Help Bri fundraise for indigenous communities

Like many Australians, I have used a busy life to protect me from contemplating the realities faced by people in our indigenous communities.  

 But now I have the opportunity to do something, and I'd like your help.  

Not-for-profit Indigenous Community Volunteers have invited 14 people on a fundraising trek of the Larapinta Trail in Central Australia in July 2012, and I am pleased to be taking part.  The trekking part is easy - Larapinta is ranked one of the 20 most beautiful walks in the world.

The part I need your help with is raising at least $3,000 for Indigenous Community Volunteers so they can continue to work with Indigenous Australian communities.

The fundraising target has been set because it costs;

• Around $5,200 for ICV staff, volunteers and communities to complete a project
• $355 for each ICV volunteer to attend a cultural awareness workshop before they can work in an indigenous community and
• $180 to hold a community event to bring ICV and the community together to understand what needs to be done 

With each of the trekkers raising at least $3,000 that's $42,000 for ICV to make a substantial difference.  I will be personally funding the travel component of $2,400 and documenting my trip for those who have supported me. 

So are you able to help?  Donating is easy. Just visit my gofundraise.com.au page.

A quick scan of other charity fund raising pages looks like donations range between $100 - $30, but I am most grateful for any contribution. Note that donations over $2 are tax deductible and you will receive a confirmation of your support.  

Thank you, and I am glad we can make a small difference to the lives of Australians in indigenous communities.

Bri

Holiday book reading list

As we head into the Christmas break, I thought it would be worthwhile to note some of the books I have found most helpful on behaviour and behavioural economics.  A word of warning though, once you read these books the Boxing Day sales will never seem the same.

Predictably Irrational: The Hidden Forces that Shape Our Decisions by Dan Ariely

The book that got me started in the field of behavioural economics. Dan has a talent for writing in an extremely accessible, entertaining way and throughout the book weaves illuminating examples of human irrationality.

Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely

Dan’s follow up to Predictably Irrational which looks at the opportunities behavioural economics creates.  Whilst a worthwhile read I found that Upside of Irrationality dealt with benefits quite broadly where I wanted to understand the application of principles specifically to the work issues I encounter. (I subsequently wrote my book 22 Minutes to a Better Business to close this gap.)

Switch: How to Change Things When Change is Hard by Dan and Chip Heath

One of the best change management books I have read and which will have you looking at your stakeholders in a completely different light…as elephants. Deals with the behavioural elements of change by encouraging us to appeal to both the rational and emotional being (and no, that doesn’t mean telling your stakeholder you love them…unless you want to).  If you are looking for new ways of influencing people, this book is very worthwhile.

Nudge: Improving Decisions About Health, Wealth and Happiness by Richard H Thaler and Cass R Sunstein

Shamefully I haven’t yet read this book but do keep up with the blog, and Nudge is widely regarded as the seminal work for breaking behavioural economics away from academia.

Habit: 95% of Behavior that Marketers Ignore by Neale Martin

A pet area of interest for me is how habits form and how you can break them.  If you are in sales, marketing or product development, an understanding of habits is an important element of your customer acquisition and retention plans and this little book is a very interesting read.

Have a great festive season and I look forward to more behavioural blogging in the new year.

Meet Santa, master Behavioural Economist

Just think, a jolly fat man in a red suit gets billions of people to spend billions of dollars on people they may only see once a year to commemorate someone else’s birthday. This guy’s a genius!

If you are looking for an example of behavioural economics, look no further than Santa.  The man himself may be a fiction, but our irrationality is all too real.

Santa, and by Santa I really mean the rituals of consumerism associated with Christmas, influences us to do things that make no rational economic sense such as;

• Buy more food than we can possibly consume

We find ourselves gorging at tables laden with very type of meat and vegetable as hosts delight in showcasing their generosity.  Such is the social construct that serving a normal sized meal just isn’t Christmas.

• Buy Christmas Trees

We drive to a Christmas tree supplier, buy a $30-$60 tree that at any other time of the year we would not even look at and will survive only a few weeks, strap it to the roof of the car, drag it into the house, throw specially bought plastic bits all over, gather around the tree and distribute gifts. The next week, we watch the tree slowly turn brown before cutting it up to fit in the green waste bin.

• Buy Snow

In Australia, in Summer, we (not me of course) buy snow in a can to spray on windows. Brrr!  Meanwhile we listen to special compilation CDs that trill about snowmen, sleigh bells, and white Christmases. Rational on a thirty degree day?

• Buy Wrapping

We buy fancy paper to wrap gifts that are already packaged so that we can watch the wrapping get torn off on Christmas morning.

• Avoid vouchers…unless we really have to

We worry about the stigma of giving cash or a voucher rather than a ‘gift’ even though the voucher may actually be worth more.  Retailers are working hard to de-stigmatize vouchers and experiential gifts like Red Balloon are helping reshape perceptions of these gifts.

• Go to the supermarket…repeatedly

We tend to freak out that the shops close for one day and so pop down to the shops to get extra supplies just in case, forgetting the jammed car park and queues at the check out.

• Boxing Day sales

The news footage should speak for itself but just to remind yourself not to let the thrill of a discount overwhelm your sense of dignity, check out scenes from the Thanksgiving sales in the US where a $2 Waffle Maker provoked a gob smacking, pant splitting frenzy.

Why do we find ourselves behaving this way at Christmas time?

Well, marketing probably has a lot to do with how we behave at Christmas.  "Special" Christmas deals, scenes of harmonious family gatherings and directive suggestions like “buy this TV for your Dad” use reciprocity (give to receive), loss aversion (make sure it’s a fair value exchange by buying expensive gifts), and social norms (everyone is doing it) to incite us to purchase. That our understanding of red-suited and jolly modern Santa is a marketing construct confirms how persuasive marketing can be, but it is more than that.

We are more influenced by how others act; the values and behaviours displayed by our fellow human beings.  That’s why shoppers went into a contagious frenzy for a $2 Waffle Maker, and why the rest of us, from the comfortable distance of our computer screens, feel we can mock them for their irrationality.  But that’s also the great thing about Christmas; a tacit agreement across much of the globe to devote one day to sharing time and tokens with loved ones.  Irrationality at it’s rational best.  Have a good one, and thank you Santa.

Image from: http://www.gdhta.co.uk/wordpress/2009/12/on-the-first-day-of-christmas/laughing-santa/

Should you charge customers an 'explanation fee'?

Retailers are doing it tough. Shoppers are coming in, speaking at length with the shop assistant about what the widget does and does not do, only to then leave the store and buy the widget cheaper online.  What's a retailer to do? How do they provide customer service but not lose the sale?

In his Fairfax piece last week, Terry Lane wrote that JB Hi-Fi has introduced a $30 "explanation fee" to recoup some of the cost of providing expertise to potential customers.  Think it will work?  Before you are tempted to follow in JB's footsteps, here are some behavioural elements to consider.

Customers are just doing what's smart
People do not believe they are doing anything wrong by speaking with one shop's assistant before buying from elsewhere; this is the very nature of shopper research and a deeply ingrained social construct.  It used to be hitting the pavement and going shop to shop.  Now it's research online, visiting a physical store if you need to sight, handle or try on the product, and then back to online to purchase.

Do customers feel guilty about wasting the shop's time? No way. In fact they are more likely to feel they deserve the better online price because they have worked for it through their research efforts.

Further, the customer does not consciously think about the overhead costs to that business.  I don't know about you, but when I wander into a store I do not calculate the cost of the assistant's salary, the electricity, merchandise and marketing that have gone into opening the store that day.  These are all lumped into the mental bucket of "sunk costs" that will have to be paid whether I buy from that store or not, and this protects me from any guilt associated with chewing up the shop's time.

So JB has a bit of an issue. They are introducing a fee for something people don't think of as a service. Now if JB's intent is simply to reduce 'tyre kickers', it may work because the fee most certainly will stop people seeking out their staff.  But in my view, disenfranchising potential customers is not a great move.


How to recoup payment for staff time  
As the nature of retail moves from in-store to online, and shops become more service rather than sales-centric, here are four thoughts about what businesses like JB might do;

1. Promote the benefits of buying in-store
Bricks and mortar stores have one massive advantage over online - stock.  "Take it home today!" should be the mantra because people hate to wait.  By the time they have come to the shop they have likely been thinking about the widget, so talking to them about taking it home and showing their loved ones tonight is a way of closing the gap between shops and online.  Make sure they are handling the widget to encourage ownership as you say "Mr Customer, whilst you might save a few dollars buying online, you can take this widget home right now and get on with things".

2. Spook them about invalid warranties 
As mentioned in Lane's article, people who buy goods from overseas often overlook the fact that the warranty may not extend to their country.  Shops like JB have a great opportunity to use people's aversion to loss to maximum effect by playing on our imagined distress if our widget breaks down.  We succumb to concepts like 'extended warranty' because peace of mind is worth paying a bit extra for.


3. Provide a value-add service 
Rather than calling the consultation an "explanation fee" that sounds condescending and a cost rather than benefit, call the service something like "expert consultation", "widget instruction session" or "how to widget".  Remember that people don't perceive shop assistant service as one that should be paid, so expectations of the service need to be interrupted.  Go to the extent of putting expert staff in a different uniform, position them in a different area of the store and even consider bookings.

The shop may suddenly find it has a whole new income stream generated by tutorial services which may also grow rather than disenfranchise its customer base.


4. Rebate service 
Offer the customer's who use the expert consultation the opportunity to rebate their fee against a product purchase.  So the $30 effectively becomes a voucher for their next purchase.  This will work in a number of ways. First, it will help overcome the objection to the upfront fee because it will feel less like the business is getting the money - it's more like they are just getting a deposit.  Second it will be hard for people to forgo their 'free' $30 so they will be more likely to buy something in store. And third, it means the business has an ongoing relationship with the customer and is more likely to get repeat business.

No doubt retailers like JB Hi-Fi are fed up with customers who take without giving, and in so doing provide online retailers with an even greater advantage through lower overheads and higher margins.  But this is the new world. I think it's great that we are seeing new models like JB's "explanation fee" popping up because it marks an attempt by bricks and mortar retailers to challenge the new online purchase cycle, and whilst this model may not quite succeed, it will at least make the retail sector consider new ways of balancing personal service with fair return.

Image from virtuallyyoursjb.com

How private labels are lulling us into higher prices

There has been quite a bit of press lately about the rise of private labels (house brands) in Australian supermarkets like Coles and Woolworths, and speculation about what this means for brand manufacturers.  An IBISWorld prediction cited in The Age has house brands growing from 23 to 30 per cent share of the $70 billion grocery market in the next five years, and companies like Heinz, De Bortoli and Goodman Fielder are publicly lamenting the dominance of house brands.  As most of us visit a supermarket every week, I thought it was worth examining private labels from a behavioural perspective to understand why we are shifting our consumption to house brands. 

How do private labels work from a behavioural perspective?
Private labels are behaviourally persuasive for a few reasons;

• Rules of thumb - in order to deal with the level of stimulation and choices available to us, we operate on auto pilot a lot of the time, using rules of thumb to guide our decision making. Private labels simplify our shopping experience because they create one simple rule - "buy this brand because it is good value".
• Self-herding - private label branding stretches across multiple product categories. The effect is that if I purchase and am satisfied with one category, I will be more prone to repeat my decision for that and extended categories rather than having to trial an alternative brand.  It's worth noting the risk for the private labels here - a poor experience of one category can poison all others. 
• Relativity - to understand whether something is good value, we compare it with similar items.  Our tendency is to stay away from the extremities - too expensive or too cheap - and settle for something that is somewhere closer to the middle.  Amongst others Woolworths have "Woolworths Select" and "Homebrand" and Coles have "Coles" and "Smartbuy"house brands.  This enables them to use one of their brands as their loss leader, leave the supplier's brand as the most expensive and their second brand as the attractive option in the middle. 

How our behaviour is changing the supermarket industry
By influencing individuals, private labels are changing the market in a couple of ways;

• Short-term bias - we are strongly swayed by the immediate rather than long term, and this has significant consequences for the supermarket industry and why brand suppliers are so worried.  We shoppers are buying for now - selecting items that meet our requirements in terms of utility and budget, and house brands are more than ever meeting this brief.  The risk with this behaviour is that through our actions, in this case buying house brands, we are slowly driving brand suppliers out of the market.  We are being lulled into a future of diminished choice, diminished competition and ultimately, higher prices.
• Drop in the bucket effect - along with our short-term bias, it is hard for us to contemplate how our individual purchase decisions can impact the whole supermarket industry.  We think that our actions are simply drops in the bucket that cannot have a broader implication, and this plays right into the hands of the supermarkets who know that engaging an individual is their path to engaging the mass.  

Lessons for other businesses
The rise of private labels clearly shows that shopper behaviour can be changed and new habits formed.  House brands have gone from being a dirty little secret in your pantry to a sign of 'smart' buying.  For all businesses it means that there are opportunities for growth by understanding how to influence consumer behaviour, and what better rule book than the field of behavioural economics to change the game?  See you at the check out.


(Image from http://www.foodmag.com.au/news/demand-for-private-labels-set-to-double-in-2025--r)

Unblocking the sale

One of the biggest barriers to purchase is fear that you are going to miss out on a better deal.  As consumers we sweat the price, wondering whether we should hold off and wait for the item to go on special. But as businesses, we want to lock in the sale today so how can you unblock your customers to get them to buy?

What's blocking the sale?
A recurring theme in my posts has been how loss aversion shapes a lot of our behaviour. It's where the fear of what we may lose is stronger than our motivation to gain. In this case, it's our fear that we buy the product today and it goes on sale tomorrow.  I know this sounds fairly innocuous, but we are psychologically tormented if we realise we have missed out on a better price. The extent of torment is of course commensurate with the value of the product - buying apples today when they will be cheaper tomorrow won't keep me up at night. But buying a new computer and seeing the same model for $500 less the next week will hurt.


Intensifying the sense of loss aversion is the availability of pricing information.  Thanks to the digital age, consumers have more pricing data available than ever before to ingest before transacting.  Whilst in general terms this is a good thing for the consumer, it can also mean they are so trapped by the search phase that they don't get around to making the purchase.

Unblocking the sale
As a result of information overload, search intermediaries like getprice.com.au, dealsdirect.com.au and myshopping.com.au have popped up to aggregate product pricing and feature information for consumers.  But that is just the start. To move customers into the decision making phase, US based e-commerce startup Decide uses a pricing prediction model to power its "Buy" or "Wait" app that helps consumers know when the product they want is worth acting on. This is a perfect example of how to overcome loss aversion.


However, whilst Decide might be great for them as an intermediary and great for the customer, as a business you want to overcome "wait" and get them to buy today.  Knowing that your customers are armed with lots of pricing data but still prone to inertia, you need to employ tactics to unblock the sale.  Here are three options to consider;

Price guarantees - providing the customer a guarantee that you will match or beat the price of a competitor even after the sale has been made is a very effective way of unblocking the sale.  The customer has nothing to fear and everything to gain by dealing with you because they get the goods today and can enjoy them without continuing to price hunt after the purchase.

Don't ever discount - this depends on your competitive situation, but if you have a product or service that is clearly differentiated you should consider a policy of no discount, ever!  Why? Your customers will never have to worry about which day they shop with you because there is no risk they will miss out on a better deal.  I can buy a product from Apple today knowing that it won't be on special tomorrow.

Trade-in guarantees - a clever tactic to stimulate sales today by guaranteeing future value has been introduced by car maker Hyundai in the US.  The Assurance Trade-in Value Guarantee has been launched to overcome customer fear of what they 'lose' on car depreciation.  According to the press release;


"Purchasing a new vehicle is one of life’s big events. You want to know everything you can about the true value of your options. But at the time of purchase, how can you know the future trade-in value of the vehicle you are considering?


Introducing the Hyundai Assurance Trade-In Value Guarantee. A program that future-proofs the value of your new Hyundai by guaranteeing today exactly how much it will be worth, two, three, or four years from now.


Hyundai: Impressive value today. Guaranteed value down the road." 

Hopefully you are now looking at your business a little differently.  Whilst a lot of our time and thinking as businesses is on how the customer will benefit from our products and services, a big part of our sales process actually needs to be dedicated to overcoming our customer's fear of what they may lose. Tackle that and the sale will follow.


Image from http://www.hsptravel.com.au/uploads/pics/price_guarantee.jpg  

Stop bitching about dull presentations and do something!

Business presentations.  Hands up if you've ever sat through a dull, overly wordy Powerpoint presentation about which all you can remember is the boredom?  If anyone asked you what the content contained you'd draw a blank.  Now hands up if you've ever given one of these presentations?  I'm guessing all you felt was relief that it was over rather than elation that you had moved your audience.  You see as audience we want to be entertained, informed, enticed, provoked and stimulated, and yet as presenters we are terrified of differentiating ourselves. What's the deal?

First let me be clear that I am not talking about the big annual sales presentation, up on stage Steve Jobs style.  For those such events it is generally understood that highly visual, multi media, well paced presentations are appropriate.

I'm talking about the types of presentations where you are informing stakeholders about your business or strategic plan - what you've done, what you need to do and what you need to do it.  Too often these become templated, drone-like dull-fests that waste time and feel more like a homework check-in than articulating a business vision.  After all, matching slide headers does not a consolidated thought process make.

Why do we fall into this trap?

• Status quo bias - our tendency to stay with what's known.  If a templated Powerpoint pack laden with charts and narrative is what the CEO is used to, then that's what gets dished up. No one wants to rock the boat.
• Herding - our tendency to follow others and hide in the pack.  Now, given the invariable inter-company competition that goes on within all businesses, herding can seem counter intuitive - after all, each team is really trying to distinguish themselves as the best.  But our willingness to conform to a specified style of presentation is most definitely herding behaviour - we are choosing to not stand out. 
• Group think - the dynamic where conflicting views are suffocated in favour of the prevailing shared view.  Dissenting voices are not welcome.  The culture of dull-presentations is an embodiment of group think and if you yourself are uncomfortable about presenting in a different way, it's because group think rules.

Fear of losing face
Underpinning our resistance to stepping out of the convention presentation style is our fear of what happens if we do.  We are more frightened of what we have to lose (credibility, promotion, even our job) than gain (engaged audience, insightful questions, endorsement, recognition as a thought leader).

It's cowardice.

Am I being too harsh?  It could be argued that a conventional, templated presentation does it's job because the content rather than the style can take centre stage.  And of course there have been countless examples of sloppy "creative" presentations where the slides have undermined the message.  But I do not agree that slides with four charts and multiple statements does an effective job at articulating your message (unless of course your message is that "I'm really really smart and impressive because I've spent a lot of time on this slide").  These presentations are written to give the presenter comfort rather than sway the audience, and would more appropriately distributed as Word documents.

Tips to make great presentations

By first acknowledging what holds us back we can then use behavioural techniques to make memorable and evocative presentations.

• Vividness - make your core message vivid for the audience. Bring in props, use multi-media, use metaphors and analogies to help crystallise the message.  Ideally, make your presentation three dimensional - by this I mean take it off the slide and give your audience a sensory experience of what you are trying to convey.  If you are losing customers, bring in a tray of eggs and smash them to represent the extent of your customer attrition. If you are trying to stop operational inefficiency, bring in a bucket of water and pour it into a sink to show the money that is going down the drain.  You get the idea!  Your presentation will take on an energy and engagement that the business will be buzzing about for weeks.  
• Saliency - we overweight recent or memorable events, so try to be first or last on the program and use your vividness tactics to differentiate your message from all the bland presentations.  Use group think and convention as an opportunity to cut through by being different.  
• Tension - great movies, TV shows and novels create tension in their narrative before providing release.  Presentations should be no different.  Your job is to create emotional unease in your audience so they are engaged in your story, and when you have them, alleviate the tension by showcasing your solution. Putting all the answers up front in an executive summary means there is no reason for your audience to stay engaged through the story, and you therefore lose control of how the audience understands your plan.

Ultimately it takes courage to overcome the pressures of status quo, but I would hope that you are being paid for your individual talent rather than your ability to herd.  There is only one you, so how about injecting that into your presentation, being inspired by the payoff that comes with risk, and making your audience's day in the process?

For ideas on a similar topic, check out my piece on "Why We Hide Behind Big, Boring Reports".

For some great tips on creating memorable presentations, I recommend Dan and Chip Heath's "Made to Stick" and Nancy Duarte's "Resonate". 

Image from http://nobullets.wordpress.com/category/data-presentation/page/2/