Prospect theory is explained with a graph. Negative losses and positive gains recorded on the horizontal are set against a vertical intensity of feeling for those losses or gains.

As we gain more, we feel less for each gain. In contrast, even a small pain (shown in red) feels a lot more negative than an equal-sized gain feels good.

Package pain. Consumers will feel less overall pain from any costs incurred when you package and deliver them all together rather than when they're felt as separate, smaller pains.

Spread out rewards. Instead of offering larger, chunkier benefits to consumers, break these down into smaller pieces, spreading them out across time. $10 given 4 times feels more valuable overall than $40 given once.

Offer mixed product bundles. We feel less good with each thing we consume. Therefore, the first can of soda tastes better than the fourth. This means we'd get more complimentary value from a bag of chips instead. Look for ways to offer relevant, mixed product bundles to offset diminishing consumer sensitivity.

77 people were asked to choose between an entirely certain win of $30 and an uncertain 80% chance of winning $45.

78% of people opted for the significantly smaller, certain reward, despite the risk-adjusted payout being higher for the uncertain reward (0.8 * $45 = $36).

Certainty is valued highly.‍

What ways can your business create reassurance or guarantees that make consumers feel safe?  How can you use exclusive certainty to reward and foster a sense of status with your brand?

Stick to your promises!

Letting consumers down, even once, will trigger uncertainty in the quality perceptions of your brand. If making claims about being the best at something, don’t ever give consumers reason to question that and turn a selling point into an unsustainable headache.

Reframe uncertain offers to appear certain.‍

The uncertain frame here requires consumers to calculate proportional savings, but the certain frame removes this by showing certainty of a zero-priced third lemon.

City Planners of Garden Grove, California installed Active Radar Speed Signs at 5 locations to provide real-time feedback on the speed of 58,000 drivers. LEDs would also flash if drivers exceeded speed limits by more than 5MPH.

After installation of the feedback systems, average speed dropped 22% from 44 to 34mph.

First, determine the behavior to change. Measure, capture and store the relevant data. 

Communicate it back to the individual in a relevant, context-sensitive way that ultimately provokes an emotional reaction.

Provide clear consequences for action or inaction. It’s critical to get the right balance between not being too subtle and not being too intrusive or authoritarian (which we filter out).

Lastly, allow for opportunities to immediately rectify the behavior - which should also be tracked - completing the loop and eventually changing the behavior pattern.  Remember to reward compliance as much as you penalize inaction to increase effectiveness.

88 students were told about an exercise training camp and split into 2 groups: either having a choice about  the four fitness programs on offer or having one randomly assigned. They were then asked to rate their anticipated satisfaction of the program out of 9.

Those given some autonomy reported higher levels of anticipated satisfaction than those who weren’t.

Choice = autonomy = certainty.  For instance, giving people a choice to still use the old version of your software platform for a given timeframe will reduce anxiety and uncertainty.

Product type matters. People desire autonomy for pleasure purchases (i.e. vacations) more than for practical ones (i.e. business trips). Place more  focus on the former in order to maximise feelings of control and consumer satisfaction (Botti & McGill, 2011).

Change behavior with the ‘4As’. Feeling that any change originated from within is vital. Ask about the behavior, advise them impartially of the facts and of better routes, but that they must make their own choice. If keen to change, assist them to make a commitment to do so by a given date, and arrange a follow-up to support this behavior change.

435 people were asked to go to a restaurant and split into four groups. They were then either given a surprise free dessert or not, and then finally either given an explanation of the reason for the surprise or not. All were then asked to rate their level of delight.

Those given the explanation rated the surprise as more delightful than those who weren’t.

Surprise sparingly.  The more frequent the surprise, the less positive it will make customers feel. Give your staff creative autonomy to make small, personal & unexpected gestures that strike deep. 

Provide an explanation for the surprise to suppress future unrealistic customer expectations, avoid mistake misconceptions and heighten the sense of personalization. 

Reframe problems into surprises. During a busy Christmas, Lush (a UK soap store) had a long queue, which an elderly lady holding one item had joined. A shop assistant noticed, pointing out the queue length and that she didn’t need to pay. After he insisted she accept, she hugged him and left the shop with the free item. Another customer then told him that witnessing his kindness  had made her day. Both will recall compassion, positive surprise and stress relief in future perceptions of the Lush brand.

72 people were split into 3 groups: Humor, Neutral or Contentment and shown a respective video: Mr Bean (a British comedy show), an educational  video or a beach scene. They were then all asked to solve a secretly-impossible puzzle.

Those humored spent 50% more time and made 2x more attempts trying to solve the problem than others.

Make it funny. Consumers have more positive attitudes towards humorous ads and their brands, increasing intentions to buy (Eisend, 2008). However, levels are dictated by product category and how related the humor is to the product.

 Funny stories are more memorable than other positive emotions  like admiration or respect.  Puns are particularly memorable because they force us to simplify our humor delivery to a single line, reducing mental effort (Summerfelt et al., 2010).

Bring humor into the workplace. It helps boost employee satisfaction (Decker 1987), leads to higher productivity (Avolio et al. 1999) and boosts creativity (Brotherton 1996).  Ben & Jerry’s, Southwest Airlines and Sun Microsystems are well-known for their use of humor within organizational culture (Barbour, 1998). 

40 students were taught a topic and either given the respective homework once instantly or 3 times over the next 3 weeks. They then had an exam a month later.

Those who had the homework spaced out over time performed much better in the exam than those who were asked to do it immediately  after learning.

Spread out the learning.

‍Research shows that spaced repetition is the most robust means of learning but is rarely used by companies. Most knowledge is delivered once and forgotten, wasting money and time. Develop shorter learnings spread over time, using different tools, both digital and physical.

Use it or lose it.

‍Knowledge only sticks when we use it. After reading a book chapter, summarize learnings into bullet points, a list of actions, or even better, become the teacher. Blinkist could send some simple interactive questions after readers have finished a book. Use Slack app QuickQuiz to follow up Lunch & Learns with a Tiny Habit of bite-size questions. 

Make progress trackable.

‍Learnings apps like Duolingo and Memrise create powerful Feedback Loops through points systems, daily goals and leaderboards to create positive reinforcement. Tracking progress gives us a sense of growth and improvement.

682 colonoscopy patients were split into two groups, with one undergoing a longer procedure but with a period of less discomfort added on at the end.

After, patients were asked to recall the total pain felt. The peak-end group reported 10% less pain and a 10% increase in attending a follow-up procedure.

How do you want to be remembered in customers’ eyes?‍

How do you want to leave them feeling? What little touches can you add to your product or service to leave customers feeling amazing and want to share with their network?

Create a Customer Journey Map

Identify positive experiential opportunities to exploit and painful weaknesses to remedy. Some pains may be small or cheap to fix, yet play a big part in a person’s memory.

Negative experiences are a hidden opportunity...

...to re-establish a positive peak and / or end. Things will go wrong, whoever’s at fault, so allow flexibility and an authentic humanity to surface, not just to save the relationship but to allow the brand to shine. Handle a problem well enough and that’s what customers will remember, not the problem itself.

2,064 male students from 9 schools in Chicago were enrolled in a two-year-long program that encouraged system-two slow thinking on how to manage situations of conflict.

Participation in the program reduced total arrests by 35% and violent crime arrests by 50%.

Add a little friction. ‍

We constantly weigh up effort vs rewards, so seeing one long sign-up form can lead us to make a fast system-one decision not to do so.

A process that’s Chunked, features reflective Goal Primes and clearly shows the product benefits will work better. 

Provide warnings for damaging decisions.

Instagram have launched "comment warning", live-analysing a comment and notifying of potential offense, without removing the Autonomy to post. This allows for reflection and avoids Reactance.

Build in reflective periods for big decisions.

Knee-jerk, short-term decisions can harm our longer-term goals. E.g., financial firms can help us make smarter decisions about withdrawing all our savings by building in a reflective delay, especially when such decisions conflict with our prior Commitments and goals.

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48 people were shown 100 sets of numbers of different lengths, split up into a number of smaller chunks. After seeing each set, they were asked to recall the numbers in a memory test.

The results found that, on average, people were good at remembering about 7 numbers and 4 chunks before memory errors started kicking in.

Chunk for clarity.

‍Our short-term memory is limited, so whether you're designing a food menu or trying to share a new idea, prevent Analysis Paralysis by breaking information down into 3-5 smaller bites that are easier to process. 

Chunk requests.

‍If you're asking for a lot of info from customers, how can you break the task into more manageable segments? Data capture company, Typeform are a great example of this, turning the concept of chunking into a core USP for its data capture products.

Chunk for long-term understanding.

Boost knowledge retention by structuring each chunk learned to build upon what was learned in previous ones. Repeat past chunks to build a strong, modular connection between fragmented bouts of learning.

Language app, Duolingo does this in an engaging visual way.

2230 people were tracked over a 19-year period and were asked to record their life satisfaction. All at some point during the study got married.

Results showed that despite average happiness peaking in the years surrounding their marriage, it eventually returned to the baseline.

Create unexpected secrets (Lyubomirsky, 2010).

As soon as your once-new product or service ceases to draw attention, it'll fail to be appreciated. What bundles, new variety or joyful hidden details can you build in and communicate to offset this?

Highlight new possibilities.

What ways can your product change customers' lives to set them on a new positive hedonic path? For example, a healthy snackbox subscription could add in recipe cards, unlocking a second-order effect of healthy food-pairing.

Reduce pain with certainty.

‍We revert to the mean faster for negative experiences when they're short and predictable. Banks offering loans shouldn’t just draw on the habitual pain of repayment but also seek to build a positive sense of closure around the joyous certainty of the final repayment. 

80 people were asked to choose between two used cars with an equal number of positive and negative traits. Two days later, they had to recall which features were for their car and which were from the other.

The results showed that they incorrectly chose more positive features for their choice and more negatives for the car they didn’t choose.

Remind customers of their good choice.

Embrace rationalization and use this to help people feel great about their choices. Post-purchase, don’t just send an order confirmation, send an order celebration, like Fitbit do. Finish on a Peak!

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Use as a platform for further steps.

‍Choices can also be validated by unlocking a new set of actions. Joining the club, getting drip-fed how-to guides, booking an event ticket or sharing a referral code are all tasks that help support previous choices. Harry’s does this very well with its shaving advice.

What next steps do you want a new customer to take?

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• Prime and capture positive sentiment.

‍Send a follow-up email a short period of time after product use with a simple call-to-action, such as a one-click star rating button with Social Proof evidence.

195 students were asked to fill out a lunch order survey in return for a free lunch. They were split into two groups and  asked either a few hours prior to or just before lunchtime.

Those asked with the delay made food choices 11% lower in calories than those just before lunch.

Adapt with time-to-delivery.

Online grocers could change what’s shown to the user based on how many days out their delivery slot is, showing more aspirational goods in the week prior and impulsive goods the day before. 

Build around customers’ goals.

Have them make a preference on your site for their future self i.e. that they want to lose weight or save more money this year. Then, have this preference dictate what products are shown to them online, along with a subtle reminder that you’re helping with their bigger goals.

Encourage “future lock-ins.”

‍Banks could improve consumer savings by allowing pre-registration for a future savings account. Consider locking in other types of ‘should’ decisions that will benefit the consumer’s future well-being, as well as reducing your costs through better demand forecasting.

36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.

All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.

Embrace the power of now.

‍Immediate gains are valued more greatly than those far off. Similarly, far-off costs seem less painful. Amazon heighten the immediate gain by taking a hit now, for longer term business payoff. Where in your business can you capitalize upon 'the now'?

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Prevent impulsive financial or health decisions by:

• Reframing future rewards around time (by stating a specific date) or by surfacing the painful zero outcomes of short-term choices (Wu & He, 2012).

• Goal Priming. Painting a vivid, personal, emotional picture of someone's future reality will boost their ability to make longer-term decisions now.

Dissuade from inferior choices today with a lock-in for tomorrow

This is when a choice now locks in a set of future inferior outcomes, aggregating any gains and forcing a stronger consideration of less impulsive choices. 

226 people were asked to go to the gym and split into three groups:  a control and two other groups given devices with audio books. Recommenders were told to restrict playback to when at the gym and Committers had to store their device in the locker after use.

It was found that commiting to this restriction boosted gym visits by 51% next to the control.

Bundle feats with treats.

‍What sort of behaviors do you want to encourage with your team or customers? Temptation bundling can be very effective in areas where short-term self-control is weakest, like saving, exercise or food choices. What complementary experiences can you bundle alongside the toughest tasks? 

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Create your own “If-Then” commitments.

‍Ideas include only listening to your favorite podcasts if cleaning the house, getting a coffee on the way to work only if you cycle or walk, or committing to a nice hot bath only if you’ve kept to your weekly spending budget.

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Keep it fresh.

‍Commitments are a powerful way to maintain long-term behavior change (Royer et al., 2012). However, life does get in the way and we tend to eventually hedonically-adapt to all good things. Keep engagement high by highlighting people’s past successes and creating new bundled experiences that are uniquely attractive. For instance, a gym having all streaming services, even those you might not have access to at home.

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68 people were shown photos of shopping environments, either with or without plants. They were then asked about the environment’s percieved restorative power.

Those who saw the biophilic environment reported a higher restorative effect on wellbeing than those without plants.

Use nature to restore consumer attention and boost dwell time (Lee et al., 2015).

Even a short exposure will reduce mental fatigue. Where are the most stressful points along a customer journey? Focus on ‘biophying’ these areas first. 

Leaf the stress behind.

‍Research (Ulrich et al., 1991) suggests that having restorative green spaces in the workplace reduces stress, even though 58% of office workers still have no plants (Human Spaces, 2014). Seeing plants from a worker's desk lowered self-reported sick leave next to those without a bio-optimized view (Bringslimark et al. 2007).

Start small and slowly work your way down the  list of biophilic enhancements. 

Create familiarity through nature.

‍Use natural references to ground marketing of technologically-complex or abstract products to boost understanding and brand warmth (Rafaeli and Vilnai-Yavetz, 2004). 

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425,744 sales of US shares were analyzed by determining which had gained value and which had lost value. Both groups were further analyzed to determine whether the shares were sold in groups or on their own.

The research found that investors were more likely to sell off losing trades in groups over those which were doing well, so as to ease the pain of loss.

Package the pain.

‍Releasing a whole bunch of bad news in one go is better than drip-feeding it across successive days. Similarly, having four fillings in one go is preferable to spreading them out one a week for a month. Less painful overall with fewer periods of worry. How you Frame pain matters too. Emphasize the short, one-off nature of the discomfort, the Fresh Start and comforting Certainty it will provide.

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Consolidate smaller losses into bigger gains. 

Even small bits of bad news can trigger overweighted negativity. Consider bundling them as part of larger, positive announcements to reduce the pain felt.

Split off small gains from bigger losses.

‍What small victories can you hold back and share separately after a big bit of bad news? What small feature can you release separately from a significant security update?

87 students were told that two men won in lotteries: Mr A won $50 in one lottery and $25 in another. Mr B only entered one lottery and won $75. The students were then asked who they believed to be happier.

Results showed that students believed the segregated Mr A to be happier with his winnings.

Segregate the good.

‍Two small gains trump one large one. Be it team victories, feature announcements, product packaging or loyalty benefits, where can you break up the good into smaller, bite-size pieces?

Highlight silver linings.

‍Separate a small gain from a larger perceived ‘loss’ to reduce consumer pain. For example, instead of offering a temporary price reduction, offer a special rebate equal to the proposed discount.

Don't separate too small. We have a low-end threshold below which we experience no joy (Morewedge et al., 2007). Breaking a cookie into crumbs results in almost zero joy. Banks offering current account holders low monthly 'loyalty rewards' would do well to reframe them into larger, more meaningful chunks, or not do it at all. After all, no one wants to be reminded of the meaninglessness of their loyalty.

733 new employees of a health company used a single opt-in process to subscribe to a retirement plan. Results were compared to a multi-step phone process used with 455 and 407  employees from the two previous years.

Participation rates were 5% after one month and 8% after three months. With the new process, they rose to 19% and 35% respectively.

Perform a friction audit.

Identify all the hurdles and delays your user may feel while using your product and attempt to minimise them. How many barriers to a near-effortless user experience can you find?

Adding friction can help people from making mistakes.

Add barriers to counter System 1 mode, prompting users for conscious reflection to validate important information (e.g. monetary transactions). What strategic friction can you create?

Add friction to make waiting times feel shorter.

Houston airport reduced the number of luggage waiting times complaints by moving the luggage area further away so that passengers spent more time walking and less time waiting.

Remove friction but highlight effort.

Our willingness to pay for something increases by knowing how much work is done for us. We pay more for a cup of coffee if we see the barista working on it for several minutes.

95 university students spent the day leisurely walking. In the measurement group they were given the choice to wear a pedometer. In the control group, everyone used a sealed shut pedometer. Afterwards, they rated how much they enjoyed walking.

Measuring led participants to walk more but decreased how much they enjoyed it – even for those who chose to be measured.

Consider what you want your users to feel.

While measurement may improve performance, it comes at the expense of enjoyment. By adding a measurement option, the behaviour will feel like work instead of fun.

Understand why users engage in an activity when deciding whether to measure it.

Sometimes the benefit of achieving more may outweigh the cost of users enjoying the experience. Does the end you’re looking to achieve justify the means of measuring its progress?

Switch the motivation type by becoming pro-social and giving meaning to the measurement.

For example: If you reduce your calories, you could send the equivalent of those excess calories to someone in need of food.

Prior data can set reference points that demotivate us

Our personal motivation can suffer in the face of prior data, setting unhelpful reference points about future expected efforts.

For instance, consider the following: "I can see that I ran 10k 3 times in a row, so if I don't run 10k this time, I feel that I'm doing worse. But I just don't feel like I can do 10k today, so I won't go at all."

However, in absolute terms, you're doing more in total by doing any more running at all, whether that's 1k, or even 100m, so you're best off ignoring the data and doing *something*.

A good counterbalance to this is to focus instead on the *experience* that running provides. This removes the quantifiable reference point and frees us to just enjoy the act for what it is. And who knows, maybe we'll end up running longer than 10k in the process!