Predictably Irrational


Blair here with MXM. I was in a conversation yesterday talking about a concept that Dan Ariely talks about in his book, “Predictably Irrational” regarding the difference between a social contract and a market contract. A purely market contract is pretty transactional, I’ll pay you this if you do that. And it’s a marketing contract on both sides of that. A social contract is very different. A social contract says, I’m going to do this because it’s the right thing to do or because it makes me feel good. He has a great example about the difference between a social contract and a market contract. He says, suppose you go over to your in-laws for thanksgiving and your mother in law cooks an incredible feast and everyone has a great time. You finish dinner and say, “Mom that was outstanding, here is $400 for the dinner!”.  So, he says imposing a market contract in the middle of a social contract is a very negative experience. But imposing a social contract in the middle of a market contract can be very positive so it dawns on me that going into this shutdown, that the companies, the clubs, the organizations that have always had an element of a social contract, meaning we’re always going to do the right thing, we are always going to treat you right, are the ones that are going to probably bounce back the fastest out of this. And the companies that always treated everything as a transaction or purely a market contract, and by the way it doesn’t mean their marketing didn’t say... "we are incredibly friendly", "we value our members" etc. but often when you go in and experience these clubs you find out that that isn’t necessarily true and everything is extremely transactional because you are the transaction that is taking place. During the membership sale, during the personal training sale, maybe even at check-in…it’s all very transactional. The way those companies will succeed is by balancing those things and it’s going to be more and more important coming out of this because now people are expecting a certain part of a social contract from you…"Keep me safe”. They are going to expect a different level of courtesy and friendliness. Now, I’ve said that the stark difference between the excellent and the mediocre is really going to come into sharp focus in this. So the way you understand how your market contract is balancing with your social contract by listening to your customer, by listening to what the voice of customer is telling you.

The Net Promoter Score is a great way to understand if you are fulfilling the expectations of that social contract with your members and that's worthy of more value. So is having a bit of a social contract going to really make me more marketable and have a better ROI? I can tell you, the answer to that question is consistently YES.

A reminder to the clubs are reopening, we have a FREE Reopen Feedback System at , that is available to everybody in the industry. What we do is demystify the member experience and make it easier for you to understand how to deliver a great member experience.

Stay distant, stay active, and stay safe, we’ll talk to you later!

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