If you’re reading this line, then the headline worked. It provided a social incentive to continue reading. More on social incentives later, but for now notice two things: First, that incentives work and second that if a headline can be an incentive then, chances are, incentives are more than you realized.
What’s an Incentive? Incentives are “anything that motivates or encourages us to do something.” We often think of incentives as carrots and sticks (the expectation of a reward or the fear of punishment), and in some ways they are, but those carrots and sticks can take many forms—not just money and prizes—and can include a few things you probably didn’t expect. Some examples include:
1. Design Incentives – You can encourage people to make particular choices by the way you present their options. In nations where people must “opt-in” to organ donation, participation rates average only 10%. But, in nations where people must “opt-out” of organ donation, participation rates skyrocket to an average of 90%!
2. Moral Incentives – Moral incentives work by convincing people that certain behaviors are right and others are wrong. Generally we think recycling is right and littering is wrong and do one while avoiding the other.
3. Social Incentives – We like to fit in. Social incentives are based on our desire to conform to what others are doing. When a hotel posted signs indicating that 75% of hotel guests reuse their towels at least once during their stay, towel reuse increased by 26%. When they changed to sign to read, “…75% of guests who stayed in this room…” towel reuse jumped to 33%!
4. Financial Incentives – These are money and/or prizes. They can work, but often aren’t necessary. For example, a group of lawyers were offered $30 to draft wills for needy retirees and none accepted. Because they were offered money, they thought in terms of market norms and judged the fee as insufficient compensation. However, when asked to do it for FREE, the same lawyers agreed! Since money wasn’t involved, the lawyers considered the request in terms of social norms and saw it as “the right thing to do.”
Not only are financial incentives often not necessary, they can even backfire. Once you begin paying people to do things they previously did because they were “right,” they will often stop doing them for moral reasons and require financial rewards instead. Oops!
Now that you know a bit more about incentives, let’s look at some guidelines for applying them.
1. Only incentivize actions known to add value to the desired outcome. If it doesn’t contribute to your goal, why encourage people to do it?
2. Make incentives proportional to the difficulty and importance of the desired action. If the action is vital to the desired outcome and also difficult for the participant to complete then it deserves a stronger incentive.
3. Use the minimally effective incentive. Never offer two carrots when one will do.
4. Apply incentives in a “Smart Sequence”:
a. Design First - Build incentives into the products themselves using fluent design.
b. Moral/Social Second - When Design Incentives are insufficient, apply social incentives. Studies have shown social incentives to outperform financial incentives.
c. Financial as a Last Resort - When design and social incentives are insufficient, consider financial incentives, but only as a last resort and within the framework of the behavioral principles that govern people’s response to them, including:
i. Loss Aversion - People work harder to avoid losses than they will to acquire gains. Therefore, framing incentives correctly (Do people earn points or for completing desired tasks or lose points for failing to complete them?) determines their impact.
ii. Hyperbolic Discounting - People are addicted to now but discount things in the future. So, a free lunch in the café today can be more influential than hundreds of dollars paid later.
iii. Mental Accounting – People value money differently depending on the mental account into which they place it. That means $5 in their pocket may be a stronger incentive than $50 in their savings account because people perceive the $5 as theirs to spend.
Incentives can take many forms and are influenced by some crazy quirks of human behavior. But, by applying them correctly, they can help you achieve your goals.
Spread the fire. GS