🧠 The Psychology of Sustainability, Inflation, Feedback and Saving
Welcome to our latest newsletter.
Do come along to our free 60-minute webinar on how to apply psychology to sustainability.
In this newsletter, we also look at what drives long-term behaviours like savings and investment.
At two scientific frameworks for giving feedback to customers.
And how to apply psychology in inflationary times.
Don't forget we're here to help:
🧠 Improve your marketing with psychology and data
❤️ Make your communications more persuasive.
👉 Shift your audiences' behaviour
Tell us what you're trying to do and we'll show you how we can help.
Every so often we use our Monkey Business newsletter to share useful nuggets, opinions, and findings as food for thought. Sign up here.
How can you apply the Psychology of Sustainability?
Join us for a FREE 60-minute webinar on Thursday 15th February at 3pm (UK time).
Places are free but limited - reserve yours now.
What does science tell us about how people think and act about sustainability? How can you apply psychology to change their minds and, importantly, their behaviour?
In this short, sharp webinar - hosted by our friends at Pinwheel - Patrick Fagan and Dan Thwaites, co-founders at Capuchin Behavioural Science will show you the science behind sustainability behaviour.
🌎 The say-versus-do gap and ten planet-saving nudges which beat it
🚦 BRAINWASH for good: disrupting old habits and creating new ones
😡 How to persuade even the unpersuadables
And how a squirrel 🐿️ reduced littering by 45%.
Whether you are talking directly to consumers, B2B audiences, or influencing people in your own company, you will leave the session with concrete, actionable ideas, ready to apply to your challenges.
Find out all this – and more - reserve your place now.
How to apply psychology in inflationary times.
Consumer behavior is not always governed by rational decision-making; rather, it is influenced by a complex interplay of personal experiences, emotional biases, and psychological factors. Especially in decisions made in the face of economic uncertainty - covered in this piece on the psychology of inflation.
A key concept in this context is neuroplasticity, the brain's ability to adapt and change its structure and function in response to experiences. When we experience significant events, such as high inflation or economic crises, these experiences can physically alter our brain pathways, leading to enduring changes in our consumer behavior.
The long-lasting effects of these experiences are not limited to individuals who directly lived through them; even generations removed from a traumatic economic event may exhibit behaviors shaped by their ancestors' experiences. This phenomenon is known as "inflation scarring," and it can have significant consequences for consumption patterns and market dynamics.
Tailoring offerings and messages to specific lived experiences
Marketers can gather data on consumers' lived experiences, such as their exposure to past economic crises or their current financial concerns, to tailor their offerings and messaging accordingly. For instance, a financial services company could offer specialized products or services to consumers who have experienced inflation scarring or provide targeted educational resources to address specific financial anxieties.
Anticipating and responding to generational trends
Marketers can also consider generational differences in lived experiences to tailor their strategies. For example, Gen Z consumers, who have grown up in a more volatile economic environment, may be more risk-averse and value financial stability over short-term gains. Marketers can address these preferences by emphasizing long-term value propositions and providing education on sound financial planning.
Harnessing loss aversion to drive behavior
Loss aversion, the tendency to prefer avoiding losses over acquiring gains of the same magnitude, is a powerful psychological bias that can be leveraged by marketers. For instance, emphasizing the potential losses associated with inaction, such as the erosion of purchasing power due to inflation, can motivate consumers to make informed financial decisions.
Utilizing scarcity and urgency to boost engagement
The fear of missing out (FOMO) and the scarcity principle can be effective motivators for consumer behavior. Marketers can create a sense of urgency by highlighting limited-time offers, exclusive promotions, or early access opportunities. This can drive impulse purchases and encourage consumers to act before missing out on potential benefits.
Employing gamification and interactive experiences
Gamification and interactive experiences can make financial products and services more engaging and appealing to consumers. For example, a financial literacy game could teach consumers about budgeting, saving, and investing in a fun and interactive way. This approach can make financial education more accessible and encourage behavioral change.
Leverage social proof and peer-to-peer influence
Social proof, the tendency to conform to the behavior of others, can be a powerful tool for influencing consumer decisions. Marketers can showcase testimonials from satisfied customers or highlight endorsements from respected individuals to build trust and encourage purchase decisions.
Communicating with emotional resonance
Beyond using relatable language that resonates with consumer emotions, marketers can also incorporate emotional storytelling into their campaigns. For instance, a financial services company could create a TV commercial that depicts the challenges of managing finances during a period of economic uncertainty and highlights the positive impact of their products in helping consumers achieve their financial goals.
Using visual cues and metaphors to tap into emotions
Visuals and metaphors can evoke powerful emotions that resonate with consumers on a subconscious level. For instance, a financial services company could use images of a safe and secure home to represent financial stability or imagery of a growing tree to symbolize wealth accumulation.
Emphasizing empathy and understanding
Marketers can connect with consumers on an emotional level by demonstrating empathy and understanding for their challenges. For example, a financial advisor could express compassion for a client who is struggling to make ends meet and offer personalized advice to help them manage their finances effectively.
Photo by Karolina Grabowska
Can a nudge in the right direction unlock a nest egg?
This Goldman Sachs research reveals 4 key psychological factors impacting long-term saving behaviors: optimism, future orientation, financial literacy, and reward vs. risk preference.
The Good News: Individuals with an "optimal" mindset – high in all 4 factors – exhibit stellar saving habits, engagement, and stress resilience. They may be your ideal audiences!
The Challenge: Those with "suboptimal" traits (low in all 4) struggle with saving, feel overwhelmed, and lack engagement. These are the audiencers who need your help the most.
So here are 6 Actionable Insights as a starter
Fuel optimism: Show clients the positive impact of saving, not just the risks of inaction. Highlight achievable goals and success stories.
Strengthen future focus: Help clients visualize their future selves and the fulfilling experiences retirement savings enable.
Boost financial literacy: Offer bite-sized financial education and practical tools, tailored to different knowledge levels.
Emphasize rewards: Promote investment options with growth potential and income streams in retirement, catering to reward-oriented clients.
Offer personalized guidance: Provide dedicated support for those with low optimism or future orientation, helping them navigate decisions with confidence.
Tailor product offerings: Consider features like automated savings and guaranteed income options for risk-averse clients.
By understanding customers’ psychological profiles, you can tailor your services and messaging to ignite their motivation, optimize their saving strategies, and unlock their path to a financially secure future.
Photo by Kristina Paukshtite
How to give feedback to customers
The psychology of feedback is far more intricate than one might initially assume. While traditional feedback practices often emphasize losses, recent research suggests that this approach can inadvertently dampen motivation.
This article delves into the concept of win maximization, which focuses on achieving and celebrating successes. In contrast, loss minimization emphasizes avoiding setbacks and minimizing negative outcomes.
The author argues that people respond differently to feedback based on their underlying goal orientation. For individuals striving for win maximization, positive feedback reinforces consistent behavior towards achieving their goals. Conversely, for those aiming for loss minimization, negative feedback should focus on identifying areas for improvement rather than dwelling on setbacks.
These findings have significant implications for marketing strategies. Marketers should carefully consider the customer's specific goals and aspirations when providing feedback. Instead of simply pointing out losses, they should frame feedback in a manner that aligns with customer's underlying drivers.
Win Maximization:
In the competitive world of gaming, simply telling a player that they lost a match can be demoralizing. Instead, marketers should shift the focus to the player's progress, highlighting how they managed their resources more effectively or made better decisions during the game. This approach helps the player recognize their growth and encourages them to continue playing, driven by the desire to achieve even greater success.
Similarly, in the realm of retail, highlighting a customer's savings compared to their previous spending habits can be a powerful motivator. By emphasizing the incremental improvements in their financial management, marketers reinforce the customer's sense of accomplishment and encourage them to maintain their mindful purchasing decisions. This approach taps into the desire for continuous progress and growth, aligning with the customer's win-maximization mindset.
Loss Minimization:
In the dynamic SaaS industry, marketers can foster customer loyalty by focusing on minimizing downtime or errors experienced by the customer. By highlighting the positive impact of the service on these metrics, marketers demonstrate the service's ability to prevent setbacks and protect the customer's investment. This approach resonates with the customer's loss-minimization goal orientation, as they appreciate the service's role in safeguarding their success and minimizing potential losses.
Similarly, in the broader business-to-business (B2B) realm, marketers can emphasize the return on investment (ROI) generated by the company's products or services. By showcasing how these offerings have helped the customer achieve their business goals, marketers reinforce the value proposition and reinforce the customer's decision to partner with the company. This approach aligns with the customer's loss-minimization mindset as it highlights the tangible benefits of the partnership and minimizes the risk of switching to a competitor.
In the packaged goods sector, marketers can showcase how their products have helped customers make healthier or more sustainable food choices. By highlighting these positive dietary changes, marketers appeal to the customer's desire to minimize negative health outcomes and adopt a lifestyle aligned with their values.
Photo by RDNE Stock project
If you'd like to apply this kind of behavioural science to your work... talk us.
James, Patrick and Dan
We practically apply the science of the human mind for hard, commercial results
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