Tactics e-mail marketers can steal from behavioral economists

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Defined very generally, behavioral economics combines psychology and economics to identify why people make certain decisions about purchasing, borrowing, lending, etc. In her article, "The Gift Card Economy" ('The Atlantic', May 2009), Virginia Postrel turns to behavioral economists to shed light on factors that have been shown to affect consumer spending.

In today's climate of economic uncertainty, marketers frequently turn to discounts and special offers to trigger spending. Research in behavioral economics supports that these tactics can increase response — however, it's important to be strategic, so you don't risk long-term losses for short-term gains. That's where e-mail can come to the marketer's rescue. Combine solid behavioral research with e-mail's ability to test and optimize offers, and you're more likely to realize greater success.

While you might think that an offer with a longer expiration date is more likely to be redeemed than one that expires very quickly, behavioral economics tells us otherwise. Indeed, study participants say that they're more likely to enjoy an offer with a longer time frame. However, studies show that the shorter deadline generates greater response. We all tend to put off things we want to avoid, but behavioral studies indicate that, without encouragement, we also tend to procrastinate when it comes to things we want to do. Use e-mail to test offer duration and optimize to find your customers' redemption sweet spot.

Also, giving customers a reason to "justify" making a purchase encourages response. That combined with a short expiration date offer can pack a powerful double-whammy. Disneyland's free birthday park pass program is one example Postrel cites that gives people permission to take advantage of a fixed-date offer. E-mail marketers can easily riff on this model, using birthdays or other special events as a justification to drive an immediate sale.

Tiered promotions — for example, awarding points or gift cards for dollars spent — can also drive upsells and repeat purchases. Behavioral economists tell us that consumers spend the "awarded" dollars on items they wouldn't normally purchase and often spend some additional dollars of their own. Most enterprise e-mail services give marketers the ability to manage their points programs for more effective tiered promotions.

Behavioral economics can lend marketers a greater understanding of human nature and how it affects customer engagement. E-mail can help you understand exactly what you can do to push immediate purchases and build long-term relationships.

Susan Tull is VP of marketing at BlueHornet. She can be reached at susan@bluehornet.com

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