SCARF

Economists have this naïve idea that a decision to buy something is based on need, price and value.  They think that higher prices will reduce demand and lower prices will increase it.  Of course there is some truth in this, but it ignores the importance of emotion. Emotions are a key driver of the purchase decision.

The importance of emotions is recognised by behavioural economists and psychologists. A neuroscientist, David Rock, has also helped with a useful framework. In 2008 he published his theory and called it SCARF: A Brain-Based Model for Collaborating with and Influencing Others. The SCARF name comes from the acronym of its critical components which are: status, certainty, autonomy, relatedness, and fairness. These five drivers not only influence others, they also influence the products we buy.

Status: This is the degree to which we feel respected or important in a social situation. Status feeds the ego and if somebody tells us that the job we are doing is of minor importance or that we are of minor importance then understandably we feel diminished. Equally, when we are praised or told what a good job we have done, we feel important and it is motivating. Status plays a key role in the buying decision. Think about the influence of brands. They add value and they draw like a magnet.

Certainty: We need to feel in control of our environment. This is behind Uber’s success. When we book an Uber, it tells us how long it will be before the car gets there. Uber increases the level of certainty of how long we have to wait and so improves the quality of our waiting time. One of the most effective improvements the London tube made was installing screens that provide a digital countdown of the time of the next train. This improvement feeds our need for certainty and it raised people’s satisfaction with the tube service.

Autonomy: We want to feel that our views matter, that we have a say and that we are being listened to. It makes us feel in control. When we feel our autonomy is threatened, we are defensive and resistant. When we feel our autonomy is rewarded, we are more engaged and motivated. This plays to the importance of recommendations. Nearly everybody at some time will have looked at the star ratings on Amazon and been influenced on whether or not they made a purchase?

Relatedness: One of the strongest bonds is to our family. Another is to our mates, especially those we work with. We are related to these people and if they are threatened, we are threatened. When a company offers a loyalty program it makes us feel part of that family and provides a strong incentive to celebrate the bond with even more purchases.

Fairness: What drives us mad is feeling that we are not justly rewarded. Living in a fair society and working for a fair boss will make us more open and cooperative. Products that say they are good for the environment or reward farmers can gain an edge with a significant proportion of the population.

Status, certainty, autonomy, relatedness, and fairness, are five things that we can think about to circumvent the naivety of the theoretical economists who think it is all about price.

If you have an American Express card it says on the card the number of years you have been a member. This simple number bonds you to the company in that it is a reminder of how long you have had a partnership. It also indicates that you are important to American Express. The right words in the right place at the right time can be used to great advantage.

Imagine you are a customer who has just closed a big deal with a new supplier. After signing the contract, the supplier compliments you on your excellent communication skills and says they are looking forward to working with you in the future. You feel a sense of satisfaction and pride, and your mood lifts. Your brain activates a "toward" response, which manifests as feelings of pleasure, excitement, or motivation, as well as behaviors such as engagement, collaboration, or creativity. Words have value when they are used in the right way.

Overall, the SCARF model highlights the importance of going beyond price and building other things into your offer such as status, certainty, autonomy, relatedness and/or fairness.