8 Ways to Use Behavioral Economics to Benefit Your Nonprofit

We found this video over on Katya Anderson’s blog the other day and found it simply fascinating and extremely informative.

It’s a session from the 2010 Nonprofit technology conference entitled Homer Simpson for Nonprofits: The Truth About How People Really Think & What It Means for Promoting Your Cause: Behavioral Economics for Nonprofit Leaders”

Alia Mckee, Katyna Andresen and Mark Rovner share a number of studies relating to behavioral economics and how they relate to nonprofit marketing

Behavioral economic theories contrast with a lot of traditional long standing theories, which state, the simple and compelling idea that we are capable of making the right decision for ourselves. Katya Anderson poses that we are not living in a rational world and thus human decision making is also not rational. The fact is that many of us make irrational decisions all the time whether in our buying habits or within our giving habits.

Behavioral economics applies scientific research on social, cognitive, and emotional factors that influence the decisions people make.

Studying and taking into account behavioral economics is very important when it come to how you market your nonprofit. If you can understand why people do the things that they do and that everyone is not driven by rational decision making you can start to craft your campaigns around this idea and make a larger impact. These 8 principles outlined in the presentation shed light on how to use behavior economics to become a better marketer.

homer Principles 1 – Understand Homer, but don’t use his ethics

Nudge: Improving Decisions about Health, Wealth, and Happiness

Always think: what are you trying to get your constituents to do? What are the barriers that are in the way? And finally, how can you remove them and make the giving/action process as easy as possible?

A good example of this is Click to Call. The service that enables recipients of messages to give put in their phone numbers and be automatically patched through to their political representative.

Principle 2 the left brain need not apply.

Switch: How to Change Things When Change Is Hard

First appeal to peoples emotions, then tell them how to take action.  Again, make sure the path in which people do this as easy as possible.

So a great way to do this is by pulling people in with your organization’s amazing story and the people that it helps. Then once people are drawn in and have given that initial emotional investment, they will be more willing to give in other ways.

Principle 3 – Stick to social norms not market norms

Predictably irrational – by Dan Ariely

The better donors are usually operating under social norms. Studies reveal that people who are intrinsically motived by doing good are likely to give more than those who are motivated to give based off market norms (aka receiving something in return)

If you appeal to market norms you are appealing to the givers with the what’s in it for me mentality. Once you trigger these market norms it’s hard to motivate people based off social norms.

Principle 4 – Small not Big

“If you scare with scale you lose” having your messaging more individual focused is much more powerful than appealing for people to help a larger audience. This is almost counter intuitive but people want to be able to visualize their donations helping real people. When they aren’t sure what their donation is going to they are much less likely to donate.

Principle 5 - Hope, not hopeless

Having your messaging is all gloom and doom it is going to turn people off. Don’t overwhelm people with the idea that their donations will have no impact and will be “just another drop in the bucket”.  This will just encourage people to give up and help another cause that seems more achievable.

Principle 6 - Peer Pressure Still works

Peer Pressure a.k.a. social norms still appeals to people. Social norms are an extremely powerful motivator and a good predictor of human behavior.

social norms in action

By crafting your messaging in a more relevant way to the reader they are more likely to act on that message. As seen in the screenshot above, the messaging increased the likely hood that hotel goers would reuse their towels as more relevance and social normalcy is added into the prompt.

This has also been effective in a study where house owners were shown their power consumption in comparison with their surrounding neighbors. When seeing these high usage number as opposed to their “eco-friendly” neighbors, the home owners decreased their power consumption.

Principle 7 – We listen to authority

Showcasing thought leadership with upper management and the leaders of your organization is important for public perception.

Using “on-brand” celebrity endorsements can work.

Principle 8 – The more you ask for the more you get (to a limit)

Priceless by William Poundstone

Applying social norms and letting others know what others may have donated has been proven to increase future donations if the people are made aware of the past amounts given. Use this principle sparingly in our opinion. =)

Are you applying any of these principles in your NPO marketing efforts?