To incent or not to incent?

You can’t watch television for five minutes or flip through a newspaper without seeing an ad offering you a deep discount on something.  It’s a very real challenge — a downward spiral of sorts — that retailers and, to some degree, manufacturers have gotten themselves locked into.  As consumers, we’ve all been trained not to pay full price for anything unless we have an urgent need — in fact, we’d feel stupid paying full price because we know darn well a coupon/discount will be coming our way soon.  And the thought that I might feel stupid is a very powerful motivator to do nothing.

Research has been done that bears out, in fact, it’s a slipperier slope than you might think.  The brain reacts to financial rewards in much the same way it reacts to heroin.  At first a little is enough…but then we need more and more to get our “fix.” So once upon a time I might have paid full price, but then I got hooked on the 10% off and now I need 20 or 30 — maybe even 50% off — before I’ll act.

Discounts, coupons and rebates are extrinsic motivators.  There are also intrinsic motivators — which are the self-identifiers that move us to do things like exercise or recycle.  In other words, we each see ourselves as a certain kind of person, therefore, we’re going to match our behaviors up to that image.  Or , we don’t want to be seen as a certain kind of person so we’re going to avoid specific behaviors that don’t align.  Nobody needs to be rewarded to exhbit these behaviors — they come from within.

Understanding the difference is critical in green marketing.  Last week at the Fortune Brainstorm Green conference I hard someone repeatedly say “we must engage and incent consumers” to buy greener products.  Engage, yes.  Incent?  Maybe not.

At Shelton Group we’re refining a proprietary consumer segmentation model that layers in the segmentation analysis from our Eco Pulse and Green Living Pulse studies with the Rogers Adoption & Innovation Curve, John Marshall Roberts’ Worldview Thinking (based on the work of Claire Graves) and some findings from our research about Extrinsic and Intrinsic motivators.  The picture that’s beginning to emerge is that the more green leaning consumers — the folks we call Actives and Seekers — are generally more intrinsically motivated than extrinsically motivated.

That means that to get an Active to choose a greener product the marketing, advertising and on-pack messaging must appeal to that person’s self-expressive identity, so they’ll align their behavior accordingly.  The messaging must subtly suggest that people like them, who view the world as they do and care about the things they care about, choose Product A because it fits with Who They Are.  Simply saying, “Hey, it’s green!  And here’s 20% off!” isn’t enough to create a new behavior — such as consistently choosing Product A off the shelf.

Where the equation gets blurry is on higher dollar items — specifically in the energy efficiency world.  An Active may absolutely feel intrinsically motivated to upgrade his/her HVAC unit and add insulation…but he/she may have some very real up-front cash constraints.  Thus, a rebate or discount may be what’s needed to move them to action — not because they don’t want to act but because they’re financially strapped.

So, the moral of the story is (as it is so often):  know who you’re talking to and what actually motivates them before you start throwing around discounts.  A marketing and messaging tweak might allow you to sell more product…without having to discount it.