Goals of customer engagement
Why behavioral economics?
Even if behavioral economics is mainly applied in pricing and selling because it focuses on (purchase) decisions, it is still worth applying the findings of behavioral economics to customer engagement. Because behavioral economics, first of all, eliminates some widespread misunderstandings of customer loyalty research:
Customers are not necessarily convinced by being offered as many benefits and services as possible. Quite the opposite, customers hate the feeling of paying for services they don’t even need. A loyal newspaper subscriber is more likely to cancel the subscription if the unread pile of newspapers gets bigger and bigger. Sometimes less is more.
Read more about this in our blog article “The relevance of irrelevant offer elements for your portfolio” (example #4).
Using behavioral economics to gain more satisfied, loyal, and profitable customers
Behavioral economics provides a set of recommendations to convince, bind, and maintain customers. This primarily includes one thing: the management of expectation: The Prospect theory is one of the most important concepts of behavioral economics. It shows that satisfaction and dissatisfaction mainly depend on the expectations of a customer. Therefore, it is important to know a customer’s expectations to satisfy them. However, it is even more important to actively shape his expectations.