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Behavioural Economics and Goals

Humans are driven by goals. Goals indicate and give direction on what needs to be done and how much effort is required to put in.

Goal setting is a science, it is tied to human emotions. Multiple studies have shown that although we are bombarded by data, information and facts, our brain leaps to emotional decisions. Goal setting is no different. The drivers of goal achievement are often irrational. We train for months to run a marathon and earn a t-shirt. We climb to the top of a mountain and come back with nothing more than a story to tell our friends. We sacrifice everything to give our children the best – and wind up with empty pockets. Knowledge and data alone are not enough to achieve a goal. They can provide a direction and a framework but too much information can lead to inaction. The fuel that powers goal achievement is emotional commitment. Caroline Adams Miller, MAPP, a thought leader on the science of goal setting, calls this grit. Grit is defined as our perseverance and passion for long-term goals. It’s what drives action and helps us power through the obstacles and distractions on our way to goal achievement.

Organisations can optimise their programs and incentives using goals by applying goal-orientated behavioural economic principles.

Illusionary Goal Progress

People change behaviour faster if you give them a head start.

Humans are more likely to work to achieve a series of small goals, than to work towards one large goal. Smaller goals are feasible, and things that feel attainable also happen to feel motivating and energising.

Offering a low-level reward for achieving an easy goal at the beginning is effective as well, as it gives them a small taste of victory that further encourages them to reach that end goal.

Choice Architecture

Helping people make the best choices by offering limited options.

The human brain is naturally lazy. The brain wants to get to the right choice or make the right decision as quick as possible. This is due to “choice overload”, where our brain’s curious tendency to be less satisfied when it’s offered a wide variety of choices. We therefore make better choices when we have fewer options, not more.

Apply Choice Architecture by allowing salespeople to select their own goals, ideally three. The higher the goal, the higher the reward opportunity. Leveraging individual goal choice promotes accountability and drives stronger personal commitment to succeed. When applied effectively, in most cases salespeople select the highest goal, and achieve it, which is explained by a behavioural economic principle called loss aversion, the fear of missing out.    

A corporate objective, handed down to individuals, is not a personal goal unless the receiver accepts it as a goal. The most effective goals are individual and are self-generated.

Goal Gradient Theory

The closer people get to a goal, the more effort they put into meeting it.

Just think about a person running a long race, you tend to see them run faster the closer they get to the finish line. Another example is when people are given a rewards punch card at a coffee shop, they will drink more coffee more frequently, as they get closer to reaching that free coffee.

Setting out goals as such, and achieving them, gives humans a hit of dopamine which is responsible for making us feel a sense of achievement and motivates us to achieve again.

Overcome common mistakes

A common mistake made by organisations is assuming that salespeople know how the incentive works and are self-tracking their progress. This is known as the Spotlight Effect, which means people simply don’t pay as much attention to you as you think they do. To counteract this, communications need to be tailored and eyecatching when highlighting their progress and the potential rewards they can earn, which is known as vividness. This can remind them of the emotional reasons they set the goal in the first place and focus you on moving forward – rather than on all of the distractions or rationalisations for giving up.

Goal setting is personal and emotional. It requires constant focus. And it’s different for everyone. What works for you doesn’t always work for me. There are so many factors involved and so many biases we bring to a new goal. Consider these behavioural technics as you get started on achieving success.