Today, Cyber Monday, is perhaps the biggest online and digital shopping day of the year. But all one needs to do is go to any brick and mortar store on Black Friday to observe that consumers don’t always behave rationally.
Companies fail when they assume that customers always make rational decisions or even perceive their experiences logically. Behavioral economics offers insights into how individuals (e.g. customers) make decisions and perceive interactions – the cornerstone of customer experience. Behavioral economics relaxes the strict, classical economic assumptions and allows for factors such as emotion, cultural influence, and poor judgment. Delivering successful customer experiences requires companies to design with such imperfections in mind.
Behavioral economics for customer experience incorporates such concepts as customer choice architecture, option optimization, positive or negative framing, and loss aversion. It accounts for “non-rational” factors in consumer behavior such as emotion, poor judgment, or cultural norms that effect decision making. Behavioral economics not only can provide further insight into the less than rational behavior of customers; it can also help improve customer experience, incentivize profit-maximizing behavior, and enhance long-term customer lifetime value.
For more detail about behavioral economics and customer experience please see our latest whitepaper, “Why Behavioral Economics for Customer Experience?: Understanding Behavior and Structuring Choices to Maximize Value of the Customer Experience Ecosystem.”