My local council has replaced its twice yearly hard rubbish collection with an on-demand booking service. On paper this sounds like a significant benefit for residents – they now have the flexibility to arrange a collection when it suits them. So why has it been so controversial and why is it a key lesson for businesses like yours?
Better to batch bad news
While flexibility is an obvious upside for residents, the downside of the on-demand collection service is more blatantly visible. Rather than residents migrating their hard rubbish to the nature strip two weeks out of 52, there is now rubbish on the nature strips every week. One week I may have a collection, the next week my neighbour and so on. There is now no respite from looking at tired and broken couches, flowerpots, sneakers and laundry baskets.
The trick to dealing with bad news – in this case unsightly rubbish – is to do it in a burst rather than drag it out. Two core behavioural principles support this tactic:
When it comes to good news, hedonic framing means that we prefer two small wins rather than one of equal value. Just think of how pokies machines work – lots of smaller value prizes to keep you in the game. Similarly, political parties tend to announce lots of smaller funding initiatives rather than rely on a few large ones.
On the flipside, bad news is better in one hit. Imagine you are about to pay for your morning coffee and find that you’ve lost your only $50. Later in the day you get back to your car and find a fine of $80. What a bad day! It’s like bad news is following you around.
Contrast this with finding a fine for $130 stuck to your windshield but you haven’t had any other losses that day. Still painful but contained to that one event. Tune into company profit (loss) announcements to see how it tends to be done on a large scale – get the bad news out in one hit to let the market recover.
“Let the healing begin” is the mantra of adaptation. We are more likely to keep used to something if we are not constantly reminded of it. The local council for example is not letting residents adapt because they are constantly reminded of rubbish, so it’s like poking a wound that cannot heal.
Businesses can fall into this trap by constantly bringing attention to the wrong things – price rises, policy changes, reduced services, staffing changes – which gets in the way of their customers adapting. Let the bad news recede in its intensity and vividness.
To help adaptation it is also useful to coincide bad news with a cycle or event (e.g. price rises on first day of new financial/calendar year) so that your customers can anticipate the pain but also know that it is confined to that time. In the case of hard rubbish collections, residents used to know that the streets would look hideous for two specific weeks of the year but the rest of the year they could relax. The new system does not provide this certainty.
Bad news is an inevitable part of business so working out how best to communicate it is worthwhile. Aside from being clear and honest, consider how to best allow your customers to ‘heal’ afterwards and where possible, put your bad news out in a batch.
Bri Williams runs People Patterns Pty Ltd, a consultancy specialising in the application of behavioural economics to everyday business issues. Bri is a presenter, consultant and author who you can find out more about at www.peoplepatterns.com.au, [email protected] or by following on Twitter @peoplepatterns.