Should you offer free advice? Should you take it?

“Why are we more likely to follow advice when we have to pay for it?”

This was the question posed by a reader recently who was curious about why customers are more likely to change their behaviour (in this case wear a piece of protective attire) when they have to pay for it.

On a rational basis, it shouldn’t make a difference. We seek advice from an authority and whether we pay or not should not matter to our subsequent behaviour.

But as anyone who has offered free tickets to an event only to find no one turns up knows, money changes things. Whenever I offer a mix of free and paid tickets to a webinar, for example, it is those who pay who are much more likely to attend.

So what’s going on? A couple of things.

Money raises the stakes

When something is free there is no ‘skin in the game’. The absence of outlay means there is little to lose by not participating.

When we pay for something, on the other hand, it means the stakes have been raised – we have something to lose if we don’t participate. And thanks to the idea of loss aversion we know that we are strongly motivated to avoid suffering a loss, even more than we are motivated to seek a gain, which means walking away from something we’ve paid for is unpalatable.

In this sense, money acts as a mild form of commitment device that locks us into a course of action that we may not otherwise follow.

We want to believe we make good decisions

Aside from the pain of wasting money by not adhering to the recommendation, the other factor at play is cognitive dissonance.

Cognitive dissonance is the unpleasant feeling we have when our actions and beliefs are not consistent. In this case, if I have paid for advice I am more likely to follow it because I want my actions (paying for advice) and beliefs (that I’m a smart person who only pays for things of value) to be consistent.

If I pay for advice but do not follow it I will have to reconcile the tension between my beliefs and actions, typically by disparaging the quality of the advice (“they didn’t know what they were talking about”) rather than my decision to seek it. 

When are we less likely to follow advice? When it confronts us with something we don’t want to do, even if it’s the best thing to do. In behavioural terms, System 1 emotion overrides System 2 rationality and the result is a whole lot of rationalisation.

As a business should you ever offer free advice?

If you want people to change their behaviour and follow your advice, should you ever offer it for free? Of course! I’m doing it right now. The trick is to define a level at which the stakes need to be raised. 

If yours is a business that trades on your IP and experience to some degree – and that’s most of us, whether you’re a builder, a financial planner, a cake decorator or a consultant – you have to offer a level of advice to gain trust and prove your credibility.

But think of it as an entrée rather than the main course, whetting the appetite without satisfying it. That means, for example, giving enough information to the customer about protective attire that they feel anxious about not having it, but not giving them the attire for free.

For habit change?

If you are seeking to change your own behavior, be aware that signing up for free courses and memberships might seem like a great idea, but it might actually make it harder for you to carry through on your good intentions. Better you put something on the line and make it hurt if you don’t follow through. Money is the most obvious, but otherwise consider sharing your plan with a friend or colleague whom you don’t want to disappoint by failing to do what you say.

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P.S. If you are curious about some aspect of behaviour, why not send it to me? I’m always happy to receive questions and it may even end up in a blog. For free!

Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.