Monday, May 30, 2016

Breaking Bad: How Freeing Us From Bias Will Spark A Revolution

We've all experienced it. Exploring hotel rooms or airline prices online a pop-up will tell us of how many people are looking at the same options right now.  Or the number of people who've been looking in the past 24 or fewer hours. Heightening scarcity preys on an unconscious mechanism in the mind, a primitive force that triggers us to act out of fear. 
The fear is the loss of a outcome we want - a hotel we like, an airline price we like. Unfortunately for homo sapiens our attachment to the option to buy something is as strong as the desire for the thing itself. It might seem odd but the logic is simple: if you lose the opportunity to buy something then what is being sought is lost too. It's a vulnerability called loss aversion - and accomplished behavioral economists like Dan Ariely have been researching it (Keeping Doors Open) and writing about it (Predictably Irrational) for some time. 
Like confirmation bias, loss aversion is an easy target for marketers to zero in on as a basis to exploit. It's refreshing to find a company rejecting this marketing ethos and giving its customers a freedom from fear rather than fueling it.  It's what Options Away is introducing to revolutionize the airline and travel space
Airline and hotel pricing are governed by the algorithm: prices are subject to fluctuate wildly based on a host of factors invisible to average buyer.  Airlines and travel aggregators typically force prospects to buy at the price prevailing at that moment and be unable to change it - unless shoppers pay a significant premium for a fully refundable booking. Taking a page out of the financial services book, Options Away is introducing the equivalent of a derivative for shopping for airfares and hotels. Options Away sells customers the option to buy at a certain price for 48 hours (or longer depending on the option). It offers freedom rather than lock-in. So while buyers might feel a scarcity pressure to buy when inventory is limited or when other people at the same time are reviewing a hotel or airfare Options Away sells an antidote to loss aversion through its option-to-buy product. 
It's smart marketing because freeing people from acting out of fear makes them far more likely act. A much bigger market exists for people wanting to reserve the right for a future outcome rather than being forced to commit with an irreversible risk.  Forty airlines have signed up with Options Away as well as Expedia, Travelocity, Orbitz, Hipmunk and Kayak. This is a change in the travel industry you are going to notice.
Hats off to the behavioral science community for continuing to shed light on unconscious mechanisms of the mind that govern our waking hours from which we are better freed.