McDonald's Behavioral Economics: Random Rewards Work Better
Nowhere is the phrase Monday morning quarterback more on point than the Monday after the Super Bowl. While most sports fans are debating why Russell Wilson passed from the one-yard line, those of us whose favorite game is marketing are trying to figure out what certain brands were thinking in their choice of Super Bowl spots.
Some reviews are measuring brain waves, others are looking at consumer votes and some are just personal opinion. Well, we think we know what was behind some of the very good as well as some of the not-so-good efforts. It's all about leveraging the unconscious factors that drive 95% of consumer decision-making, and the best way to do that is through behavioral economics. Of course, when you can combine the smart use of behavioral economics (B.E.) with your brand's core positioning, you've really got a home run -- make that a touchdown.
And that's just what McDonald's did. McDonald's "Pay with Lovin" promotion randomly will let people pay for their meal over the next two weeks with acts of love and kindness. It's a great use of the BE principle of "random rewards," which engender more loyalty than regular expected rewards not only among those who receive, but among those who observe. The fact that McDonald's tied the rewards to its "Lovin It" tagline and new campaign direction made it even stronger. Touchdown McDonald's.
One of the most fundamental B.E. principles is the "power of free" -- proven many times to be perceived as more valuable than offers that have greater actual financial value. It has mystical powers that can completely change the way people feel about an experience. Not a bad idea for Turbo Tax, especially after the controversy over its charging for forms that were formerly free. Turbo Tax put the "power of free" into high gear with its "Boston Tea Party" spoof. Who doesn't mind paying taxes when filing is free -- or at least there's no more nasty charge for forms. Frankly, we preferred its original "Year of You" campaign based on the B.E. principle of "reframing" -- making tax returns a celebration of the past year, not paying a debt. We'll be eager to see how "Tea Party" works when it comes to sales.
Another B.E. principle that showed up several times during the game was "loss aversion." In T-Mobile's over-the-top spot with Kim Kardashian, the wireless carrier focused on the principle that people will take more action to save something they've already got than to gain something new. Making people aware that they don't have to lose all the data they paid for is a powerful reason to switch carriers. Besides, the T-Mobile target customer lives for celebrity social media, so Kim would get their attention with the message that you shouldn't give up the opportunity to look at me with the data you've already paid for!
A related B.E. principle -- "fear of regret" -- was at the heart of the Mophie spot. Guess there's lots of worry in the world of wireless. What's even worse than loss of data? Loss of battery, of course! How many of us would have to admit that it really does feel like the end of the world? Who wants to regret they didn't do everything they could to keep their battery going? While many people still might not be sure what Mophie is after seeing the spot, we suspect that a lot of them will want to find out.
While Super Bowl advertisers spend a boatload on awareness, in most cases the spots won't trigger sales unless they tap into how consumers' brains work. Of course, just using behavioral economics principles doesn't mean you're using them well. That means speaking to the people you most want to reach – in ways that are true to the brand.