Posts Tagged ‘neuroscience’

Financial incentives: Why marketers need a new drug

By admin, July 19, 2010

There’s a little devil inside all our brains. It’s called the nucleus accumbens, and it’s a real pleasure-seeking bastard. In addition to playing a huge role in addiction and fear, the nucleus accumbens is also responsible for a ton of marketing missteps, especially those dealing with incentives. I’ll explain.

What are you dealing?

In business to business, it’s promised ROI. In retail, it’s coupons and loyalty programs. In direct response, it’s rebates and promos. But in all these cases, you’re offering the customer a direct financial incentive for doing what you want. That kind of thing is like crack to the nucleus accumbens.

No, it’s literally like crack. The brain responds in the same way to these payouts as to any dopamine-stimulating drug. But they also come with the same drawbacks, e.g. addiction and tolerance.

n. uccumbens

n. uccumbens

Something – in this case a financial incentive – gives you pleasure, our little thrill-seeking friend, nucleus accumbens, sends signals to douse the brain in dopamine. Dopamine makes us feel good. The problem is, the same stimulus won’t give the same jolt next go-round. And that’s because people are buying the deal, rather than what you’re actually trying to sell. And when it’s time to buy again, they’re looking for an even better deal – or at least the same deal. C’mon, man, just gimme my fix!

Addicts instead of advocates

So, that’s a pretty serious problem. Your loyalty program – or your ROI claims – are creating an addiction to the deal, the savings, the expected returns. And it’s coming at the expense of loyalty. So what happens when someone comes along with a better deal buzz? All your customers chase the dragon right into the arms of your competitors. Because you can’t buy loyalty. You have to earn it. And you do that by stimulating a totally different part of the brain (the posterior superior temporal sulcus – associated with altruism, loyalty and social connection). But that’s a different blog post.

Giveaways, promises of profit, loyalty programs and other incentives have a huge place in the mix. But they can’t come at the expense of building brand loyalty. That’s what makes the difference between customers who keep coming back and loving you for it and customers who buy once and start looking for a better deal.

What are your thoughts? Tell me where I can shove my neuroscience in the comments.

With an unusual ability to connect seemingly unrelated items, Jacob intrigues and impresses clients with his sharp wit and crystal clear concepts. He can be reached at Jacob.Edenfield@adfarmonline.com or on Twitter @jacobedenfield.

Photo courtesy of: http://thebrain.mcgill.ca/flash/i/i_03/i_03_cr/i_03_cr_par/i_03_cr_par.html.

Additional inspiration from Science Daily