The Power of Defaults
Right as I published my blogpost on Changing Customer Behavior yesterday, I came across a related Bloomberg BusinessWeek article about the use of defaults, the third tool I had outlined in my post. The article investigated consumer behavior related to conserving energy and using clean energy and provided further explanation about the power of defaults.
Defaults are choices that simplify and guide decision-making by making it easier to choose the desired option (the default) vs. the alternative. Defaults work, the article explained, for three reasons:
1. inertia — Basically people are lazy. So by making the desired behavior the default, we make it harder to choose to do otherwise. “In light of the power of inertia and the all-too-human tendency to procrastinate, many people simply continue with the status quo.”
2. implicit endorsement — People tend to think that if an organization has selected an option for them, others think this is the right thing to do. In this way, the “wisdom of crowds” is presumed by the default.
3. loss aversion — A default serves as a reference point from which any action to change it is perceived as a cost. The example from the article goes like this: “Suppose you are not getting clean energy and are asked whether you want to switch to it, even though it costs a bit more. You might think you don’t want to lose the money. But if you already have clean energy and are asked whether you want to save a little by opting out, you might not really care.”
The implications of these insights are important to businesses whose success relies on changing people’s behavior — whether it’s getting people to choose one brand over a competitor’s, to buy something they normally wouldn’t, or to adopt a new technology. Defaults are a powerful tool to achieve an advantage.
When they’re used to encourage behaviors that we can all agree are positive, as in the examples cited in the BusinessWeek article (better energy use) and yesterday’s HBR-inspired piece (better health behaviors), defaults seem quite acceptable. But there are uses that seem less altruistic: fast food combo meals that come standard with large fries and large drinks, online marketers that automatically enroll you in their mailing lists, doctors who conduct routine tests that may be unnecessary, etc. So perhaps a word of caution is needed — organizations need to use defaults responsibly and consumers need to be aware that they might not always represent the best choice.
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