By Helen Belogolova (Co-Founder & CEO, Venuetastic)
A lot of times with a startup, what you really hope to do is change how someone makes a decision – whether a purchase decision, a what-tool-to-use-for-a-specific-purpose decision, or a how-do-i-know-i-can-trust-this-tool decision.
Most of the time, changing the way someone behaves is very difficult, especially if you’re dealing with spending money. People get used to making decisions a certain way and breaking those habits is our task as startup founders. Understanding how people make those decisions and how to break those habits is hard, but it’s something done through user testing, surveys, A/B testing, multivariate testing, every communication with a user, and every feature built to track the response of users.
Doing this testing involves doing research on what to test and how — so when the opportunity to attend Startup-Onomics presented itself, we snagged it. The intense three-day conference was an amazing amalgamation of the top academia in the behavioral economics field working closely together with industry in order to stimulate change.
Not only did we start to understand what we needed to test in our marketplace in order to be more successful, we were exposed to insights that challenged the way we thought about our industry, customers and emphasized the importance of metrics and experiments building the core of our business.
We’ve highlighted a couple of our favorite takeaways below:
- Price Anchoring – People tend to start at a presented reference point or “anchor” when making a decision. If presented with a high number and then asked to bid on an product, the individual is subconsciously “anchored” on that number and will thus bid higher than someone presented with a smaller number. In our case, it may be the way event planners subconsciously focus on the way pricing is presented.
The venue industry, at its core, has a “Food and Beverage Minimum.” It means that the “Minimum” you’ll pay for a venue with food and beverage for a buyout or rental of a bar/restaurant will be X. We learned that a lot of venues might be slowing down and scaring potential customers because of the fact that they are posting “Minimums.” Minimums automatically anchor the buyer by letting them know that most likely, they are going to pay more than X.
If venues posted “Maximums”, the anchoring would happen on the other side and the venue customers would be more likely to bite the bullet and book once they were sure the venue would fit their budget.
- People like watching you do work for them – When people can see “work” being done by some search algorithm with their own eyes, they’re more likely to trust and prefer the presented search results rather than an instantaneously displayed set. In this day and age, when instant gratification online is the name of the game, this seems ludicrous — why would people want to wait for a longer period of time?
In a paper by one of the conference speakers, they showed just that. They found that “customers find waiting more tolerable when they see the work being done on their behalf — and they tend to value the service more.” Parallels are easily drawn to Kayak.com versus other travel sites with instantaneous search results.
This “labor illusion” becomes even more interesting when presented with significantly more and fuzzier search criterion (like those we deal with at Venuetastic). The concepts and goals, however, are the same: getting the customer to trust and prefer your site’s search results. We’re excited to start testing this as soon as possible.
Above are just a few examples, but by leaning on the achievements and learnings of academia, startups can get an even bigger boost in the goal of understanding and subsequently changing user behavior in their favor.
What sorts of behavior do you want to change?
Editor’s note: Got a question or answer for our guest blogger? Leave a message in the comments below.
About the guest blogger: Helen Belogolova is the Co-Founder and CEO of Venuetastic, a venue marketplace that makes it easy to find and book event venues online. Prior to founding Venuetastic, Helen was a trader at Goldman Sachs in New York and a portfolio manager at Barclays Global Investors/Blackrock in San Francisco. Helen holds a B.S. in Mathematics and a B.S. in Brain and Cognitive Sciences from MIT. Follow her startup on Twitter at @venuetastic.