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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

294. Understand Mapping: Mastering Choice Architecture in Business

In the context of choice architecture, mapping involves organizing options to make them easily comprehensible and help customers make better decisions. By presenting choices in a simple and quick-to-understand manner, customers can avoid getting overwhelmed and make choices they are confident about. It is important, however, to carefully consider how options are presented, as offering too many choices can lead to confusion and regret. 

For the best results, businesses should strive to make options easy to compare and understand. Melina Palmer explains that mapping is a critical part of structuring complex choices, the “U” and “S” in NUDGES, and can be used to make customer decision-making more accessible and efficient. Proper mapping can result in better outcomes for both the customer and the business. Palmer highlights examples from several industries, including ice cream, hospital treatments, megapixel cameras and product guarantees, to illustrate how mapping concepts can be utilized to guide customers towards the best choice while maintaining their freedom to choose.

  • Understand the role of mapping in choice architecture for superior customer selections.
  • Convert complex choices into approachable, meaningful opportunities.
  • Help people get from where they are to where they want to be in the easiest way possible.
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SHOW NOTES:

  • 00:00:00 – Introduction,
    Melina Palmer introduces the topic of the episode, which is the “U” in NUDGES: understanding mapping. She explains that the concept of mapping is important in choice architecture and nudging, which are foundational in behavioral economics.
  • 00:04:03 – What is Mapping?,
    Mapping refers to the relation between choice and welfare. The example given by Thaler and Sunstein in Nudge is choosing a flavor of ice cream versus choosing a medical treatment. The mapping for choosing ice cream is relatively easy, while the mapping for choosing a medical treatment is much more complex and difficult.
  • 00:07:07 – Five-Step Process to Understanding Mapping,
    Melina’s five-step process to understanding mapping includes: 1) encourage thoughtful review and open-mindedness, 2) break down the options, 3) make it relatable, 4) help them to get there, and 5) call to action. This process is essential in building the map and guiding the customer to the right recommendation.
  • 00:10:22 – Encouraging Thoughtful Review,
    It’s important to understand the biases and mental state of the customer or patient in making big decisions. The best choice architect will encourage thoughtful review and open-mindedness, especially in highly emotional situations.
  • 00:12:08 – Breaking it Down and Making it Relatable,
    The second and third steps in the five-step process are breaking down the options and making it relatable. This means anticipating the questions and needs of the customer and presenting relatable information in their language. In the example of buying a camera, the mapping will be different for each type of customer and their needs.
  • 00:16:34 – Mapping in a nutshell,
    Every choice can be broken down into a simple rule of thumb to use. Sticking with the camera example, megapixels are confusing. Saying it can be “billboard” or “poster size” or “web only” means something that can help someone make an informed decision.
  • 00:19:54 – Air Conditioning Mapping Example,
    To map the seemingly simple choice of buying air conditioning, let’s encourage thoughtful review, break it down, make it relatable, help them get there, and set our call to action.
  • 00:27:17 – Mapping in the Restaurant Industry,
    Mapping in the restaurant industry involves sorting menu items into categories, relatable descriptions, and making it easy to choose. Staff picks, chef specials, bolded options, and images can also help with the mapping process.
  • 00:31:44 – Mapping in the Beauty Industry,
    Nail salons and other businesses in the beauty industry can learn from mapping practices. Simplify options, categorize services, and provide clear descriptions to help customers make informed choices.
  • 00:32:45 – The Importance of Mapping,
    Adding more options to a product can cause confusion and overwhelm for the consumer, making it harder for them to make a decision. It is important to provide a map or a clear comparison of options to aid consumers in making a choice.
  • 00:37:12 – The Significance of Incentives in Mapping,
    Consumers perceive fees differently than rates and how incentives play a role in mapping. Companies should present information in a relatable way to consumers to aid in making better decisions.
  • 00:42:09 – The Importance of Trailers and Descriptions in Mapping,
    Trailers, reviews, and ratings help customers map their options when it comes to choosing movies to watch. Brands can use visuals, such as commercials that show someone using their product, to help consumers create a mental map and make a decision.
  • 00:44:38 – The Benefits of Trial Periods and Satisfaction Guarantees,
    Companies can offer trials or guarantees of their products to help consumers test their welfare and make a more informed decision.
  • 00:46:45 – The Importance of Showcasing Benefits in Mapping,
    Category headings like “Most Popular” or “Best Value” can help direct consumers towards the best options. It is important to ensure that these headings accurately reflect the product to avoid nudging consumers towards a bad choice.
  • 00:48:31 – Understanding Customer Behavior,
    To understand customer behavior, it’s important to consider the options they have and the criteria they use to make decisions. Creative solutions and presenting information in the best way possible can help businesses stand out from competitors and win repeatedly.
  • 00:48:59 – Value and Testing,
    Understanding where customers experience value and knowing how to present information takes time and testing, but it pays dividends. Businesses can unlock the most effective ways to encourage customers to buy and motivate employees to buy in by using proper mapping.
  • 00:49:28 – Incentivizing Employees,
    Incentivizing employees can be challenging, but with the right approach and understanding of their motivation, businesses can achieve success. The effort put in upfront can lead to significant dividends in the long run.
  • 00:50:08 – Conclusion,
    Melina’s top insights from the conversation. What stuck with you while listening to the episode? What are you going to try? Come share it with Melina on social media — you’ll find her as @thebrainybiz everywhere and as Melina Palmer on LinkedIn.

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