Yesterday I talked about Dan Ariely’s book Predictably Irrational and discussed the hidden messages many companies send us in order to sway our decisions.  Mr Ariely also discusses intricacies involving social norms vs. market norms.  The most vivid way to define social norms and market norms is to paraphrase Dan Ariely’s story:

Let’s say you are at your mother-in-law’s home for Thanksgiving. The meal looks amazing – all your favorite dishes are presented beautifully on her table. The relatives are all getting along well – even your kids seem happy momentarily. As the afternoon winds on, the meal is eaten and digested, and everyone is feeling festive and content. You pull out your wallet and dig around, saying “Mom, this has been a great dinner. Will $300 cover it?”

Ouch. You’ve stepped on a serious social norm. By generously offering $300 for a favor that is done out of tradition or generosity you’ve gone ahead and introduced a market norm, or the concept of monetary compensation for services rendered.

This delicate balance is apparent in the business world. When companies create marketing and messaging that relates to social norms (i.e., “we are your partner, we can help you” or “we are here when you need us”), they are sending out a positive and reassuring signal to their customers. But they often want to have it both ways, implementing market norms and treating customers impersonally when it’s convenient.  Your “partner” wouldn’t violate the social exchange by calling and rudely demanding immediate payment for an invoice. This may create confusion and resentment from customers, who might prefer to be treated consistently.

How do you handle this dichotomy in your business? Or do you? Do you recognize it exists?

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Californian gets scheduled maintenance on Honda in Rimforest, CA

As you may have heard, we had some massive storms this weekend around here. So I took advantage of a rainy Saturday and read “Predictably Irrational: The Hidden Forces that Shape Our Decisions” by Dan Ariely.  A quick read and a fascinating book about how so many of our decisions and behaviors are largely NOT made by our rational brain…rather, they are influenced by factors that we may not even be aware of, like emotions, previous experiences, social norms, and more.

One of the most memorable lessons from this book comes from the automobile world. For a long time, Ford was having a tough time selling maintenance service visits to its car owners.  Sure, they’d come in when something broke down or failed, but the company wanted to increase sales of preventive maintenance services, too. The services they could offer were many and complex – car parts wear out and need to be replaced on very different schedules, but the technical details were difficult to communicate and customers were not motivated to schedule service visits for obscure parts.

Honda had a similar problem, but a simple solution. They decided to bundle their maintenance services into defined schedules – the 30,000 mile checkup, the 60,000 mile checkup, and so on.  They provided large signs in the service area that broke down the simple options, and listed what services were covered with each option.

Sure, the engineers were a little distressed that the needed maintenance services didn’t always conform exactly to the set schedule. But the company’s success in selling these bundled services overruled their concerns.  Now the 30-, 60-, 90,000 mile checkups are an industry standard.

Lesson: tell your customers how to buy from you, and when. Your company may offer lots of different services and products, but your customers don’t have time to deal with all the options. They want it clear, simple and well-defined.

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