By Dan Monheit, originally shared on CMO Australia 17.11.20
As this year closes out, everybody is cheering for Christmas to be a good one. A great one, the best Christmas ever. After all, we deserve it after the absolute dumpster fire of a year 2020 has been for most.
As we count down to the holiday season, however, it’s easy to get caught up in a ‘COVID-19 stole Christmas’ mentality.
If growing up Jewish in suburban Australia through the 1980s and 1990s taught me anything, it’s that Christmas always gets saved. From Home Alone and Die Hard to Full House and Family Matters, it was drummed into me that we should never, ever, bet against Christmas.
Without our own Superbowl, Christmas has become Australia’s unofficial beauty pageant for big budget, emotionally driven advertising. Last year we saw plenty of big names come out to play including Australia Post, Coles, IGA and NRMA. Each one turned up the sentiment to tear-inducing nostalgia, tugging at our heartstrings and purse strings alike.
The holiday season kicks off with Black Friday on 27 November, stretching right through December (complete with Boxing Day frenzies and the New Year’s rush), and into full-on t-shirt and thong-wearing summer holiday mode with bumper promotions in January. The three months of Christmas give CMO’s across all disciplines ample opportunity to convince the population that yes, we shall overcome and emerge stronger than ever before, as families reunite and we treat ourselves to many of our old favourites.
Of course, we’ve also got science on our side.
The field of Behavioural Economics offers up decades of research and hard evidence that prove the key drivers underpinning most of our decision making are hundreds of millions of years in the making. This makes these drivers are fairly built-in and constant, despite whatever upheaval happens to be taking place around us. In other words, it will take more than COVID-19 to overturn our desire to spend time with loved ones and show our appreciation for them with gifts and hospitality.
At the core of Behavioural Economics is a set of common and consistent biases or heuristics that have a disproportionate impact on the way we make choices. A number of these biases should provide comfort and confidence for the CMOs of Australia, as they try to determine just how they can make 2020 great again.
The licensing effect
Traditionally, the Christmas holidays are the time we witness the Licensing Effect in its full twinkly effect. Simply put, Licensing refers to our inherent desire to balance out our virtuous acts with our indulgent ones in order to retain a sense of equilibrium.
In a macro sense, Christmas is the big treat moment that everybody gets at the end of the year. For the 50 weeks prior, our focus is on work, school and being more mindful when it comes to spending. Christmas is where we get to ‘treat ourselves’, loosen up a little and make everything right before another big year of work and responsibility ahead.
This year, our ledgers have been firmly stacked towards virtue. Month after month of civil obedience, frugality, isolation and general conservatism, mean we’re more ready than ever for a Christmas-fuelled buying frenzy.
Like every other year, come Christmas time, money fades to a faint consideration to be dealt with in February when it comes to the giving of presents. We fill our larders, our faces and our bulging bellies with more food and alcohol than we knew we even thought possible. The streets, the shops, the songs on the radio all sweep us into ‘full holiday mode’, and we spend like it too, treating ourselves and others as signs of love and support.
Like in other years, this will flow right on to treating ourselves at post-Christmas sales and into the New Year when reinvention is on the cards. This year has given us an appreciation that life is short, fleeting and unexpected, therefore giving us more license to treat ourselves than ever before. People will be thinking about a new look, a new car, a new career path, or a new qualification, giving marketers further opportunities to guide them in their decision making.
The idea that we have different ‘mental accounts’ for our money comes from the fine mind and excellent research of Nobel prize-winning economist and psychologist Richard Thaler. At its core, the concept demonstrates that despite money having an objective value (for example $100), we treat it subjectively based on a range of factors like where the money came from.
When it comes to inherited money, a bonus, a tax refund, a crisp $50 note in a Christmas card from Auntie June or even better, bonus money from the government, our brains tend to categorise this as ‘windfall money’, as distinct from the regular, earned money we make from our jobs.
Studies have revealed windfall money is spent more quickly and more freely than ‘regular’ money, likely due to the lack of guilt associated with spending it. Research has also proven that windfall money is more likely to be spent on luxury items than everyday necessities, which should also be good news for many.
Luckily here in Australia, there are still positive economic signs of life that indicate Christmas won’t bottom out. The Federal Government tax cuts are to be backdated to July, meaning consumers will have a tidy lump sum ready to blow by December. Then there’s the extension of JobKeeper and JobSeeker supplement as well as people being able to withdraw from their superannuation, extended to December.
Obviously, we cannot discount that people are doing it tough right now, but for those who haven’t lost their jobs, things can be looking pretty flush. Most have been blocked from spending money on shopping, dining out, entertainment and travel, while almost a million households put their mortgages on hold. All told it’s almost the perfect storm for having maximum disposable income at a time when we need to be spending — if not for ourselves, then for the sake of the economy at large.
It’s the definition of awkwardness: That highly uncomfortable feeling when you’re given an unexpected gift and don’t have one to give in return. Don’t worry, it’s natural. Being wired in this way has kept the human species connecting, cooperating and progressing for Millenia.
Reciprocity — the desire to return favours, either out of goodwill or the avoidance of feeling indebted — is baked deep within us. A 2006 study conducted by David Strohmetz of the University of West Florida, found diners in a New York City restaurant tipped an average of almost 20 per cent more when the waiters presented small chocolates alongside the bill.
The reciprocity bias is what turns free tastings at wineries and free yoga classes at Lululemon into revenue generators down the track. It’s also why we feel so uncomfortable if somebody insists on paying for our coffee every time we go out with them, even though pragmatically, we should feel nothing but grateful.
The long-held tradition of gift-giving at Christmas is no doubt spurred along by our desire to reciprocate, and this year will be no different. Whether it’s a genuine desire to show gratitude, or a pre-emptive strike on ‘non-reciprocation guilt’, the result will be the same; gifts for family. Gifts for friends. Gifts for colleagues and neighbours and teachers and pets.
Ultimately, gifts for the CMOs of Australia.