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Supercharge Your App Revenues Using Decoy Offers


Every pretty gal knows this dirty trick. She wants to stand out and be the center of attention at a party tonight. So she asks her not-so-fine-looking friends of hers along. These friends innocently tag along, thinking Good Looking Gal really enjoys their company. In reality they are being used as a decoy. If Good Looking Gal is really smart, she will single out friends who are similar to her – in height, built and hairdo – but less attractive. And tonight, accompanied by her minions, she will be the shimmering presence and the focus of many men.

economist Figure 1. The effect of an irrelevant alternative (decoy). Adapted from: danariely.com

Dan Ariely, a behavioral economist, surveyed his students on the subscription option they preferred in Figure 1 (left). Obviously nobody fancied the Print subscription when there is the Print & Web subscription with the same price. Why, then, bother to put the print-only option there? So Dan erased the print-only option, and did another survey as shown in Figure 1 (right). Lo and behold, the Print & Web subscription preference dropped from 84% to 32%.

What just happened? Apparently, something (Print & Web for $125) will seem more attractive when it is compared to another thing that looks similar (Print-only for $125), but a bit inferior. So attractive is that something that the rest of the options (Economist.com subscription for $59) pale in comparison.

This inferior thing is called the Irrelevant Alternative.

In the case of people like Good Looking Gal, she will seem more gorgeous when compared to her so-called best friends – the irrelevant alternatives – who look similar, but a bit uglier. So much so that the rest of the girls in the bar don’t seem to matter to the guys Good Looking Gal is trying to entice.

Wicked. But that’s how our neurons are wired to fire.

room-booking Figure 2. Attracting travelers to buy a more expensive hotel room with an irrelevant alternative. Adapted from: agoda.com

Can we implement Irrelevant Alternative in ecommerce apps? Sure we can! Take a hotel booking app (Figure 2). You want to push your more expensive rooms. So you embark on a clandestine mission to place an irrelevant alternative to make the other similar, and more expensive, room type (circled in red) look really attractive. Note that these two room types are identical in every aspect except for the breakfast and internet access.

Think of how to implement this “wickedness” into your apps to prompt your users into purchasing something that you want them to buy without them realizing you are fooling around in their head.

References:
http://www.economist.com/blogs/democracyinamerica/2009/05/the_independence_of_irrelevant
Featured image: delicious-decor.blogspot.com

 

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