Weapons of Influence

“Consumers are statistics. Customers are people.”
-Stanley Marcus

During COVID-19, my family finally got rid of cable.

This was a long time coming.

For years, other than live sports, I only watched shows using Netflix, HBO Max, Hulu, etc. When the pandemic started, my family left New York City to live with my deeply gracious parents or in-laws for the next six months, thereby not needing any cable or internet in our vacant apartment. When we finally moved into a new apartment and needed to get a new internet connection, cable died a quiet death from our monthly bills.

My family’s decision was a version of what is called “cord-cutting,” the choice to stop paying for a cable bundle and only pay for streaming services.

Honestly, had we not moved out of our apartment, I might still have cable. There is so much TV I want to watch, and while I’ve never regularly watched a show on HSN, HLN, WeTV, CourtTV, etc., that doesn’t mean I won’t one day. A sucker is born every minute…

However, if you have been thinking about cord-cutting, but still have not pulled the trigger, have no fear: a heuristic lies at the heart of your action (or rather, inaction). And this heuristic is sneakily one of the most powerful forces that keep many Jewish institutions afloat…

Bundling Bias

Do you watch ESPN?

I watch ESPN all the time. If you don’t, no hard feelings.

ESPN is by far the most lucrative channel in the standard cable bundle because ESPN charges the highest “carriage fee,” a licensing fee that a cable provider pays for the right to run ESPN on their airwaves. If you have cable, this means that you pay approximately $10.00 USD per month as a part of your cable package to have ESPN, regardless of whether or not you watch ESPN.

If I had cable, I would prefer not to pay for Fox News, and I imagine someone else would prefer not to pay for MSBNC. However, most consumers do not factor in whether or not they actually watch all the channels in their cable package, thereby paying for a bunch of channels they will never watch (I’m looking at you, Hallmark Channel).

Dilip Soman and John Gourville call this choice the “bundling bias,” the tendency of people not to use all available services, products, or experiences when they are purchased in a bundle. Their analysis builds upon Richard Thaler’s work on the sunk cost fallacy, a critical concept in behavioral economics that you can read more about in the footnote. Returning to cord-cutting, cable is a kind of bundle; I am paying a certain amount of money and getting tons of channels. However, once I’ve made the bundled purchase, I am likely to “[decouple]…the transaction costs and benefits” to the point where I no longer make decisions about what to consume based on what I paid. In other words, someone who doesn’t watch sports is unlikely to pay $10 for ESPN as a stand-alone channel. However, once that fee for ESPN is packaged into the cable bundle, they will pay less attention to whether or not they actually need ESPN when paying their monthly bill. In academic speak, Soman and Gourville conclude that “Relative to an unbundled transaction, a bundled transaction will result in a greater willingness to forgo any individual unit of consumption.”

What does this have to do with Jewish life?

If you work for any Jewish organization that charges membership for an array of services, including a synagogue, JCC, rabbinic association, etc., your business model survives because of the bundling bias. In these institutions, almost none of the people who pay dues use 100% percent of the services you provide. In some cases, they use none of them! But the bundling bias is the reason why people will continue to pay, in spite of the “irrationality” of their choice.

Yes, many of these organizations frame these dues as “investments” in a larger mission, which is an entirely fair argument, and some people will pay for that reason. However, the consumer, not the producer, ultimately decides whether or not these fees are investments or expensive bundles they do not use.

Does taking advantage of the bundling bias make Jewish organizations “bad”? Of course not. Does it make members gullible? Absolutely not. The organization and the person use the bundle for reasons that make perfect sense. But beware: Once the equivalent of Netflix comes along in a sector, and people have the option to choose to cut the cord, chances are they will.

Get proactive before it’s too late…

Influence

Notwithstanding what I just wrote, I am sympathetic to the argument that what many call “membership” is really an “investment”; ultimately, we drastically underestimate the importance of infrastructure in the Jewish community, and desperately need organizations that are viable every day for anybody who needs them, not just the ones who are motivated to pay a fee for service.

To succeed, your organization will need more compelling arguments, which is why you need to read Robert Cialdini’s Influence.

Influence is one of the most influential pieces of research on marketing in the past several decades, and Cialdini freely admits in his introduction that he took an interest in this subject because he is one of those “suckers” (his words) who pay for things they don’t need because someone made an effective ask. By extension, he argues that people effectively influence others due to “the way they structure their requests, the way they arm themselves with weapons of influence that exist within the social environment.” Cialdini crystalizes these weapons of influence into six principles:

1. Reciprocation
2. Commitment and Consistency
3. Social Proof
4. Liking
5. Authority
6. Scarcity

While you will need to read Cialdini’s book to understand the nuances of each principle, let’s return to how the bundling bias relates to Jewish organizations to draw some connections.

If you lead a Jewish organization that financially relies on a membership bundle, be cautious of what arguments you employ to encourage people to join. Some organizations with these membership models are tempted to create lists of all of the services that they employ that make the membership “worth it,” but this only gives the consumer evidence of all the things they are not using! The reasons need to be carefully crafted.

Cialdini spends much of his epilogue focusing on how people can use influence for nefarious purposes, but that is not why I am sharing it with you. I actually believe that the bundles we purchase in the Jewish Community are essential to millions of people and undervalued by most potential funders. But if we are going to properly support them, we need to be more astute in making the case for them.

The Principles of Persuasion

Weekly Links

1. You’re Not Lazy: One of the marks of terrible leadership in an organization is a predilection towards blaming frontline staff for an organization’s failures; just because you call staff “lazy” and “unaccountable” doesn’t mean that they are. Nonprofit AF makes a powerful statement about what it means to be “lazy” in the nonprofit sector.
2. Has Religion Become a Luxury Good?: You’ve no doubt heard someone say to you that it is “expensive to be Jewish.” They are not wrong, and we are not alone. Read more.
3. Intelligent People Take Longer to Solve Hard Problems: Minus the liberal use of the word “intelligent,” I loved this article about the benefits of slowing down when hard problems come our way. Important perspective for all of us.
4. How to Stop Doom Pessimism: I can never decide if I am an optimist or a pessimist. That’s for another time. But I’m certainly not a “doom pessimist,” and I hope you’re not either.
5. Misinformation is a job; Fixing it is a Problem: The title alone caught my attention. The content is clear and compelling. You should read it.