From driving the same route to work every day to ordering coffee, so many of your actions are automatic because we develop habits based on heuristics, the mental shortcuts we take due to familiarity. What if customers would choose your vacation rental site based on this principle?

Websites like Facebook and Pinterest have sky-high customer retention, because their members come back over and over, like addicts returning for more. Brands like Kleenex are able to sell more since they have become so ingrained in the mind of consumers that people no longer have to think; they simply ask for a Kleenex when they need a tissue. That’s where you want your company to be. How can you get there?

Habit Building
Unfortunately, drug dealers and casino owners are very good at creating habits. Dealers start by giving the drugs out, often for free at first. Its appealing to vulnerable people initially seeking an escape, but who are soon hooked through repetition. Likewise, casino owners use instant jackpots and the lure of big payoffs, which are tempting to people looking for a shortcut to wealth. Many casinos even pump oxygen through air vents to keep habitual players awake and energetic so that they can continue feeding the slots. Drugs and gambling once someone starts, its so difficult to stop.

Those are dark habits, but using the same concepts, you can build positive, consumer-friendly habits and improve customer retention. Studies show that habit-forming is based largely on the rule of three. If you get a customer to do business with you three times, its far more likely that they will keep coming back. Perhaps that’s why they say threes a charm.

The Road to Habits and Heuristics
Here are a few counter-intuitive ways to help boost customer motivation and increase the likelihood of habit forming.

• Use a heuristic tool called Representativeness, where you look at the trend and go against it at the right time. One example of this is the gamblers fallacy. If you’ve lost a game of chance like blackjack five times in a row, you think you have a better chance of winning the sixth time around. So you increase your bet; in reality, your chances remain exactly the same.Stock brokers will use that attempt: The stock market has been going down, down, down, so it cant go any lower buy now because its going to go up! The time to do it is now!

  How you can take advantage of upward or downward trends in your marketplace to encourage immediate action?

• Scarcity and availability. In one study, researchers placed ten cookies in one jar and two cookies in another. Participants chose their cookies from the jar with two, which were perceived as being more valuable. The cookies were the same; it was the scarcity that made them more appealing.The thought of losing out on something evokes strong feelings and creates a high degree of emotional tension, which motivates action. Based on this logic, the Home Shopping Network has likely made millions of sales, whether porcelain figurines or sterling silver jewelry. As the number of items available dropped (well displayed on the screen), and they became scarcer, people dialed faster and faster to buy them! Likewise, Groupon uses the same principle of scarcity: only 25 left and one day to buy act NOW! And don’t forget the lottery lines an hour before the Powerball closes with millions of dollars to be won.

  But don’t use scarcity in an inauthentic way. For example, if you say there are only 10 copies of an e-book left, most people will spot this as an obvious lie. There’s no real increase in resources or cost to distribute one e-book or 100,000.

• Endowed Progress. This is the art of providing people with artificial advancement toward reaching a goal. An eye-opening study was done with punch cards for purchases. These are the cards that get marked each time you buy a product (e.g., a sandwich) or a service (e.g., a haircut). After 8 or 10 purchases, you get one free.Research showed that if you put ten spaces on the card and punch out the first two before you distribute it, more people would finish than if the card had only eight spaces. Its all about perception. In fact, the cards with two pre-punched extras were completed 82% more often than those that offered only the eight spots. Customers felt as if they had a head start, and were down a path of progress already. Ask yourself, how can you apply this to your company?
• Minimize the obstacles. Look for the top 6 conscious and subconscious reasons that would stop someone from forming a habit. The most common obstacles are:
  1. Money (price too high)
  2. Time (buying experience takes too long)
  3. Effort (too much physical exertion involved)
  4. Social deviance (asking them to do something outside the norm)
  5. Non-routine (product/service/process is too new and perhaps too intimidating)
  6. Brain cycles (too confusing and just too hard to understand; makes their brains work too hard)

  If you can figure which one of these inner obstacles is blocking or interfering with your business being habit-forming, you can adjust and eliminate the roadblocks.

  Needless to say, all of the above is predicated on you having something worthwhile to sell. People won’t come back if the product or service is awful.

  Jon Goldman is CEO of the business strategy firm Brand Launcher and the author of two works on business and marketing topics, including one that has been translated into Japanese. He is a powerful speaker who will be presenting on Managing Multiple Generations: Boomers, Xers, and Yers at the VRMA Annual Conference. Get a FREE copy of Jon Goldman’s latest e-book, Vendor-to-Expert, at VendortoExpert.com.

Source:
By: Jon Goldman
VRMA Blog

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