can impact lots of different things, like how we choose goals, how we invest our time, our money, and more.
Here’s an image to exemplify Choice Architecture:
This example of a pricing page from Campaign Monitor is a great example of how Choice Architecture comes into play with price. Let’s analyze:
- Next to the other two prices, Premier looks like it’s kind of over-priced, right?
- But in turn, the presence of a $149 price tag makes the Ultimate plan (coming in at a measly $29 seem much more reasonable)
- The Basic in turn seems like you’re missing a lot of value if you don’t go with the Ultimate plan. What’s another $20 compared to the $140 more for Premier.
This is why I called Choice Architecture the pricing manipulation that we all fall for. It’s everywhere: wine, software, cars, you name it. But Choice Architecture doesn’t have to be the bad guy of behavioral economics. In fact, it can actually help us achieve more than we thought we could.
Choice Architecture and Goal Setting.
When it comes to motivation, we can use Choice Architecture to help an audience achieve their goals. There’s a lot of research that suggests that when setting goals, self-selection often leads to more frequent achievement of that goal. Add Choice Architecture in here and we get a set of goals that allow our audience to stretch themselves to better hit them.
Here are two examples of how this works:
Working with a sales team
If you have a sales team that needs to hit certain quotas. Using Choice Architecture, you set up three goals for them to pick from.
- Standard. They’ll pull in the deals and customers they need to be comfortable. They’ll maintain the relationships they have while garnering some new ones. Overall, a good quarter.
- Rev It Up. They’ll stretch themselves a little bit. Afterall, who’s not hungry for some big pay outs? This goal has them pulling in 15% over quota and pays them accordingly.
- Go for Broke. They’ll be the best in the business this quarter. They won’t slow down until they seal over 30% more deals than the standard quota. Winners like this get awarded like they should.
Working with a group of customers
But let’s also say you want to set goals for you customers, too. Choice Architecture can help us here as well. You set up your goals for your customers and they look like this.
- Don’t Rock the Boat. They do good business with you regularly. Let’s keep that up. With this goal, they’ll aim to do the same business with you this year.
- Push Your Limits. They have the potential to grow with you and grow they will. Picking this goal means spending 5% more with you this year, and their payout will be well-earned.
- Shoot for the Stars. Together, you’ll become great. They’ll quickly become a top customer, spending more than 10% YoY with you, and be rewarded with the #1 reward experience.
Both of these examples exemplify Choice Architecture, because grouping these together allows those who can shoot for the middle of the pack to feel like they’d be achieving more than the average. Additionally, it allows those who go for the top tier to feel like they’re really shining above the rest.
Choice Architecture and GoalChoice
Goal setting is something we’re passionate about and believe is an important part of any business. That’s why we set up our very own system called GoalChoice, to help integrate Choice Architecture incentive loyalty programs and help our clients achieve and exceed their goals faster.
Using GoalChoice, you can keep your standard earners and your superstars engaged throughout your promotion.