IDEA 22 PROPOSITION Ultimately, marketing is the business of managing human behaviour to achieve social and commercial objectives. It is all about encouraging members of a target market to behave in a specified manner for the first time, more often, less often, or for the last time. Maximising the return on the investment in marketing […]

IDEA 22

PROPOSITION

Ultimately, marketing is the business of managing human behaviour to achieve social and commercial objectives. It is all about encouraging members of a target market to behave in a specified manner for the first time, more often, less often, or for the last time.

Maximising the return on the investment in marketing requires identifying the most cost-effective means of causing the required behaviour to occur with the required frequency. This, in turn, requires an understanding of how humans (and in particular consumers) think and how best to influence them.

This paper addresses cost-effective strategies for managing consumer behaviour. Each of these strategies draws on an understanding of how humans think and behave based on neuroscience, behavioural economics, and other behavioural research.

1/20 – BEHAVIOUR MANAGEMENT – FORGET ABOUT EDUCATION

58% of crashes due to driver distraction

How many times have you heard people say ‘education is the key’? While this is often the case, education is not always an effective tool for managing human behaviour. All too often, people know what is right or know what they should do (they have the facts) but ignore what they ‘know’ and behave as they choose. Their behaviour is often inconsistent with their education. Consider:

• 58% of teen motor vehicle crashes are due to distraction
• 97% of teens ‘agree’ that texting while driving is dangerous
• 43% of teens who know it is dangerous, text anyway

 

Another 2018 study looked at teen texting while driving. It found that the effects of anti-texting education are short-lived. After a short period of behaviour change, the majority of consumers return to their usual practice of texting while driving – despite knowing the dangers.

While these two studies focused on teens, ask yourself:

• Have you ever driven under the influence of drugs or alcohol?
• Have you ever driven tired (which is as bad as driving drunk)?
• Have you ever used your phone while driving?

 

Education can be an important tool when managing human behaviour. However,  more often than not, it is not enough. Education is an important starting point and little more. Managing behaviour also requires:

• An emotional connection
• The creation of a habit
• A nudge

 

People with an emotional connection with a behaviour – want to act in a manner consistent with that behaviour. People with a habit – don’t even think about the behaviour sought. They just do it. A nudge can have the effect of causing a behaviour through a stimulus-response type process.

Each of these is discussed in the blogs that follow.

RECOMMENDATION – View education as the beginning and not the end of the behaviour management process – and then build on that education with emotion, a habit, or a nudge.

2/20 – BEHAVIOUR STRATEGY 1 – CONNECT EMOTIONALLY

85% sales growth from emotional connection

The last blog in this series cited a study in which teenagers were educated about the dangers of texting while driving. The impact of this education was small and short-lived. In this same study, the teenagers were also introduced to a once attractive woman of their own age who had been badly injured in a crash in which both of her parents were killed. The crash was caused by teen driver texting. The effect of this meeting on the texting behaviour of the teens in the experiment was long-lasting – very long-lasting, indeed.

Meeting with an injured woman of their own age created an emotional connection for teens in this study, and resulted in a determination to stop texting. Meeting the woman made the issue of injury caused by texting real, rather than a statistic. Seeing the devastating result of texting for just a few seconds created a fear of texting while driving. The empathy with the injured woman made the dangers of texting real.

Creating an emotional connection is possibly the most effective way of causing a behaviour to occur. Education creates an understanding, but an emotional connection creates motivation. Emotional connections are also good for business more broadly. A study reported in the Harvard Business Review found that emotionally engaged customers are:

• Three times more likely to recommend
• Three times more likely to re-purchase
• Less likely to shop around (44% rarely shop around)
• Less price-sensitive (33% wanting a 20% discount to change)

 

Forrester research found that an emotional connection:

• Facilitates a 26% increase in margins
• Facilitates an 85% growth in sales

 

Strategies for creating an emotional connection include:

• Creating a personal human connection
• Demonstrating values consistent with the target market
• Engaging customers in the story behind the brand

 

There are few things more powerful in marketing than an emotional connection. An emotional connection will almost always have a more significant impact than a cognitive connection created by education.

RECOMMENDATION – place the highest possible priority on knowing what is important to your customers and display a human connection in a way that creates an emotional connection.

3/20 – BEHAVIOUR STRATEGY 2 – CREATE A HABIT

14% of adults still smoke

If you still believe that education is the key to managing or influencing consumer behaviour, consider the 14% of Australians who still smoke; the 70% of Australians who increased their alcohol consumption during the COVID-19 lockdown; or the last time you drove home late at night straining to keep your eyes open.

A powerful strategy for influencing or managing human behaviour involves helping people to develop new habits. Habits are so strong that they often endure when memory is lost. Many studies have found people with dementia completing tasks they cannot remember how to do or could not explain how they completed. Habits happen in a different part of the brain to memory – and they are largely automatic – making them beneficial for sales.

After all of the investment in anti-smoking campaigns, the fact that 14% of adult Australians still smoke is not only a sad demonstration of the limitations of advertising, but it also provides an insight into the power of habits. Create a habit that is strong enough, and people will keep on repeating it in the face of significant opposition. The habit of smoking is supported by up to 100 associated or ancillary habits. These include when a cigarette is lit, how it is held, and how it is smoked etc. Smoking is, in truth, a complex group of habits rather than one big habit.

Smoking is an undesirable habit – but it is no different in structure to other habits and involves three critical components:

• A cue
• A routine
• A reward

 

Exceptional marketing campaigns often do seek to create a habit, often, an unconscious habit, by creating a cue, a routine, and a reward scenario for members of the target audience. Further, there are few things more conducive to ongoing sales than a habit. One of the more famous examples of powerful habit creation was the launch of Pepsodent toothpaste – the most successful such launch of all time. This campaign created the habit of nightly teeth cleaning.

RECOMMENDATION – Create a habit – such that members of your target market will buy and utilise a business or brand automatically, without drawing on memory or conscious thought.

4/20 – BEHAVIOUR STRATEGY 3 – GIVE THEM A NUDGE

50% reduction in spillage because of a fly

Authorities have been educating men and boys to urinate directly into a urinal and not to splash liquid on the floor. Research suggests that most of this education has been ignored. Hoping to find a better approach to reducing spillage and, therefore, cleaning requirements, researchers placed an image of a small fly in the base of urinals in a men’s toilet to see what effect it might have. One study reported a 50% reduction in the ‘splash’, or at least the liquid on the floor. Some 60 – 70% of users intentionally aimed at the fly.

A university in the United States replicated this study.  Instead of a fly, the logo of another University was painted in the bowl. Again, there was a 50% reduction in liquid splashed on the floor. Once again, boys and men were aiming at the logo, and this helped to reduce the splash. Where education had failed a simple ‘nudge’ caused a new behaviour to occur consistently. ‘Nudge’ is a term coined by Nobel Prize-winning Economist, Richard Thaler, to describe the concept of using positive reinforcement and indirect suggestion to influence behaviour.

There are many simple nudges used in marketing. For example:

• ‘Do you want fries with that?’
• Using smaller plates to reduce food consumption
• ‘Insitu’ signage – such as a 3D image of a child painted on the road near a school.

 

Nudges are everywhere. You just have to look for them. They can be very useful in changing consumer behaviour and even in creating new habits. Thaler’s book – Nudge is a great read. Most nudges are inexpensive and relatively easy to implement. Most target the moments surrounding the behaviour marketers seek to influence.

RECOMMENDATION – look for opportunities to nudge consumers to behave as you want them to. Look for strategies that will influence behaviour at a critical point and without significant expense.

5/20 – BEHAVIOUR MANAGEMENT – LEVERAGE BIAS

12 types of human bias drive behaviour

Anyone who suggests human beings and, therefore, consumers are rational is lying, delusional, stupid or all three. Human beings are anything but rational – but at least they are ‘Predictably Irrational’ – or so says Duke University Professor and psychologist – Dan Ariely. Much, though not all, of the irrational behaviour of consumers is facilitated by one or more biases. The most common biases are:

• Authority effect – thinking something is true because it came from a respected source
• Exposure effect – a tendency to view products you are exposed to as superior
• Decoy effect – where a decoy impacts the perception of two credible options
• Recency effect – considering the most recently heard facts as more reliable
• Framing effect – being influenced by how a proposition is framed
• Correlation bias – acting as if correlation means causation – when it does not
• Bandwagon effect – it must be the best choice if most people do it
• Post-purchase effect – only considering confirming data after a purchase is made
• Humour effect – being more inclined to remember that which is funny
• Availability bias – tending towards options where there is more information available
• Loss-aversion – being more attracted to limiting losses than making gains
• Ambiguity bias – more inclined to pay attention to risk than reward

 

There is, alas, no such thing as an entirely rational human being or consumer. We are all subject the one or more of a variety of biases – only 10 of which are listed here. Fortunately, as well as being a problem, biases can be an opportunity – provided they can be leveraged. Natural biases can be leveraged by, for example:

• Creating social norms
• Creating a decoy
• Creating an authority

 

Each of these opportunities will be addressed in the blogs that follow. For now, the critical issue is to be aware that humans are not rational – but at least they are predictably irrational.

RECOMMENDATION – Don’t believe anyone who says they buy rationally. While the level of rationality varies by person and product, all human beings are subject to behavioural biases.

6/20 – LEVERAGE BIAS 1 – CREATE SOCIAL NORMS

13.8% of Australians smoke

In 1945 –72% of adult males and 26% of adult females in Australia smoked. By 1980 some 35% of adult Australians smoked (41% of men and 30% of women). In 2020, just 13.8% of adult Australians smoke (about 16% of men and 12% of women). These numbers suggest that women are smarter than men when it comes to avoiding bad habits. They also highlight the fact that smoking rates have declined markedly since 1945 – especially among men.

Much of the decline in smoking can be attributed to anti-smoking legislation and campaigns. That said, research has found that while impacting on the behaviour of smokers, health warnings did not impact as strongly as changes in social norms. Between 1945 and 2020, smoking went from being a social norm and expectation to a social ill. In 1945 it was expected that adults, in particular men, would smoke. In 2020 it is considered bad form for men or women to smoke. As much as they might have changed the behaviour of individuals, anti-smoking campaigns created a new social norm and created an expectation that smart people will not smoke.

This shift demonstrates the power of social norms. Smoking rates were high in 1945 when smoking was an expectation, and they are low in 2020 when smoking is considered to be a stupid behaviour. Social norms are very powerful, indeed, and the creation of social norms is among the most powerful tools available to marketers. Consider these two examples from current research:

• A jam display in a supermarket attracted almost no viewers and very few sales. In response, the researchers had a number of people stand in front of the display reading the labels. This resulted in a massive increase in the number of shoppers who stopped and drove sales. Shoppers, like all consumers, and indeed humans are in fact – sheep.

 

• In a hotel, patrons were asked to reuse bathroom towels in order to save water and energy and, in so doing, be environmentally responsible. Less than a third complied with the request. A second group was told that they should reuse bathroom towels like 80% of patrons. Reuse rates rose to around 70%. Patrons wanted to behave as other patrons did.

 

Human beings are social animals, and they are drawn to behave as their fellow humans behave. As such, creating social norms can be a powerful marketing tool. Leveraging the social norm bias can be very powerful, indeed. The social norm bias can be summarised as follows – ‘if everyone else is doing it, then it must be the right thing to do’. Social norms can be created in numerous ways, including:

• Using high profile influencers
• Facilitating social media comment
• Communicating stories
• Engaging in relevant partnerships

 

In addition to immediate sales, social norms can deliver long term behaviour change and repeat sales’.

RECOMMENDATION – Consider creating a social norm – the perception that a behaviour is consistent with social norms or the behaviour of other people in a target market.

7/20 – LEVERAGE BIAS 2 – CREATE A DECOY

16% chose the cheaper option, and 84% chose the better option

In a famous study, completed in conjunction with the Economist magazine, Professor of Psychology at Duke University in the United States, Dan Ariely, tested 100 students as follows:

• Group 1

This group was presented with two purchase options:

• The web edition of the Economist only for 50 cents a day; or
• The web edition with the weekend print edition for 50 cents per day

 

• Group 2

This group was presented with the following three options:

• The web edition of the Economist only for 50 cents a day; or
• The web edition with the weekend print edition 50 cents per day; or
• The web edition and a copy of the print edition daily for $1.00 per day

 

The findings were as follows:

• Group 1

• Web only – 68%
• Web and weekend print – 32%

 

• Group 2

• Web only – 16%
• Web and weekend print – nil
• Web and daily print – 84%

 

For the subjects in Group 2, the web plus weekend print option acted as a decoy – driving customers to the more expensive option. This is the ‘decoy nudge’ effect – now used by many international corporations, including Apple.

Behavioural Economics.com notes, ‘The decoy effect is technically known as an ‘asymmetrically dominated choice’ and occurs when people’s preference for one compared with another changes as a result of adding a third (similar but less attractive) option.’ The Conversation notes, ‘The decoy effect is defined as the phenomenon whereby consumers change their preference between two options when presented with a third option, the “decoy” – that is “asymmetrically dominated”. It is also referred to as the “attraction effect” or “asymmetric dominance effect”.

RECOMMENDATION – Consider the potential for a decoy to encourage consumers to opt for a higher margin product and use a decoy to enhance the value of the preferred purchase.

8/20 – LEVERAGE BIAS 3 – CREATE AN AUTHORITY

54% of consumers use social media for product research

It is common knowledge that consumers are increasingly turning to the internet to research products they might purchase. It might, however, be less well known that some 54% of consumers use social media to complete that research. Consumers seem to hold the view that people on social media can be trusted and represent a credible authority, at least in so far as comments regarding a product are concerned. This is why 91% of major brands use two or more social media channels.

Socialite Kim Kardashian has amassed a fortune in excess of US$72 million – not bad for a woman whose only talent appears to be recommending products online. Kardashian is among the world’s leading influencer marketers. She purports to be an authority on beauty and related products – and people, it would seem, take her advice and buy the products in significant numbers.

Consumers actively look for authorities – people they trust – to tell them what is best to buy – triggering the authority bias – ‘if Kim buys it, then it must be good, and I should buy it’. The ‘authority bias’ is somewhat different from the ‘celebrity effect’. Denis Lillee selling Steel Blue work boots (about which he knows nothing) and Ita Buttrose selling St Ives retirement villages (about which she knows little) are examples of the celebrity effect – whereas Kim Kardashian (apparently a woman of style) selling fashion or Anthony Bourdain (a celebrity chef) selling a food destination are examples of the ‘authority bias’.

There is a natural human bias towards relying on people we believe are authorities – people we trust to give sound advice. Leveraging the human predisposition to rely on authorities might involve:

• Identifying and engaging credible authority figures
• Engaging those authority figures to recommend the brand
• Communicating relevant messages online and offline

 

This is a tried and proven strategy. Suffice to say here that it still works – especially where the authority is seen as being knowledgeable about the product at hand.

RECOMMENDATION – Rather than engaging in celebrity marketing, consider engaging an authority who is trusted by the primary target market and then – consider influencer marketing.

 9/20 – BEHAVIOUR MANAGEMENT – THINK DIFFERENTLY

1997 – 2002 flashback

In the seventh blog in this series, I wrote about the power of social norms in shaping consumer behaviour. They are very powerful, indeed. The fact is, however, they are equally powerful in shaping the behaviour of business people. Indeed, sheep-like behaviour is as common among business- people as it is among any other group of consumers – if not more so, given their natural (though often denied) conservatism.

The ‘Think Different’ campaign launch by Steve Jobs and Apple in 1997, was at least in part a response to the natural inclination for businesspeople to operate in line with social norms – doing the same thing and offering the same product over and over. The campaign launched by Jobs in 1997 ran until 2002 and was, in my view, one of the best ten campaigns of my lifetime – which has encompassed most of the advertising age. Have a look at the initial commercial – https://www.youtube.com/watch?v=5sMBhDv4sik

Many businesspeople talk about thinking differently, but in some 40 years in business, I have met no more than 5 or 6 who do. Despite the value in looking at markets, problems, and products from a range of perspectives and developing innovative solutions – most go safe and avoid the risk. My firm was once sacked from a significant account by a Managing Director who told us that he had been to an association event where he was told that his latest campaign was ‘bullshit’. We were sacked, not because the campaign did not work (it did) but because he was embarrassed when his peers noticed the radical change in direction. Whether it is peers, senior managers or the boards people are concerned about – ‘thinking different’ is rare and acting differently is very rare indeed.

The three blogs that follow this will look at three areas in which ‘thinking different’ has been demonstrated to be beneficial:

• Replacing threats with something more engaging
• Focusing short term on a long-term product
• Leveraging control to inspire motivation

 

Thinking differently is the key to developing innovative solutions. It  is the key to differentiating your product or brand and rising above the competition. This requires:

• Being smart and strong enough to recognise the flaws in your intuition
• Applying intuition only after real data has been collected and analysed
• Engaging people with the capacity and ability to think laterally
• Asking the right questions, listening for and responding to the answer
• Focusing only on the customers – ignoring commonly held views

 

Approaching issues from a different perspective and thinking differently is rare – but that is lwhy it can be a competitive advantage – assuming, of course, you have the courage to act differently.

RECOMMENDATION – Resolve to think differently. Engage people to help you look at issues from a different perspective and come up with solutions and strategies no one has actioned before.

10/20 – BEHAVIOUR CHANGE 1 – STOP THREATENING

20% increase alcohol consumption during COVID 19

An ANU study found that 20% of adult Australians drank more during May 2020 – one of the months during which the CIVID 19 pandemic was in full swing. Another study reported by the ABC found that 70% of Australians increased their alcohol consumption during the pandemic (starting in March). Whatever the true figure, it is apparent that many people increased their consumption of alcohol during the pandemic, despite alcohol restrictions in some states and the threats of:

• Unemployment or at least a lower income in the months ahead
• Health issues arising from increased alcohol consumption

 

There is little doubt that a percentage of the population responds to threats. Indeed, many people have reduced alcohol consumption or stopped smoking because of the threatened damage to their health. It is equally evident, however, that many people do not respond well (in the way we want) to threats. Indeed, there is a body of neurological research that talks about the ‘boomerang effect’ where threats have the contradictory effect of increasing consumption. This latter group don’t just ignore threats. Many of them react to them negatively – partly due to the high number of threat neural pathways in the brain.

It might make intuitive sense that threats will change behaviour, and they can most certainly contribute – with some consumers at least. But more often than not, threats are not enough to change ingrained habits, and, in some cases, threats are counterproductive. The literature suggests that the preferred approach involves offering or highlighting the rewards of the preferred behaviour. That is, it is generally more productive to highlight the benefits of low alcohol consumption than it is to highlight the negatives of high alcohol consumption. It is better to promote the benefits of a clear head than to highlight the threat of liver cancer (which many believe will never happen to them anyway).

RECOMMENDATION – Prioritise rewards over threats. Avoid threats where possible, instead highlighting the benefits of the preferred behaviour. Certainly, don’t use threats alone.

11/20 – BEHAVIOUR CHANGE 2 – THINK SHORT TERM

30% in 30 seconds

In a now famous Stanford University research conducted between 1965 and 1969, children were asked to sit in a room for 10 minutes with a treat on a table just in front of them. They were told that they could eat the treat immediately or wait 10 minutes and receive two treats. The result was that 30% of children waited just 30 seconds before consuming the treat. Only 30% were able to wait the 10 minutes required to get two treats rather than just one. This landmark study and many others replicating it have been used to predict all kinds of life outcomes from weight to wealth. Setting aside these predictions, the strength of which has been brought into question – the research did highlight one critical issue – human beings struggle with delayed gratification.

It is likely that human beings have always struggled with delayed gratification. However, it seems that the inclination towards immediate gratification (I want it now) is growing every year. In 2020 the resistance to delayed gratification is reflected in the:

• Ongoing resistance to invest in superannuation
• The resistance to address climate change
• Difficulties associated with saving a deposit

 

Many consumers are resistant to investing in superannuation – beyond the mandatory level and fail to appreciate the long-term benefits. Consumers are reluctant to address climate change because  the effects cannot be experienced now. Resisting breakfast out each Saturday and Sunday is a big call for many young people who are attempting to save for a home deposit. In many respects, these are examples of irrational behaviour, but humans are irrational – albeit predictably so.

The solution to encouraging consumers to accept short term pain for long term gain is to accept that it is very difficult, if not impossible, to encourage the majority of human beings to delay gratification. The solution lies in bringing some of the gratification forward. For the three examples noted above, this might involve (among numerous options):

• Creating competitions with immediate prizes for higher investments in superannuation
• Delivering a superior level of overt social acceptance to people who act on climate change
• Allowing people to rent and then buy a property – so they can enjoy it even before paying

 

Research suggests that these short-term rewards no not need to be huge, but they do need to be frequent and consistent.

RECOMMENDATION – In addition to any long-term rewards, consider offering frequent short term or immediate rewards to maintain interest and consistency in behaviour.

 

12/20 – BEHAVIOUR CHANGE 3 – GIVE PEOPLE CONTROL

20% reduction through home displays

A study by Energy Economics reported in 2018 found that providing domestic electricity users with real-time information regarding energy consumption led to a reduction in demand of 20%. Savings were largely achieved by shifting some power use to off-peak periods with lower charges. This study demonstrates that information can deliver a greater level of control and motivate consumers to take action to reduce energy consumption. This demonstrates both the power of information and the impact of control.

Information can empower consumers to take control of aspects of their lives and, indeed, their purchase decisions by giving them a sense of control. That sense of control (real or perceived) motivates consumers to take action. Research suggests that perceived control also feeds into a greater sense of happiness.

Further, research suggests that in commerce, choice is a significant driver of the perception of control and, therefore, an antecedent of motivation (perhaps to purchase) and happiness (or satisfaction). Research has found that choice can be an important facilitator of control and that consumers find this control to be both liberating and motivating.

Research in the United Kingdom found that senior public servants are significantly happier and more motivated than junior public servants. Surprisingly enough, this was not found to be income-related. Rather, it was found to be related to the perceived level of autonomy or control that senior public servants feel they have and the lack of both that lower-level public servants believe they have. Again – control motivates.

The reality is that human beings have little control over their lives. Despite this, or perhaps because of it, consumers respond very positively to control wherever they can find it. Indeed, research suggests that the panic buying at the beginning of the COVID-19 pandemic was as much due to a desire for control (in an environment in which there is little control), as concerns about running out.

Human beings crave control. Deliver them control (real or perceived) and they will be more motivated to act as you want.

RECOMMENDATION – Give consumers the information, choice, and flexibility they need to feel that they are in control. Motivate your customers and potential customers with control.

13/20 – BEHAVIOUR MANAGEMENT – DECISION MAKING

60,000 choices – overwhelming

An average supermarket has 60,000 products or SKUs (stock keeping units). Larger supermarkets have many more than this. Of course, consumers do not choose between all of these products on a day to day basis. However, these numbers serve to highlight the vast choice available to consumers in 2020. In her famous TED talk, Palo Alto discussed a supermarket with 348 varieties of jam – another overwhelming number. It must be stressful for some customers to make a choice. Indeed, research has demonstrated that when there were six varieties of jam on offer – the number of people likely to buy was six times higher than when 24 varieties of jam were offered.

The fact is, decisions create uncertainty and choices are often harder for consumers to make than marketers realise. Consider your response to a menu in a Chinese restaurant with 120 items on it compared with a menu in an Indian restaurant with 20 items on it. I find Chinese restaurant menus too hard, and I have little doubt that other people do too. Such menus encourage people not to read them but rather to ask the staff or buy what they always buy. With choice or decision making – more is not necessarily better. As suggested in the last blog in this series – a degree of choice can be motivating as it creates the perception of control. However, the suggestion here is that too much choice is undesirable. Research suggests that 3 – 7 options (depending on the product) is ideal for most consumer goods and that offering more options actually reduces customer satisfaction.

Limiting options, and therefore the choices to be made, is one strategy for making decision-making easier. Three other strategies that can make decision-making easier are:

• Making the choice concrete
• Setting a clear deadline
• Categorising the offering

 

These three strategies for making decision making or choice easier will be addressed in the blogs that follow.

RECOMMENDATION: Maximise sales by limiting the options or choices per category to a manageable number (3 – 7) leaning towards the lower number of options. Avoid too much choice.

14/20 – EASIER DECISION MAKING – MAKE IT CONCRETE

US$185 billion market capitalisation for Tesla

It is most instructive to consider the extraordinary growth and success of Tesla. The company was founded in 2003. By June 2020, it had a market capitalisation of US$185 billion, making it the second biggest automotive company (by market cap) on earth in just 17 years. The largest is Toyota, which was founded in 1936.

Clearly, some of this market capitalisation is based on estimates of future car sales rather than current car sales, given that in car sales – Tesla ranks seventh. That said, being the seventh largest automotive company in the world after 17 years is good going by any standards – other than perhaps those of Elon Musk.

So, why has Tesla been so successful? One contributing factor is the tangible difference between Tesla and most of its competitors.  Tesla offers:

• A 100% electric only motor – ensuring that at least for now it has few competitors
• A distinctive design – that sets it apart from almost all of its direct competitors
• Superior technology – with a range of nearly 400km – well ahead of others

 

These factors and a number of others including the direct sales of vehicles and the charisma of the biggest shareholder make the differences between Tesla and its competitors absolutely concrete. In this regard, it is very different to Toyota, Hyundai, Kia and Nissan as for most of their vehicles the differences are more subjective and not at all concrete. While the Tesla does not suit everyone – those that like them appreciate their uniqueness and concrete differences.

Choice is easier where differences are concrete. Choices are easier where differences are concrete. Consider, for example, three products where direct comparisons are difficult because the differences are anything but concrete:

• Telephone and internet contracts
• Health insurance arrangements
• Superannuation products

 

Choices in these three industries are so much harder because differences and features per se are not concrete.

RECOMMENDATION – make it as easy as possible for customers to remove doubt and decide to buy your product or brand by concretely differentiating it from that of competitors.

15/20 – EASIER DECISION MAKING – SET A DEADLINE

4 reasons consumers procrastinate

The literature suggests that there are four common reasons why consumers procrastinate before taking action:

• They are overwhelmed – a point addressed in previous blogs
• The timing is wrong
• Dislike of the task or lack of real interest in the purchase
• No sense of urgency

 

The last of these reasons is addressed here. Decisions take longer and seem harder when there is no sense of urgency. Setting a deadline and creating a sense of urgency has the effect of reducing the decision-making time and making decision making easier.

Over the years, much has been written about Parkinson’s Law – which theorises that work expands to fill the time available for completion. In other words, consumers will take more time to make a choice or decision if they have more time to make it – and they will make a decision faster and with greater ease if there are strict time constraints. In a commercial environment, this has implications in terms of the following propositions:

• 50% off until Friday
• Strictly limited season
• Order by Wednesday

 

In each of these cases, a sense of urgency, and scarcity has been created. The consumer has been given a strict time limit within which a decision to purchase or not purchase needs to be made. While setting a deadline will not ensure that the preferred product is purchased, it will have the effect of simplifying decision-making – or making it easier to choose.

RECOMMENDATIONS – Address Parkinson’s Law with a view to making decision-making easier by setting deadlines on all special offers and wherever else you can. Reduce procrastination.

16/20 – EASIER DECISION MAKING – CATEGORISE

400 delivers more choice than 600

Choices involve decisions and decisions create uncertainty. When there is uncertainty, human decision-making slows and becomes more difficult. Making decisions easier reduces uncertainty and can have the effect of decreasing decision-making time – and increasing consistency and satisfaction. There are numerous ways to make decision-making easier, including:  (1) making it concrete; (2) setting a deadline; and (3) categorising products. The first two were addressed in previous blogs. The third is addressed here.

Consider two scenarios:

• 600 magazines divided into 10 categories
• 400 magazines divided into 20 categories

 

Consumers consistently consider the second of these two options to:

• Offer more choice and as create a greater sense of control
• Make a choice easier and deliver a higher level of customer satisfaction

 

Research has demonstrated time and again that creating more discrete categories of a product – rather than increasing the number of products creates the greatest sense of choice – while at the same time making the choice easier. There is a body of research that clearly demonstrates that creating a new category of product can be a powerful strategy for differentiating a new product or brand from the current range on the market – again highlighting the value of category management.

All of this research highlights the importance of product or brand categories and how the management of those categories can differentiate, make the choice easier, and increase customer satisfaction. At one level, a Prius is a car that like any other, gets you from A to B. It might even be considered a stylish car that gets you from A to B. On this basis, the Prius has hundreds of competitors, making choice difficult and lowering satisfaction upon purchase. (A purchaser will forever wonder, ‘did I make the right choice and were there other options I should have looked at?’). On the other hand, the Prius might be categorised as an electric vehicle – in which case it has only tens of competitors – making a choice easier and satisfaction more likely. If it is further recategorized as the car that responsible environmentalists drive – in this category, it might have no direct competitors – making choice very easy indeed.

RECOMMENDATION – Place a higher priority on the number of categories than on the number of products on offer. Categorise your product such that it has the least number of competitors.

17/20 – BEHAVIOUR MANAGEMENT – UNDERSTAND THE BRAIN

2 types of decision-making impact on purchases

In his book, Thinking Fast and Slow, Nobel prize-winning psychologist Daniel Kahneman, identifies two types or systems of thinking:

• Fast thinking – unconscious, emotional, and instinctive thinking
• Slow thinking – conscious, deliberate, and largely rational thinking

 

Fast thinking occurs in the brain stem and limbic system without thought, making it open to the effects of prejudice, and other unconscious biases. Its function is to facilitate decisions that we don’t have time to consciously ponder such as the range of automatic thinking or decision making that occurs when we drive a car. If you consciously thought about every action when driving, you simply could not drive. It would take too long. Fast thinking tends to respond to more obvious cues.

Slow thinking, on the other hand, is what sets human beings apart from most other animals. Type 2 thinking occurs in the neocortex, the largest and most recent part of the human brain. It is far more considered and deliberate. This is the kind of thinking that is more common when making important purchase decisions such as a house or a car. Instincts and emotions may still play a part in these decisions, but because of the dollars involved, cognition is more common. Slow thinking often involves more complex cues.

The work of Kahneman highlights the complexity of the human brain and the importance of understanding that complexity, including systems of thinking, when developing the optimal marketing strategy. Three of the more powerful strategies for influencing consumer decision-making are:

• Leveraging instinct
• Addressing the unconscious
• Embracing the pain of buying

 

These three issues are discussed in more detail in the blogs that follow. These blogs point to the importance of neurology in influencing human behaviour and the marketing efficiencies that can flow from embracing what we know about the human brain.

RECOMMENDATION – recognise that the human brain is the most complex organ in any animal. Embrace the marketing efficiencies that can flow from embracing neurology in your marketing.

18/20 – LEVERAGE INSTINCT/AUTOMATIC THINKING

90% of decisions are emotional

If you believe that human decision-making is largely rational, you are living in ‘cloud cuckoo land.’ If you believe that the majority of human decision-making is thoughtful – you are right out of touch with reality. If you think that any human decision and in particular a purchase decision is entirely rational – you are just plain wrong. Research suggests that 90% of human decision-making is largely emotional, and almost all decision making is influenced by emotion. In other words, most purchase decisions are made using predominantly ‘fast thinking’ – a system of thought discussed in the last blog in this series.

Because fast thinking is fast and based on emotion, it more often leads to poor judgements and is far more impacted by bias and heuristics. At the same time, it is often easier to appeal to, especially where there is an understanding of what it responds to. Fast or automatic decision making is most common with:

• Low value purchases – such as chocolate bars
• High frequency purchases – such as newspapers
• Low engagement purchases – such as tissues

 

With products in these categories, intuition plays a much greater role in decision making than conscious thought. Fast or automatic thinking and instinct can be leveraged by:

• Appealing to heuristics and biases
• Emotional connections
• Ease of purchase

 

All human beings are impacted by heuristics and biases, such as recency, availability, confirmation, and hindsight. Playing directly to these biases can be very powerful in influencing fast thinking. The ethics of doing this warrant consideration, but the effectiveness of leveraging biases is clear. Few things are more powerful motivators of human behaviour than emotions. Politicians are past masters at appealing to the emotions that drive fast or instinctive thinking. This is often reflected in their passion for three-word slogans (‘Stop the Boats’) – slogans we can connect to emotionally and will not think too deeply about. If a product is to appeal to fast thinking, it must be easy to purchase – because if it is not easy to purchase, the consumer has to apply slow thinking to make the purchase. In 2020, convenience is more important than ever and maximising it facilitates fast thinking.

RECOMMENDATION – Understand which purchases can be the outcome of fast thinking and where to apply the strategies that influence fast thinking. Remember that facts matter very little.

19/20 – ADDRESS THE UNCONSCIOUS

4 key drivers of unconscious behaviour

Did you know that one of the main reasons human beings tend not to be attracted sexually to a member of their own family is smell? Perhaps the most interesting aspect of this little-known fact is that we are not even conscious of the way our family members smell (in the main). The effect of smell on our lack of sexual attraction to family and, conversely, our attraction to other people is largely unconscious. If you asked people – why they are not attracted to family members – few would cite smell. Without knowing why, I have never liked shopping in Woolworths. It was only recently after lengthy pondering and discussions with others that I realised that I don’t associate the corporate colours or the store presentation of Woolworths with cleanliness.  I have since started shopping in Woolworths occasionally – with the same level of satisfaction as any other supermarket.

All of this points to the unconscious impact of variables on the unconscious mind and the impact the subconscious mind can have on human behaviour – including purchasing behaviour. Four primary, often unconscious influences are:

• Colour
• Smell
• Sound
• Touch

 

While Google does not always follow its own corporate colour rules – its base colour is blue, which was chosen because it has a calming and reassuring effect on human behaviour. This is conscious for graphic designers but unconscious for consumers. We are all conscious of the smells pumped into the street by fast food outlets. These, and less subtle smells (fragrances in department stores – where we are attracted to smells that complement our internal biases including those that impact on our choice of partner) can dramatically influence consumer behaviour and not just with food or perfume. Your laptop and, indeed, your desktop often make sounds – none of which are necessary. These sounds are generated artificially to play to our unconscious expectations. They make us think the computer is working hard. You will note that your mobile devices rarely make such processing sounds. Finally, we are also unconsciously (and consciously) impacted by touch. The soft silky feel of a fabric can effect purchase decisions – as can how soft or hard the chair we sit in when making a purchase. While some of this is conscious, much of the impact of touch and texture is not. It took me years to realise that the reason I could eat food with pumpkin in it (scones or pie) but could not eat pumpkin – was the texture of pumpkin – which still makes me feel like throwing up.

RECOMMENDATION – Much of human decision-making is based on a reaction to unconscious influencers, often undetectable in market research. Identify and leverage unconscious influencers.

20/20 – EMBRACE THE PAIN OF BUYING

3 types of buyers – 24% tightwads

There is almost always pain associated with making a purchase. Apart from anything else, there is pain associated with the requirement to part with money. Research suggests that almost regardless of the sector, there are three categories of buyer, at least in so far as the pain they experience when making a purchase:

• Unconflicted – 61%
• Tightwads – 24%
• Spendthrifts – 15%

 

Unconflicted customers are average spenders. Their ‘buying pain’ takes time to kick in. Tightwads are people who will spend less than average. Their ‘buying pain’ kicks in early. Spendthrifts are big spenders. They tend to spend a lot more before ‘buying pain’ sets in. Clearly, the group that offers the low hanging fruit is ‘Spendthrifts’, while the group that will be most difficult to convert and sell up is the ‘Tightwads’. Given that all markets tend to have all three groups and that theses dispensations are hard wired in the human brain, it is useful to be able to determine which category each customer falls into. Simple questioning can usually facilitate this identification.

It seems especially important to be able to identify ‘Tightwads’ given that they represent about a quarter of the market. Identifying ‘Tightwads’ can facilitate the implementation of customised strategies, including but not limited to:

• Reframing value – $1000 could be reframed as $84/month for 12 months
• Reduce pain – perhaps by bundling products in the way telcos do
• Sweat the small stuff – instead of ‘a $5 fee’ – ‘a tiny $5’

 

It is important to know the questions needed to identify which category each customer is drawn from, as they may warrant a different marketing or sales approach. There is no evidence to suggest that an individual can be moved from one category to another. The categories seem to be hard-wired in the brain.

RECOMMENDATION – Ask questions to identify if an individual customer is unconflicted, a spendthrift or a tightwad. Then, customise the strategy accordingly.

21/20 – BEHAVIOUR MANAGEMENT – GET PERSONAL

80% attracted by a personalised experience

One of the most significant trends in marketing over the last 5 years has been the growth in and expectation of consumers for – personalisation. Research suggests that 80% of consumers are more likely to buy when they have a personalised experience. In response to this trend marketers using a high level of personalisation credit it with a 20% increase in sales. Personalisation works and marketing automation can be used to make personalisation work even more effectively and inexpensively. The more personalised your marketing the better.

Personalisation can and should apply wherever possible. It is especially relevant with regard to:

• Direct mail and particularly e-mail (EDM)
• Lead management experiences
• Website interactions – perhaps using geo-location technology or a log in facility
• Telephone enquiries, sales and follow ups
• Face to face sales interactions
• The ‘in-business’ customer experience

 

A feature of the 2000s is that we have the data required to personalise marketing – and a feature of the marketing of highly successful businesses like Apple, Amazon and Facebook, is that they actively gather and leverage data that facilitates personalisation. This is a feature of most of their marketing.

Automation driven personalisation can also reduce waste and as such improve the cost efficiency of the marketing – by ensuring that the right person gets the right message in the right way.

Research suggests that personalised marketing increases enquiries, conversion rates, the average sale, margins, repeat business rates and referral rates – due largely to higher levels of attention and engagement on the part of enquirers, new customers and past customers. It achieves this by:

• Grabbing attention – the human senses respond more actively to personalisation
• Holding attention – human beings engage better with personalised experiences
• Positive feelings – human beings feel good when experiences are for them
• Building loyalty – human beings are more loyal when they have a personal connection
• Enhanced advocacy – human beings talk more about personalised experiences

 

Important drivers of the personalisation in marketing are the human needs for:

• Significance
• Connection
• Growth

 

Each of these drivers of personalisation will be discussed in the blogs that follow.

RECOMMENDATION – as far as possible personalise all aspects of your marketing, leveraging fully the human needs for significance, connection, and personal growth.

22/20 – GET PERSONAL 1 – PERSONAL SIGNIFICANCE

107 billion people and climbing

For sane human beings who embrace science – the universe has been here for 13.8 billion years, the earth has been here for 4.5 billion years, there are around 8 billion people on the planet in 2020 and over the last 200,000 years some 107 billion people have walked this planet. In 2020 there are 2100 billionaires on earth, 39,400,000 Wikipedia personal profiles and 195 world leaders. Alexander the Great had conquered the known world by 32, Napoleon had conquered Europe by the age of 32 and Michael Collins had freed Ireland by the age of 31. In the face of all of this, and more it is not surprising that in 2020 human beings crave significance.

Most human beings are repelled by the idea that they are of no particular significance or that they are unworthy of significance. Most human beings are repelled by the notion that they are little more than a number – or in the case of a Myer shopper – nothing more than a ‘credit card courier’. Indeed, research suggests that in an increasing number of commercial interactions consumers feel that they are little more than a number or a ‘credit card courier’. Most human beings wand to feel that they are important (at least a little) and in the commercial environment – valued and respected.

As such, making customers feel significant can be a very powerful marketing strategy – and it need not cost much at all. Indeed, the only cost might be that related to training staff and creating a culture that values the individual. Making customers feel significant and more importantly making them feel like a valued customer, is facilitated by:

• Asking questions and demonstrating listening
• Looking them in the eye and introducing yourself
• Calling them by name wherever possible
• Saying thank you
• Remembering who they are and what they like

 

There venues I visit to eat or drink and businesses I buy from where – they remember me, call me by name, always say thank you and show genuine interest in me. With these businesses I feel a connection and a sense of loyalty. Unlike the case with Myer – I will keep on going back – and I am not alone. I am sure you are no different – and it is not politeness you are responding to but rather – a feeling that they value your custom.

RECOMMENDATION – Create in your business a culture where all customers are valued and where making customers feel significant or important is a central element of your marketing.

23/20 – GET PERSONAL 2 – PERSONAL CONNECTION

14 cigarettes a day are healthier than loneliness

At some point in our lives most of us realise those traits we have that are less common among the people around us. About 20 years ago, I realised that I would rather be alone than in the company of other – no matter how much I like them. Being alone energises me. This is however anything but the case with most human beings. Most human beings crave social connection. Indeed, examining the health effects of loneliness research have found that it equates to smoking 15 cigarettes per day.

Human beings are among the most social animals on the planet. Most human beings crave social connection and it has been cited as the most significant determinate of life expectancy – after genetics and environment. Psychology Today reports that – strong social connection leads to a 50% increased chance of longevity. Whether they are aware of it or not consumers are attracted to social connections and respond positively when they occur. Among other things social connections creates a sense of personal validation.

Creating a personal connection or facilitating personal connections can be represent a powerful marketing strategy. Creating or facilitating social connections can involve:

• Ensuring the brand has clear social goals – a higher purpose
• Engaging customers both in the business and on social media
• Personalising marketing campaigns and customer experiences
• Loyalty programmes – especially where engagement is involved
• Membership programmes and the opportunity to interact

 

Human beings want to connect with other human beings. Consumers want to feel a connection with brands, the other people that engage with the brands they purchase. That is one of the reasons why brand communities have become so popular and effective. It is also a big part of the reason why consumers will wear t-shirts and hats with large brand logos on them. They want to connect with their tribe.

RECOMMENDATION – Help customers connect with your brand and then connect with other purchasers of the brand. Treat your customers as a family and consider a brand community.

24/20 – GET PERSONAL – PERSONAL GROWTH

10 reasons why personal growth is important

Personal growth is important to most human beings. It is one of the six core needs of consumers in the 21^st century, with the others being certainty, variety, significance, connection and contribution. It is instinctive for most human beings and therefore most consumers to want to be – richer today than yesterday or faster today than yesterday or slimmer today than yesterday or stronger today than yesterday or smarter today than yesterday. While the area of growth will vary the desire for being more today than yesterday is generally strong. We want to move forward.

Researchers have identified 10 benefits of personal growth. Personal growth has been found to enhance – relationships, stress, health, productivity, self-control, success, peace of mind, parenting, resilience and happiness. Not only do human beings want personal growth – they need it. They will also respond positively to brands that offer it – as they respond well to video and before them arcade – games with levels they can progress through, sports that have clear levels of achievement (karate with its belts measuring progress)and educational courses they can progress through and secure qualifications from (even when those courses have no practical application).

Brands that can create or foster a sense of personal growth will invariably have a greater appeal to consumers than those that do not. Brands that connect with the personal growth expectations of their customers will invariably have more appeal than those that don’t. Connecting with the desire for personal growth might be achieved by:

• Creating levels – the entry level cars through to the top of the range
• Recognising progress – the letter sent to customers complimenting a purchase
• Loyalty programmes – with customers getting rewards for frequent flyer points
• Certification – certifying levels of performance as it progresses
• Positioning products – offering the basic, advanced and professional packages
• Offering grades – offering products for juniors, intermediate and seniors

 

These are just a few of the many ways that you can make a customer feel that a purchase they are about to make, or have just made will move them forward and make them more today than they were yesterday. Clearly, the best measure of progress will vary buy sector.

RECOMMENDATION – Help your customer grow and feel that they are achieving personal growth by providing them with options that recognise levels, stages or grades.

IN CONCLUSION

Marketing is ALL about managing human behaviour – and in particular, the behaviour of the primary target market. There are a huge variety of tools that marketers can use to efficiently manage the behaviour of their primary target audience with a view to causing individuals within that market to behave in a manner consistent with the achievement of social and/or commercial objectives.

This paper addresses just some of these tools – all of which can be incorporated into a marketing strategy and applied cost effectively.

All marketers need to think of themselves as social scientists using what ever tools are most effective and cost-efficient in terms of driving performance. Advertising is just one of many tools and often not the most cost-effective.