How the cult of busy impacts buying behaviour

Should you remind your customers how busy they are?

That was the topic explored by researchers Kim, Wadhwa and Chattopadhyay (Journal of Consumer Research, forthcoming 2018) who were interested in how perception of busyness impacted consumer decision-making.

Past research has suggested that time pressure leads customers to rely on feelings rather than facts, resulting in lapsed self-control and a preference for indulgent products. When short on time, in other words, we cut corners and prefer expedience to virtue, donuts to salad.

This research was slightly different because the researchers investigated perception of busyness rather than whether customers were in fact under any time pressure. 

The difference, as the researchers state, is that “people perceive themselves as busy when they simply feel they are occupied with work or have a lot of work to do, whereas feeling pressed for time is triggered by the concern for insufficient time to complete the tasks at hand”.

This look at mindset is important because ‘busy’ has become a badge of honour, whether or not it is objectively true. People perceive busy people of high status, and being busy is increasingly related to how people feel about themselves. For many, busyness increases their sense of self-importance.

Busyness enhances self-control

In the first of seven studies, the researchers monitored items purchased in a university cafeteria for how healthy they were. When signage in the café cued students to think about being busy (e.g. “Good to go for busy students”) compared to a neutral sign (e.g. “Good to go for summer students), they chose significantly fewer unhealthy items and items with significantly fewer calories.

In a second study, participants who reviewed a print ad for an indulgent fast-food outlet were less willing to purchase the bacon burger when the ad carried a busyness-related tagline.

Additional studies found:

  • Participants who were primed to think about busyness and then offered a cookie were less likely to eat one framed indulgently as a “delicious sugar” cookie but (surprisingly) more likely to eat one called a “healthy oatmeal” cookie.
  • A busy mindset increased the preference for extra credit work over a free day amongst students.
  • A busy mindset only increased self-control for those who believed being busy was good. Those with a low work ethic were unaffected.
  • A busy mindset increased self-control when it was not accompanied by a high-level of time pressure.

Key take-outs

Up till now, the theory in marketing has been to link busyness with indulgent choices; “you’re a busy person, you deserve a donut!” type messages. And in some contexts, I still think this applies. Research by Shiv and Fedorikhin (1999) has shown, for example, that people are more likely to opt for an indulgent snack after their self-controlling, cognitively intense System 2 has been depleted. When people are tired, in other words, they opt for ease.

But being fatigued is not necessarily the same as being busy, and this latest suggests reminding people of their busyness actually makes them think about their self-importance, and through that, increases their self-control. The message is more appropriately, “you’re a busy person, you deserve the best!”

I think the bottom line is self-identity. We know from other research by Patrick and Hagtveddt (2017, PDF) that saying “I don’t” rather than “I can’t” can enhance self-control. Now we have research that reminding people of their identity as a busy person increases the odds they will resist temptation. For us in business it just reiterates the need to understand your customer’s world and support how they see themselves. If you are selling something healthy or virtuous, cuing busyness may work in your favour. If you are selling an indulgence, talking about fatigue or time being short may be a better bet.

This article also appeared in Smartcompany.

The birdbath principle: Attracting customers by reducing fear

If you’ve noticed customers baulking at the entrance to your store, abandoning your online process, or avoiding contract discussions, it could be due to the birdbath principle.

Birdbath positioning

Birdbaths serve two purposes in a garden. They can be used as a structural element to attract the eye, and they can be used to attract birds that like to drink and bathe.  It is this second, more functional purpose, where I see things break down because, much like engaging customers, there’s a right and wrong way to position your birdbath.

The right way is to nestle your birdbath amongst foliage. The wrong way is to place it in the middle of a barren landscape.

Why? Birds need to feel safe. They are very vulnerable when taking a drink or bath, so it’s important they feelprotected and have an escape. When a birdbath is stuck out on its own, birds are too scared to approach.

Birdbath principle

The birdbath principle

Poorly placed birdbaths remind me of retail outlets where customers are anxious about entering the store for fear of being pounced on by a predator (you). In effect, they haven’t been provided enough “cover” to feel safe to come in. As a result, many shoppers bypass stores that are empty of customers in favour of those where others have dared to enter.

I call this the “birdbath principle”; when people feel exposed, they will avoid you. It not only happens in retail. The same goes for:

  • Restaurants, where people will feel awkward about entering an empty space,
  • Online, where customers will feel very vulnerable if you ask them personal or sensitive questions (like date of birth or credit card details) without assurances,
  • Networking events, where people (particularly those who are introverted) don’t know where to stand or what to do with their hands
  • Contract discussions where they feel the pressure of being the decision-maker

How to make customers feel safe

Your role is to make customers (and staff) feel safe to proceed. Like the birdbath nestled amongst the plants, look for opportunities to give customers a safe environment to enter, and an easy path to exit.

In retail, have sufficient stock just inside the entrance to give them a sense of protection, and try to look busy when they come in so they don’t feel all eyes are on them. Acknowledge them, but keep it brief and wait for them to loiter over something before actively engaging with prompts.

In hospitality, if your customers are first to arrive (someone has to be), they’ll probably be feeling a little weird. Greeting them like being first is no big deal is important, so keep it low key. Seating them and offering water will help to anchor them. Having background music playing, possibly a little louder than later on, will help fill the void until other diners arrive.

Online, whenever you request sensitive information, be sure to explain why you need it (and get rid of any that you really don’t need!) For example, when asking for an email, let them know it’s so their confirmation can be sent to them straight away. Also, make sure you confirm any important action, providing an order number or thank you page, for example.

At networking events, the registration desk is a good place to make them feel comfortable and get their bearings. Consider pointing out people they know, or where they can get a drink. A small information card can be a helpful device for them to hold and give them something to read when not in conversation (and keep them off their phones). Provide plenty of physical anchor points, like bar tables, where they can plant themselves.

In contract discussions, give them ways to save face to colleagues if they need to recant on a decision or make a concession. Diminish their sense of risk if they proceed with you, while making them feel nervous if they don’t.

This article also appeared in Smartcompany.

How Shopify uses priming to change behaviour

Replacing a hot water service because it had too many buttons was just one of the decisions taken by Shopify CEO and founder Tobi Lütke.

“I ask everyone to build world class software”, said Lütke, “…but if you arrive in an office where the first thing you do is get hot water…and you are faced with some sort of insane user experience …where the obvious thing to use the device feels like an after thought…then I can’t really ask (my team) to do better. (If I do) I’m fighting gravity.”

Shopify is the world’s largest successful ecommerce platform, with 4,000 employees and 600,000 customers, and founder Lütke was recently discussing his approach to business in the excellent podcast, “The Knowledge Project” with Shane Parrish.

Time and again the use of environmental primes, or nudges, in the Shopify offices were mentioned as a way to shape employee behaviour. As Lütke points out, asking employees to create beautiful, effortless products is incongruent with a workspace that is ugly and full of friction. For the same reason, their floor plan is intentionally maze-like in places to prime staff to explore and have fun. Rationally, these things shouldn’t make a difference. Behaviourally, they do.

Aside from replacing the hot water and microwave with more effortlessly functional variants, Shopify also overhauled the way it encouraged staff to keep the cafeteria clean. Their first inclination was to educate staff by placing posters around the room. No effect. They then used a social norm on the poster to shame staff into correcting their behaviour. A small but fleeting effect. Finally, they just put a tray next to the exit of every lunchroom where people could deposit their dirty dishes. Problem solved!

Primes, subconscious cues in the environment, can be applied to all types of spaces, even the bathroom. In my interview for the Behavioural Grooves podcast recently, co-host Kurt Nelson mentioned toilet paper primes.  Yes, that folded triangle of toilet paper in your hotel room is sending an important message; “relax, your room has been thoroughly and carefully cleaned because we care about you.”

Lessons for business effectiveness

Priming plays a significant role in how your staff and customers will feel and act. If you need more proof:

  • a car insurer was able to increase sales 11% by varying the pitch of background traffic noise;
  • a hotel used priming in its Wi-Fi password;
  • handwritten typeface increased crisp bread sales from 5.6% to 30.4%; and
  • Will Smith was able to fleece a high-stakes gambler in the movie Focus using number primes.

Lessons for personal effectiveness

Priming doesn’t just affect others, it affects you too. To prime yourself, set up your home and work environments to support your goals. Change your computer login to something positive, surround yourself with plants and light to stimulate your energy levels, remove temptations from line of sight, use smaller bowls and spoons if you want to eat less, remove your smartphone from your office if you want to be more productive, and use “I don’t” rather than “I can’t” when refusing a treat.

You are already priming, but in the right direction?

By the way, you are already priming yourself, your customers and staff, whether you realise it or not. The key is to prime in way that serves your objective. According to Lütke, “people are so much more affected by their environment than we like to believe.” Indeed.

This article also appeared in Smartcompany

Traffic noise increased car insurance payments 11%

That background hum your customer hears may be impacting whether they buy from you. New research investigating the impact of background noise on willingness buy car insurance and try new foods has found that low pitch sounds trigger customer anxiety, which leads to greater risk avoidance.

The power of environmental primes

The environment in which a decision takes place plays a large, and often overlooked, role in shaping the outcome. I’ve written before about how music, smells and shapes can impact customers, and this latest research reiterates the importance of paying attention to how you shape your customer’s environment.

Hypothesising that low pitch subconsciously primes people to perceive threat, Lowe, Loveland and Krishna (2018, forthcoming) were interested in whether this would result in greater risk avoidance. Across a series of seven studies, the researchers varied the pitch of background noise between low (below 250 Hz) and moderate (between 250 and 1000 Hz) levels.

In one task, participants were asked to complete a computer survey on financial choices. Sine waves were played through a hidden speaker at a level they could not consciously hear.  Those in the condition where the waves were at a low pitch took significantly fewer financial risks than those in the moderate condition.

In another, participants were asked to listen to and evaluate a 35 second ad for car insurance. In the ad where background traffic noise was set at a lower pitch, customers expressed a willingness to pay $98.98 for the insurance, reducing their perceived risk. When the background traffic was set at a moderate pitch, this dropped to $88.63. An 11% difference based on imperceptible sound levels!

Moving out of the lab, the researchers set up an experiment in a self-serve yogurt store, inviting people to sample as many flavours as they wished before making a choice. Those in the low pitch environment tried 1.26 flavours on average before committing to their preferred, whereas those in a moderate pitch sampled only 0.9 flavours.

I don’t know about you, but I’m both excited and terrified of research like this. Excited because it shows how we can more effectively engage our customers, but terrified for the ethical boundaries it dances along.

What gave me some comfort is how easy it can be to counter balance these effects. Across the studies in which the researchers pointed out the background noise and gave a benign reason for it (e.g. “you might notice a hum because our speaker is broken”), any perceived, non-conscious threat was removed and the differences between low and moderate pitch levels, attenuated.

Implications for you

As the researchers note, “background sound in retail environments and marketing communications can alter a customer’s comfort level, and value placed on products that have the potential to reduce risk and their desire to try products before purchase to decrease risk.”

In other words, priming anxiety can be advantageous if you are in the business of risk reduction, like insurance and healthcare, but problematic if you are trying to get your customer to commit to something they cannot try first.

As this latest research affirms, priming is one of the most powerful tools of behavioural influence. You are susceptible, I am susceptible, and your customer is susceptible. Please use it responsibly.

This article also appeared in Smartcompany.

Behavioural economics and segmentation

“Dan Ariely points out that human beings are about 97% similar. Trying to segment your audience is important to some extent — those 3% of differences can be profound — but many of the drivers of behaviour are universal and not always rational, as standard economics would presume. Behavioural economics looks at the areas where that breaks down(1).”

Something I know many of my clients grapple with is how (and whether) behavioural economics intersects with segmentation.

Think of it this way. Behavioural economics is about similarities. Segmentation is about differences.

You can survive without segmentation, but you can’t thrive without BE. Of course, the two methods of understanding behaviour complement each other and work most powerfully in tandem.

Let’s say 100 people are in a room.

behavioural economics perspective suggests that everyone in that room is going to be influenced by the same forces as everyone else.  Forces such as:

  • Priming e.g. type of music playing and the height of the ceiling
  • Social norms e.g. who else is in the room and what they are doing
  • Defaults e.g. what drinks are being served
  • Framing e.g. what the drinks are called

By understanding these universal influences, behavioural economics gives us the most efficient way of shaping the behaviour of the group.  Our area of enquiry is not whether people will be influenced, but to what extent and in what direction.

segmentation view suggests there are sub-groups within those 100 people, and the best way to influence them is to articulate a message that accords with specific wants and needs. We typically use proxies like age, income, attitude, gender or geography to separate and differentiate.

For our message to be effective, according to a segmentation perspective, it needs to be tailored to people who share common characteristics, with whom it will resonate. No use sending me an ad for dentures if that is not something about which I am interested.

This is where segmentation gets tricky, however, because in order to make our message efficient, we need to develop segments as large as possible to capture as many people as we can. How deep do you have to go to be effective without losing economies of scale? Writing a personalised letter to every customer might be most effective, but wildly impractical.

Introducing BEgmentation

When it comes to BE and segmentation, they are best when used together in a specific sequence. I call this “BEgmentation”

BEgmentation

In BEgmentation, behavioural economics is the starting point, with each principle applying across the board. It’s an ‘opt-out’ model, where every principle is assumed to be in play unless there is good reason for it not to be.

Segmentation is the layer on top, where a more nuanced view of your audience can be developed. That means you could explore how segment 1 is impacted by messages framed differently, or how the same message impacts segments 1 and 2 differently, for example.

The key here is to start with BE so you know the foundations of how behaviour is influenced. If you start with segmentation, you end up having to repeat the process of working out whether a difference between groups is unique to them or something that affects all (i.e. a universal principle.)

It’s a bit like the difference between baking a large cake and icing it all at once, or making multiple cupcakes and icing each individually.

Segments of one will be a reality

BEgmentation is only going to become more important.  Traditional segmentation will increasingly be automated and personalised, with the customer’s digital paw prints scooped up and interpreted by algorithms and predictive analytics. Your role will less about defining the segments, and more about developing the pre-populated materials that can be delivered automatically.  

The only way to devise effective materials that are generic enough to scale but also be personalised is to start with a roadmap of similarities, not differences.

Imagine, you are advertising a dog food sale, for example. You devise an email to customers that, thanks to your knowledge of BE, includes a social norm. The algorithm then drops in the most effective representation of the social norm for each specific person (segment of one), increasing the odds they will respond. The email offer to me includes a picture of golden retrievers because the algorithm knows I have one, whereas my neighbour gets an email with pugs. We both click to buy.

This article also appeared in Smartcompany.

(1) http://adage.com/article/adagestat/advertising-dan-ariely-behavioral-economics-marketing/146001/

How to make behavioural economics a habit

If you know about behavioural economics, want to integrate it in your work but find yourself reverting to the old ways of doing things, awaiting the perfect project to apply it to, then it’s time to rethink your approach. Procrastinating means you are missing opportunities each and every day to become a more effective influencer. Here’s a two-step approach to make behavioural techniques a habit.

Step 1. Overcoming your own resistance

Adopting a new approach to how you do things, like intentionally applying behavioural economics (BE), is an exercise in behaviour change.

That means we can anticipate three potential barriers that stand between you applying BE and not applying BE:

  • Apathy – you can’t be bothered
  • Paralysis – you are confused
  • Anxiety – you are scared of getting it wrong

Overcoming Apathy

Embedding new knowledge and skills like BE is a brain-intensive exercise, requiring deliberate, System 2 thinking to displace System 1, habituated pathways.  In other words, you have to slow yourself down and interrupt your usual approach to writing emails, thinking about your customer, designing a presentation, interacting with colleagues and so forth. 

I know because despite being an expert in the field, I still have to pause and deliberately apply BE to how I interact. The habits governing how we write and speak are so entrenched it takes effort to do it differently.

The good news is that by slowing down up front, you get a better return on your efforts. For example:

  • Reformatting the way you invoice will take some time up front, but improve your rates of on-time payment from there on.
  • Rethinking the approach you take with a stakeholder may feel more effortful, but will mean a more successful (and less stressful) meeting.
  • Redrafting pro forma letters to customers will reduce the number of in-bound complaints you receive.

Overcoming Paralysis

With so much to know about behavioural economics, it can feel overwhelming. Where to start? What principles should you use in the email you are about to write?

When I am training people in how to adopt BE, I recommend narrowing choices by focussing on three things:

  1. Clarifying your behavioural objective – Who are you trying to influence? In what context? What are they currently doing? What would you like them to do?
  2. Anticipating why you may get resistance – Is Apathy, Paralysis and/or Anxiety most likely to be a barrier?
  3. Use one of two key BE principles per barrier – For Apathy, ensure there’s a benefit for Now Me (Short-term Bias); for Paralysis, signal the most popular choice (Norms), and for Anxiety, give them nothing to fear if they do take action and something to fear if they don’t (Loss Aversion).

Overcoming Anxiety

Being nervous about applying BE is entirely understandable; it’s like any new skill. Remember when you were learning to ride a bike? You were probably taken somewhere safe, away from traffic where falling wouldn’t hurt too much. You may have even had training wheels to keep you on track. Even if it felt like you’d never get the hang of it or you fell off, you persevered because not riding a bike was worse than these short-term tribulations.

In short, you had nothing to fear if you did try riding a bike but something to fear if you didn’t. So it is with applying BE.

  1. Give yourself nothing to fear – The key benefit my clients receive through BE coaching is less an understanding BE principles, and more about building confidence. Start with small scale, low risk applications. Try sending colleagues a BE optimised email, or rework a webpage that can be monitored for impact. Make sure your manager and/or peers are on-board so you feel comfortable trying something new.
  2. Give yourself something to fear – If you are serious about embedding BE in your daily work, put something on the line. As a start, list the downside of doing what you’ve always done and missing the upside of BE, and commit to sharing your results with the leadership team.

Step 2.  Creating a habit loop

Habits are created when behaviour is repeated and reinforced on a consistent basis. Using the habit loop model devised by MIT researchers (and popularised in The Power of Habit), we can break the anatomy of a habit down further as:

  • Trigger – what and when you are reminded to apply BE
  • Routine – what you actually do to apply BE
  • Reward – why you bother

In my experience, the biggest culprit in the failure to apply BE is an absence of a trigger. If you are not reminded to think and act differently when faced with a task, you simply won’t bother.

The secret to developing a BE habit therefore relies on identifying and/or creating triggers. Here are some to get you started.

Apply behavioural economics when:

  • Writing an email to colleagues
  • Creating a new website
  • Conceptualising or drafting a marketing campaign
  • Sending an EDM to customers
  • Writing a letter to customers
  • Preparing an invoice
  • Developing a letter of engagement
  • Responding to a pitch and proposal opportunity
  • Making a sales call
  • Considering market research
  • Preparing for an important stakeholder meeting
  • Participating in a strategy session
  • Navigating budget constraints

There are also some emotional triggers, for instance:

  • You’re not 100% certain all the bases have been covered
  • You’re frustrated that you are not getting the answers you need
  • You are sick of the same old, same old
  • You’ve noticed colleagues are all talk, no action
  • You’ve just lost a big account and are looking for answers
  • There’s a sense of dread or panic in the business
  • Your industry is changing and you feel out of control

Behavioural economics is an amazing opportunity to get better outcomes from every single interaction you have with other people. Don’t you think it’s time to get on your bike?

This article also appeared in Smartcompany.

Don’t be cagey about your pricing

Being cagey about your pricing doesn’t work. That was the key message I took from a recent survey by SAP on how Australians shop online.

As many as 6 out of 10 Australians reported abandoning an online shopping cart when shipping costs were higher than expected.  46% left the cart after using the site for a price comparison and 32% terminated the transaction because stock was unavailable.

How to address each of these issues? Here are my tips.

1. Shipping cost

People hate paying for shipping, and hate being surprised by it even more. If you charge shipping, that’s OK, but you have to be smart about how you represent it. List it on your home page, ideally as a low rate “flat” cost, and consider creating a threshold at which customers qualify for free shipping.  Why? It will increase propensity to buy more to avoid paying for something they don’t value. Failing that, provide a “shipping cost” estimator before people get to the cart to ensure they know what they are signing up for.

Shipping also gives you another promotional lever. Like the mattress shop that delights a customer who is buying a $2000 bed by waiving a $50 delivery fee, consider running special “free delivery” events to drive sales.

2. Price comparison

Price comparisons are a fact of life, so it’s up to you to present your product in such a way that value seems undeniable. How? One way is to use numbers psychology to diminish the perception of cost. Consider:

  • Whether to use rounded or specific numbers (e.g. $20 or $19.95)
  • The sequence of mark-downs (e.g. was $45 now $25 or Now $25 was $45)
  • The size of the typeface you use (e.g. whether the RRP of discounted price should be larger)
  • Whether and how you should use dollar signs and decimals

You can also use choice architecture to make some products look better than others, moving the customer’s focus from a comparison between competitors to a comparison within your range.

Further, consider how you describe the products. Focus on the benefits for them (the why) before the features (the how), and what they get (the value) before the give (their money).

3. Stock availability

Out of stocks happen, but that doesn’t mean you have to irritate your customer. Include stock availability on the product page BEFORE they add to cart. Leaving it until the cart page means they have psychologically committed themselves to the purchase and will feel very let down by you. It also doesn’t hurt to have messages like “only 5 left” to increase urgency to act through scarcity.

This article also appeared in Smartcompany.

Five oranges

Let’s say I give you five oranges. Is that good?

It depends.

Did you want four oranges?

Did you want six oranges?

Did you want five apples, not oranges?

Did you not want anything at all?

Whether the act of giving you five oranges was a good or bad thing depends very much on context.

And yet, in business, we often seem to forget to consider the context of the exchange we have with our customers. We overlook the role we play in shaping the context to ensure our offer is always a good thing.

So is giving you five oranges a good thing?

It depends.

Or-an-ge glad I gave you oranges?

To understand context, we start by asking some basic questions about what is happening.

Who are you to me? If you are a stranger or friend will impact how the act is perceived. Have we been discussing oranges at length, or has this come out of the blue?

Where are you? If you are in a fruit shop and I am the retailer, there’s a chance it’s a commercial transaction. If you are at a sporting event and the oranges are segmented, it’s likely you will be distributing them to those on the field. If you are about to board an airplane, it will seem inconvenient and odd.

Who is around you? Are others there to help you carry them? Do you want others to see you receive the oranges, or will this be embarrassing? If you are at a Mango Growers convention, it may seem inflammatory.

What time of day is it? Presenting you five oranges at 10pm may not be as helpful as 7am.

What are your needs? Your wants? Do you hate oranges? Do you have more oranges than you know what to do with? Are you suffering scurvy and desperate for vitamin C?

Contextualising value for your customers

Now that we have considered the context in which the transaction will take place, we can move towards shaping perception of value.

Remember, value is relative, not absolute. That means your customer will be comparing what they get and have to give with a frame of reference.

You therefore have two choices as a business.

You can let them use their existing frame of reference. This is dangerous.

Or, you can create a new frame of reference. This is smart.

I once had an accounting practice send me a proposal for services, for example. This is how they communicated price to me.

Pretty standard phrasing, right? The problem was they left me to define the frame of reference. Was $2,000 good value or not? If I had $900 in mind, then $2,000 seemed expensive. If I had $5,000 in mind, it seemed cheap. I didn’t end up accepting their terms.

Remember, our job is to frame the value of our goods and services to encourage our customer to proceed. Here are many techniques you can use, but let’s tackle two now: numbers and names.

Number framing

Contextualising the numbers you share with customers can make or break your interaction. Your success depends on the first number they see as it ‘anchors’ their perception of what follows.

Use a low anchor to be seen as generous

Use a low anchor if you want to be seen as generous e.g. “I know you only asked for four oranges, but I wanted to give you five as a thank you for choosing us”, or “last year’s bonus was $1200, but this year I’m pleased to say you will receive $1700”.

Use a high-anchor to diminish perceived cost

Steve Jobs used a high anchor when introducing the iPad so we would think it was great value. He started by citing ‘pundits’ who said it would be priced at $999 before thrilling the audience by revealing it would only be $499!

For the accounting practice, that could mean contextualising value as follows: “For larger clients we typically charge $5,000, but for your portfolio it would only be $2000”.

Or, if they didn’t have tiered pricing, they could use another larger number to anchor perceptions. For example: “Your current portfolio is $1,245,678. For us to manage everything we’ve discussed for you the fee will be $2000 plus GST.”

Re-set the anchor

What to do if they have a fixed expectation and you can’t deliver? For example, they wanted six oranges but you only have five to give?

Provide a reason for the shortfall, ideally citing an external event that is out of your control and likely to be affecting alternative providers as well, before framing about what you can do for them, right now. For example: “Unfortunately there is a shortage of oranges at the moment. What I can do for you is give your five right now, and arrange for an additional orange to be delivered to you tomorrow.”

What if the product or industry category has a fixed anchor, but you want to charge more? Starbucks faced this issue when launching in the US. The existing anchor for diner coffee was around $1, but they wanted to charge 4-6 times that. How? They re-framed what ‘coffee’ meant. From their store fit-outs with couches, cool music and the smell of roasting beans, to the fancy names they gave their drink sizes (Grande, Venti), they created so much distance between ‘coffee’ and “Starbucks” that they could re-anchor price expectations.

Back to the accounting practice. If the customer is used to paying $900 and they charge $2000, they need to re-frame expectations of what services from this accountant means. One approach is to offer the $2000 as the most basic option, introducing two more expensive options to drag the customer up to a higher anchor point.  Now the customer is comparing $2000 to $6000, and thinking they need to at least move to the $4500 option to get value.

Name framing

People are persuaded by descriptions. Rather than just give you “oranges”, I am giving you “sweet, juicy, sun-ripened organic oranges from Australia’s most awarded orchard”. A restaurant was able to increase sales of one item on its menu by 27% by changing the description from “broccoli” to “seasoned Asian-broccoli” (Just & Wansink 2009).

The language we use conjures up images in the minds of our customer. Not only does that mean paying attention to how we describe our offer, but what we call the product itself.

Imagine you were selling sweets, for example. Calling them “fruit chews” rather than “candy chews” would likely double consumption (Irmak, Vallen & Rosen Robinson 2011).  

Staging cocktail hour? Listing a drink as “Red Bull and Vodka” rather than “fruit cocktail” would prime your guests to act 51% more intoxicated.

If your product or brand carries a taint due to the connotations of what the name represents, consider changing it. Kentucky Fried Chicken moving to KFC and British Petroleum becoming BP are just two examples of companies distancing themselves from the original meaning.

Common product names you may have seen (or used) have their own framing connotations

  • Standard: Use to normalise it as a default. Avoid if you don’t want them to choose it.
  • Basic: Use to signal no-frills, low-cost and build tension about selection. Avoid if you don’t want to disparage your product.
  • Essentials: Use to signal they can’t live without. Avoid s lowest cost option because it will reduce impetus to upgrade.
  • Achiever: Use to signal aspiration. Avoid for lowest cost option.
  • Pro: Use to signal status difference between pro and amateur. Avoid if all options are for pros because it loses its meaning.

So you are about to give your customer five oranges. Is that good? It depends…on you.

This article also appeared in Smartcompany.

Three truths about how people respond to information

A warning. This blog will only be of interest if you’ve ever experienced someone:

  • Refusing to change their mind despite evidence to the contrary
  • Being blind to their faults
  • Making decisions differently depending on what day you catch them on

That’s all of us, right?

Influencing the behaviour of your customer starts by recognising they are not a blank slate, eagerly awaiting your brilliance. In my experience there are three truths about where they are coming from, and this shapes how to approach best them. If you want an insight in how I use these truths to structure proposals, presentations and websites, read on.

1. Your customer is the scriptwriter

Whatever you tell your customer will be slotted into an existing narrative about the world.  It’s like you are trying to introduce a new storyline into an existing TV series they have scripted with established characters and plot points.

Known as the “Narrative Fallacy”, people tend to bind facts or events together even where no causal relationship exists. If you listen to one of hundreds of podcasts on how an entrepreneur has found success you’ll hear such narratives play out. In share trading, people tend to believe past performance will help them predict future performance, ignoring the role of luck and uncontrollable events.

It means your customer will have a view of how the world works, and will treat your perspective as something that either fits or does not.  As a result, they are prone to:

  • Proactively seek information that confirms rather than disaffirms their view (Confirmation Bias) and
  • Reactively distort information to retain equilibrium (Resolving cognitive dissonance)

A potent illustration of this comes in the form of a survey of 174 business executives.  When asked to describe their decision-making style, 42% said they were data-driven and 17% empirical. Only 10% claimed to be intuitive.

When subsequently asked how they would proceed if data contradicted their gut feeling, 57% said they would have it reanalysed and 30% said they would collect more data. Only 10% said they would follow the course of action suggested by the data.

In other words, almost 9 out of 10 of decision-makers, the majority of whom believe they are data-driven, ignore or refute data that does not fit with their narrative!

For you:

  • Understand their story. What assumptions are they making about their industry or customers?
  • To get them to be open to considering new input, first uncover reasons why the existing narrative is flawed – this is your grounds to provoke new thinking
  • Then, to start re-writing the narrative get them to agree that the status quo is not perfect
  • Finally, introduce your new storyline that they can easily integrate into their perspective

Example:

Before I can get people to consider using behavioural economics I must first get them to agree that there are flaws in how we currently think people behave. My training sessions deliberately start with a consideration of why we can’t rely on what people say they’ll do or assume they are rational.  Only once we’ve agreed that these problems exist can I introduce a way to resolve the challenge.

And for bonus points, did you notice how I introduced this blog? I started with shared frustration to incite curiosity.

2. Your customer is the hero of their own story

Not only does your customer write the story, they make themselves the hero. Avoid diminishing or insulting their sense of uniqueness, and always approach the situation from a “what’s in it for me?” perspective.

Being the hero means your customer will rationalise and justify their beliefs and actions. They will be prone to:

  • Act differently depending on whether they are addressed personally (Identify Bias)
  • Excuse their own poor behaviour if they are otherwise ‘good’ (Self- licensing)
  • Internalise credit for their own success but blame the external situation for any missteps, whilst attributing reasons for the success and failure of others’ in the opposite direction (Fundamental Attribution Error)

For you:

  • Treat them as a person not a process and ensure everything you do considers their “WIIFM?”
  • Presentations – proposals or seminars – will tank if you start by talking about yourself. They don’t care about you yet, so lead with insights about them or their industry before introducing what you have to offer later.
  • Spell their name correctly!

Examples:

  • The first 75% of my proposals are all about the customer – their situation and how it can be resolved. I only include details about my credentials at the end, by which time they are curious.
  • When asking your customer to do something (e.g. sign up to a newsletter), tell them what they get (free news) before what they have to give (their email)
  • Your website needs to be about them, not you. Your history and philosophy should be deprioritised  (i.e. not on the home page). Rest assured,  if your customer is interested, they’ll find it.

3. Your customer runs on batteries

Emotional and cognitive energy is limited.  That means your customer will follow the path of least resistance wherever possible and is prone to making superficial expedient decisions. That means “good enough’ (or “satisficing”) rather than “maximising” decisions.

You will have seen the implications of limited battery-power in your friendly neighbourhood supermarket.  There’s a reason they sell sweets at the checkout -people are prone to indulge once their self-control is depleted.

In a study by Shiv and Fedorikhin (1999), for example, a group of participants were required to remember a two-digit number before being asked to venture down the hallway for an interview. On the way, and seemingly as an after thought, they were offered their choice of fruit salad or chocolate cake from a snack cart. People chose fruit and cake in almost equal measure.

A second group were required to remember a seven-digit number. This time people overwhelmingly chose the chocolate cake. Why? The longer number had chewed up their battery, leaving them to the mercy of their indulgent impulses.

Being battery-powered means customers will be prone to:

  • Leave things as they are when they are fatigued (Ego depletion)
  • Rely more heavily on fast, intuitive, habitual System 1 thinking when tired, than slow, deliberate, detail-oriented System 2
  • Follow recommendations if they trust the person making it

For you:

What state of energy do you want your customer in? 

  • High energy can mean your customer will be open to thinking more about what you are suggesting, but that can also invite pointed objections.
  • Low energy can mean a more passive audience, which can be good or bad depending on their mood. A passive, negatively disposed customer will not be bothered to contemplate change unless it is the easiest path to follow. A passive, positively inclined customer will tend to roll with your suggestions.

Examples:

  • I send my newsletter to most people in the morning so they are fresh and interested in new ideas.
  • I believe my Friday coaching sessions are more popular than Mondays for two reasons. Mondays often have a condensed, business-as-usual vibe where people are just getting back in to what they need to get accomplished. Fridays are typically more expansive, where people like to talk about interesting concepts.

This article also appeared in Smartcompany.

Why misspelling a name is a big deal

I was having a pleasant exchange via LinkedIn with one of my past managers when something interrupted my enjoyment. She spelt my name wrong.

Granted, spelling my name Bri is not as common as Bree, or even the fromage inspired Brie, but having worked with me and, indeed, my name being right there in my profile means she should have known better.

Is it a big deal? Yes. Paying attention to small details like a name can change behaviour in very real ways. It can mean a customer doesn’t do business with you or a recruiter doesn’t take your call. It can even change how people recycle, as some researchers discovered.

Trudel, Argo and Meng (2016) were interested in the impact misspelling a name had on how people discarded a paper cup.  Inviting a group of volunteers to rate the quality of drinking water, the researchers either spelled the participant’s name correctly (i.e. Sarah, Paul, Ashley) or incorrectly (i.e. Saruh, Pawl, Ashlee) and then watched to see how each person disposed of their cup.

Cups with misspelled names were recycled less

48% of those whose name was spelled correctly recycled their cup, whereas only 24% of people whose name was incorrect did so. Those who received a cup with no name were just as bad, with only 26% recycling.

What’s this about? Identity Bias. According to the researchers, “the presence, strength, and valence of an identity causes consumers to treat functionally similar everyday products differently during disposal. Further, we find that consumers are more likely to recycle a product linked to the self because trashing such a product creates an identity threat.”

Our name is central to our identity, and so mucking it up means you are attacking people are their core.

I’ll be honest, when a client with whom I have corresponded misspells my name a little bit of my desire to work with them dies.  It shows they do not care about forging a respectful connection. Goodness knows, I don’t get it right all the time either, but the lesson from the research is that small courtesies like getting someone’s name right make a big difference.  If you happen to realise your mistake, apologise as soon as possible. “I’m so sorry, I just realised I spelled your name wrong!” will do wonders to smooth over a festering resentment.

With apologies to Destiny’s Child, “Spell my name, spell my name, if you want my business, make damn sure you do this”.

This article also appeared in Smartcompany.