20 Apr 2010

Well begun is half done

If we reduce to a cause-and-effect scenario the recent subprime lending crisis that nearly brought down the economy of the world, the blame can probably be laid at the doorstep of some of the most ugly and forgettable Advertising which happened to include three words of copy: NO DOCUMENTS NEEDED

Think about it for a minute... A person without the (documented) means to repay a loan would not even consider approaching a reputable bank.

But why did the addition of those three words prompt people to apply for loans that they really did not need?

Before we being to answer that question... Let us take a detour to the other side of the globe - to an average II Class Sleeper compartment of the Indian Railways in the Southern Indian state of Kerala - to witness another unique marketing technique.

Hawkers handout stacks of cheap trivia and recipe books to bored passengers in every coupe. They then disappear long enough for most passengers to select a book and browse. When they return, not everyone buys the book, but I am fairly certain these guys have a conversion rate that is ridiculously higher than the bookstores stocking quality literature at the stations.

Just why did the hawkers' little antic make people buy books that they did not need?

The commonality in both the cases of the unintentional borrowers as well as book-buyers is this: The critical first activity in making a purchase was almost eliminated. (In the first case, there was no tedious documentation between the borrower and easy money; and in the second instance, inertia against selecting a book was overcome.)

Forget 'building brands' and 'starting conversations' for a moment. If we sweep aside the cobwebs of agency-speak, and polish away the patina of habit, what else is Advertising but the first step that leads to a 'purchase'?

Why a 'first step'? Praxeology, the study of human action, and especially the work of Ludwig von Mises and the Austrian School of Economics, concluded that human action cannot be predicted - and that it essentially consists of a series of decisions.

According to Rory Sutherland's Blog, "Behavioural economists call this step-by-step approach “chunking” and [...] what also seems to be true is that the nature of the first step has an insanely disproportionate effect on whether people complete the journey."

Bottom line: If your Advertising / Marketing effort can eliminate the first step or makes it extremely easy, the possibility of completing a purchase will increase manifold!

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