Procrastination and Profit in 2011 (Commentary

You will likely be getting a lot of advice – and perhaps even make a resolution – to “stop procrastinating” in 2011.

But before you do anything rash, let’s take a moment to look at the phenomenon of procrastination from a marketer’s perspective. In this column, I will help you understand effective and profitable ways to leverage consumers’ propensity to put stuff off. You might even learn something new about your own behavior.

You have likely seen the stories announcing that more Americans want gift cards for Christmas this year than any particular tangible product. Retailers are happy to oblige, in large part because of consumers’ tendency to procrastinate.

For example, in its 2006 fiscal accounts, Best Buy reported a gain of more than $40 million from customers who failed to redeem gift cards before their expiration date.

The research and advisory firm TowerGroup predicts that what the industry calls “breakage” (the value left unused on gift cards) will drop by half this year to $2.5 billion, or about 3.1 percent of the total value of gift cards out there.

That decrease isn’t due to economic pressures or some diminished level of procrastination, by the way. Rather, experts attribute the decrease to a 2009 law that restricts expiration of gift cards (thus saving us from ourselves).

The gift card expiration data highlight a very interesting finding about procrastination: We can be just as likely to put off enjoyable and rewarding activities as we are visits to the dentist.

Two researchers – Suzanne Shu of the University of California at Los Angeles and Ayelet Gneezy of UC-San Diego – recently completed a study that both confirms the phenomenon and sheds light on why it happens.

The hypothesis was that consumers put off completing enjoyable activities as well as unpleasant ones. The reasoning is that people overestimate the time they’ll have in the future to engage in enjoyable activities, then later come to realize they will be just as busy in the future as they have been in the past.

To test their ideas, the researchers conducted two studies using a gift certificate for coffee and cake at a popular local bakery. In the first study, consumers were asked to rate the attractiveness of a gift certificate that would expire in three weeks versus an identical one that would expire in two months.

As you might suspect, the option with a longer expiration date was rated higher than was the other one (the bakery was rated more favorably, too). In addition, 68 percent of respondents predicted they would use the two-month certificate, while only 50 percent predicted they would use the three-week certificate.

Things changed when participants actually received the gift certificates. While 30 percent of those receiving the three-week certificate visited the bakery and claimed their coffee and cake, only 6 percent of those with the two-month certificate actually redeemed it.

In follow-up surveys, those who redeemed their certificates were very likely to report an enjoyable experience and credit the bakery. Among those who did not redeem, the most common reasons why were along the lines of “I got too busy and ran out of time” and “I kept thinking I would do it a bit later.”

Here are two ways this insight can help you in 2011:

 • Offer your customers additional benefits for early decisions and/or redemptions; they will be more likely to use them.

• Use the power of scarcity when making offers or even setting meetings. By offering a prospect an overly large number of times when you are available (particularly if those dates are well into the future) you might unwittingly prompt that prospect to put off your meeting forever.

 

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Over the years, many of you have asked me whether I was ever going to put together a “best-of” collection of these columns. Well, I finally slew that particular Procrastination Dragon and will have a book ready for you in a few weeks.

Tentatively titled “30 Doses of Marketing Success,” this collection of (you guessed it) 30 columns from Arkansas Business during 2001-09 will be available in paperback this January. Please don’t put off your purchase.  

Jim Karrh is the founder of Karrh & Associates and director of MarketSearch, both of Little Rock. E-mail him at [email protected].