InsureMe Agent Blog: The Decoy

My mom lives in Sweden and got some books shipped to my house so that I can bring them to her when I visit next month. She’s a psychologist, so orders more interesting reading material than my usual fare. I started flipping through one last night called Predictably Irrational.

The first chapter discusses the presence of decoys in marketing and why even MIT grad students’ answers are affected when decoys are thrown in the mix.

Consider these offers from The Economist:

1) One year online edition $59.00
2) One year print edition $125.00
3) One year online and print edition $125.00

I didn’t mistype that. They are offering the print and online editions for the same price as the print only edition. Who would buy the print only? The answer: No one.

When 200 MIT students were asked, none chose the second option. The majority picked option number three—an obviously better deal than option two. And a handful chose the online only edition. When the print edition for $125.00, otherwise known as the decoy, was removed, the majority chose the online only edition for $59.00.

So what happened?

The author hypothesizes that a decoy offers people an easy comparison that will lead them to choose the better of the two similar options. In the aforementioned case, it is easy to see that a one year print and online subscription for $125.00 is far better than the one year print only for $125.00. Even though the online only option is cheaper than both, it doesn’t offer as simple a comparison, and so is overlooked by many.

In another example, he uses PhotoShop to prove his point. He takes pictures of good-looking men on campus and then uggs them up—distorting a nose here, making one eye too big there.

Then, he puts three photographs together to present to his audience.

1) A picture of an attractive guy (Hot Jack)
2) A picture of Hot Jack made ugly (Ugly Jack)
3) And a photo of another attractive guy (Hot Frank)

He showed the photos to women on campus asking them which guy they’d like to date. It seemed everyone wanted to date Hot Jack.

Again the presence of a decoy, in this case Ugly Jack, he surmises, causes the women to choose Hot Jack because they have something to compare him with. Hot Frank’s looks are nothing to shake a stick at (I saw the picture), but the easy comparison between Hot Jack and his ugly twin make him the obvious choice for most.

The takeaway:

If there is one product you really want to sell, create three options. Product A, product A for more money and less coverage (or ugged up) and product B. Chances are the presence of a decoy will convince your prospect that product A is the best of the three options. And it very well may be. This isn’t so much about tricking your customers, but leading them to the decision you want them to have. In other words: sales.

P.S. Jeb's post that should have gone up yesterday is below this one, so make sure to check it out.