Tag: ambiguity aversion

Copying the Inflation Buster

MIKE4 Comments

I don’t check my home equity every day, goes a joke among the Vanguard-Buffett-DCA crowd, why should I check my stock portfolio? It’s a riff on the availability heuristic: if I think it, it’s important.

‘Home’ is super available. Vacation rentals, of someone’s home. A chunk of net worth is home. Neighbors move. During Covid we were stuck in our homes. People began to work from home. After Covid the home market exploded. After that rates ran up. ‘Home’ is everywhere. 

Good copywriting, said Bob Bly, “enters the conversation people have in their mind.” Let’s look at a good Rocket Mortgage ad.

Transcript: “Buying a home? Rocket mortgage will cover one percent of your rate for the first year at no cost to you, saving you hundreds even thousands. With Inflation Buster that means more mini-vacations, a lot more lattes, and more date nights. Now imagine if rates drop within three years of your home purchase. You get exclusive savings when you refinance at that new lower rate. It’s more cash in your pocket. Save when you buy today and refinance tomorrow. Visit inflationbuster.com to get started.”

The good. Rapid fire: It’s not a house, it’s a home. One percent is a nice whole number, and worth more (psychologically) than 0.99999999%. First year… appeals to our myopia. More mini-vacations… highlight the opportunity cost. At no cost to you, and if rates drop… avoids our ambiguity aversion. Visit… as a call to action. 🧑‍🍳 😘

The bad. None!

The interesting. A picture is worth a thousand words, and this video is good. 

We’ve tracked ‘average’ monthly home payments (1971-2022). On a four-hundred-fifty-thousand dollar home, Inflation Buster saves about $200 a month. Put another way, it’s a year of payments on a four-hundred-thousand dollar house instead of the more expensive one. None of that factors into this ad. It’s not the customer’s language. 

Interest rates and home prices are not the important metrics. Only monthly payment matters. That’s the conversation in this ad.

Sweet words

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Successful copywriting uses the customer’s language. Find out what, how, when, and why the customer thinks – and the words they use.

One accent of customer language is certainty. We dislike not knowing. Not knowing feels risky. It’s why this bag of sugar is so sweet: 30 calories per serving. Diets are trends. Eat this or that? Now or later? Are health bars actually healthy? Is sugar bad for me? It’s too much! But this simple bag of sugar puts it in the customer language: calories, and not that many. 

Road construction is another example, only inverted. Fines doubled when workers present. I don’t know how much, but I certainly don’t want it to be doubled! In this case, the natural dislike of the unknown is magnified and aids in the messaging to slow down. 

This hook helped Jaws (1975) set the mold for summer blockbusters. It was a difficult movie to make, in part due to “that sonofabitchin’ bastard rig” (the shark) which kept breaking down. The footage was such a mess that during editing Steven Spielberg used barren shots of the water along with John Williams’ score. That was great because rather than seeing the shark, audiences imagined the shark, a worse fate. 

Organizations can remove or introduce anxiety in their customer communications. How much depends. On what? On what the customer thinks. 

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We talked about Jaws’ role in the evolution of the movie business model in this post, Batman BATNA. Contact too:

Earned or eligible?

MIKE1 Comment

“We were trying to motivate vets to take advantage of an education employment benefit that they were entitled to after returning to the United States after their time serving in the military overseas. The office of Veterans Affairs had very little budget and could only send one email to veterans to market this program…We changed just one word in the email. Instead of telling vets they were eligible for the program, we reminded them that they had earned it through their years of service.” – Maya Shankar, Inside the Nudge Unit

Another way: a vaccination dose has been reserved for you.

Behavioral scientists call this the endowment effect, all things being equal we value the thing we have more than the alternative.

Cade Massey observed (2018) this in the NFL. One year a team would refuse to trade down, noting the value of a high draft pick, but the next year refuse to trade up, noting the value of multiple lower picks. All things equal is never quite true so the question is how unequal is this case?

The first step to any problem is admission and articulation. We had a derelict iMac on our kitchen desk for a long time. A few times a year the kids played Roblox and sometimes it streamed music. One day I logged in to the Apple trade-in program and discovered it was worth $240. Click, fill, submit the form and three days later a box showed up. Pack, seal, ship. Ten days on I had an Apple gift card. There’s no way I would spend $240 on an old iMac and so trading it in was an easy exchange.

If that was the whole story.

You see, this was the second time I did this. Almost two years early I did the same thing. Click, fill, submit. The box came, I procrastinated and the return, recycle, and reward never came. Why not? The transaction costs.

The endowment effect is a helpful human habit because it shields the owner from transaction costs. Exchanges have middle-men, asymmetric information, ambiguity, and egos. But words like ‘reserved’ and ‘earned’ reduce some of that mental accounting.

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Another way to think about this is to ask is this a compromise or a coin flip??