Only a few things in life are certain; death, taxes, and spending thousands on a gym membership every year that is never used.

As the months go by, many of us are trying to convince ourselves that this month, no wait, next month, we’ll finally get back into the gym. Yet as the days trickle into weeks, our memberships go unused.

Throughout this time, our spending on fitness has been questioned but never cancelled. So, why don’t we just cancel the membership and put those funds to better use?

There’s a psychological principle called ‘default bias’ which we have to blame and it’s not just for gym memberships. It’s the streaming subscriptions, marketing emails, and the reason you’re still with the same super fund since your first job. It’s also the reason why many European countries like Belgium, Poland, and Portugal have incredible organ donation rates, while Australia’s is absolutely abysmal.

A lot of European nations have upward of 98% and higher donation rates, while Australia is sitting slightly above 30%. Atrocious. But why? Are Australians really that passionate about taking our remains to the grave? Or could it be that we have to opt into organ donation whereas the French, Austrian, and Polish have to opt out?

Remember Richard Thaler? No? You obviously didn’t read our Sunk Cost blog. Richard Thaler is a behavioural science leader and professional explorer of why humans make illogical choices. He, alongside co-author and Harvard Law School Professor, Cass Sunstein, wrote a book called Nudge, which speaks briefly on this concept.

“The combination of loss aversion with mindless choosing implies that if an option is designated as the “default”, it will attract a large market share. Default options thus act as powerful nudges.”

A ‘nudge’ in this instance, is something pushing someone to a preferred decision. So the reason for not cancelling that gym membership, or not opting into organ donation, is simply because it’s easier to not take action and resort back to the default option.

As a business, leveraging the default bias can yield incredible results. Setting a default option such as an auto-renewal each month for a subscription based service upon signup is a great way to retain customers and maintain consistent sales. Bonus points for making the opt-out process as difficult as winning the 100m butterfly at the 2024 Los Angeles Olympics, with your hands tied behind your back.

That said, not all memberships, subscriptions and plans are built around this psychological loophole. Providing value is the most important part of any ongoing customer-client relationship. Netflix, for example, invests heavily in its content - not just from the perspective of production value but also in its creative decision making process. They analyse user data to inform what types of movies and series they create. This ensures that when you do log in, there’s something epic for you to watch.

Default bias is also why so many homeowners simply bite their lip and push through as banks and insurance companies raise their fees year on year. That said, there is nothing particularly wrong with keeping an under utilised gym membership or sticking with the same overpriced car insurance - after all, convenience is a key driver in many people’s decision making process.

Establishing a model that leverages default bias can be a smart business decision - but how? Beans has been working with businesses in professional services, education, health and property to devise strategies and create new products to improve customer retention and loyalty. We are then supporting these new products with highly targeted digital marketing across search and social to build long-term growth, all based on data-driven decisions. And, we’re doing it all for a low monthly fee.

Go on, join the Beans Gym.

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