Commentary

Use Behavioral Economics To Turn Bad Experiences Into Good Memories

  • by , Columnist, December 22, 2017

Travel marketers have mastered the art of filling airplanes and hotel rooms, but they have neglected the art of memory. Delays, cancellations, and mishaps dominate the remembered “customer experience.” Telling travel horror stories is practically a competitive sport. One person boasts that she spent three hours waiting on the runway; the next person one-ups her with the night he slept on an airport bench. No one brags about how pleasant the trip was. It’s as if vendors can only do wrong. 

But what if travel marketers have underestimated their ability to shape those stories? Behavioral economists have shown that, thanks to human irrationality, it can cost pennies to change memories.

The Peak-End Rule    

In 1993,Prof. Daniel Kahneman, father of behavioral economics and a Nobel Prize winner, subjected people to a painful two-part experiment. First, participants submerged one hand in 14° C (57.2° F) water for 60 seconds. Second, participants repeated the 14° C for 60 seconds then kept the hand underwater for another 30 seconds, during which the temperature gradually rose to 15° C. When asked which experience they’d prefer to repeat, 69% of participants opted for the longer exposure.       

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That seems irrational—who would want more pain than less? Kahneman was testing the peak-end rule, which predicts that the worst and final moments shape a person’s recollection of a distressful experience. The duration of pain doesn’t matter.

The worst moments of each submersion (the “peak”) were equally bad, but the final moment (the “end”) of the longer submersion wasn’t as painful. Kahneman concluded that “…people prefer to repeat the experiences that have left them with the most favorable memories—not necessarily the experience that actually gave the most pleasure and least pain.” 

Subsequent studies have found the peak-end rule applies in everything from colonoscopies and childbirth to vacations and train trips. Travel marketers facing impossibly high standards can apply this principle.

Reshaping Rough Experiences

When people recount their travel nightmares, the peak-end rule is in effect. With airlines, the cancellation, broken WiFi, or delay on the tarmac becomes the peak experience. Arriving late, deboarding the plane in a rush or losing checked baggage becomes the end experience with the brand. At hotels, the unmade room, broken air conditioner, or neighbors yelling at 3 a.m. is the peak. The end includes lugging suitcases, paying unexpected charges, and rushing to an airport.

How might you shape a better memory?

Let’s say a mechanical error causes a two-hour flight delay. The passengers are irate. After the plane lands, a flight attendant stationed on the jet bridge hands out cards for free airport lounge access. Receiving a perk reserved for people with business class tickets and metallic credit cards changes the final moment.

Offering one-time lounge access costs the airline pennies, yet marketers can frame it as a $50 value, the usual entry fee for travelers without privileges. Free on-board Wi-Fi or frequent flyer points could work, too, and would encourage frustrated passengers to be loyal to the brand.

Similarly, hotels could offer late checkout the morning of departure. They could wave WiFi fees or invite guests to the fancy breakfast buffet on their last morning (and toss out fewer leftovers). The key is to create a good moment at the end of the experience.  

Memory Interventions

Airlines and hotel marketers excel at using data, discounts, and messaging to sell their product. However, they need better tactics for rewriting the travel “horror” stories people recount.

The peak-end rule shows how marketers can tap human irrationality to shape experience. It only costs pennies to remold a bad experience into a good memory.

2 comments about "Use Behavioral Economics To Turn Bad Experiences Into Good Memories".
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  1. Ron Kurtz from American Affluence Research Center, December 22, 2017 at 2:20 p.m.

    What a great article. Dan is so right in both his observations and clever suggestions. Of course the major airlines do not care about the bulk of their passengers because they are an ologopoly (and essentailly a monopoly in their fortress hubs). 

  2. Paula Lynn from Who Else Unlimited, December 22, 2017 at 6:10 p.m.

    They are afraid that they more they give, the more than would be expected. Then again, you have to look at greed.

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