Wednesday, June 22, 2011

McDonald's coffee guy; why complainers are hot

Bad coffee. For Melburnians, it is one of the sins along with disinterest in the weather and the absence of black clothing.  And so, McDonalds has launched its attempt to win custom back from people disgruntled by their burnt beans and insipid froth. Complaints, or more likely, declining sales have pushed McDonalds to admit it was dishing out bad product. 

Have you come across the TV ad?  It centers on a gentleman seen arguing with a bus driver. The scene is set that this fellow lives for complaining.  And yet, there he later sits enjoying a McDonalds brew without complaint.

What I find interesting about the ad is the portrayal of complainers.  This guy is a world weary, grey skinned, relatively unattractive man. Whilst McDonalds could have snaffled Hugh Jackman or a Cleo bachelor to play the role, that would have confused the message. McDonalds are inferring that complaints are an ugly behaviour, and that complainers are unattractive.

This is an interesting heuristic that is entrenched in most businesses.  The link between "complaints = problem = negative = cost = seek to eliminate" is extremely strong.  And this is where a fear of social media rears its head.  As long as you see complaints as a negative thing to be reduced, you are cutting yourself off from the best market feedback you can get.

 I know, I know.  You are going to say that customers are your priority, you take them seriously and you even monitor satisfaction.  But I would guess that the governing bias is still that when a complaint is received, it is seen as a problem for your business, not an opportunity.  Why?  Two principles from Behavioural Economics are at play.

Not Invented Here Bias - we have a tendency to shun the ideas of others. Working as a product manager, I certainly fall into the trap of thinking I know more than my customers...and I do, but about what the widget should do, not how that customer is experiencing it.  My subjective view must not blind me to the relatively objective view offered by the customer.

Status quo bias - it's more comfortable for us in the status quo.  A complaint might mean we have to step out of our rut and life might get more challenging. But here's the thing. Status quo is a misnomer in any market; you cannot stay stagnant because the world is not, and the complaints you receive are the market's way of telling you to get moving.

So here's my challenge to us all. When you next receive a complaint, I want you to imagine the person has the charm and looks of Hugh Jackman rather than the washed-out McDonalds man.  And I want you to take a deep breath, relax your shoulders, and absorb the gift of real-life market feedback.

PS as an aside, McDonalds is offering a free replacement coffee if you are dissatisfied with the brew.  A classic example of overcoming loss aversion by convincing customers they have nothing to lose (except of course their time).

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Thursday, June 16, 2011

Slapping the post; our need for completion

Slapping the post, tapping the fence, smacking the wall...I've seen runners do them all.  On Saturday a lady jogged up to the fence post, patted it once, and turned for home.  I've caught myself doing this when visiting a scenic location - walking to and touching some part of the landscape before leaving.  What does this have to do with business and Behavioural Economics?

We are geared for completion.  Humans like to finish, to see things through. In the case of running, it can mean physically marking your progress by slapping the post.  In a business context,
- If you manage staff, this means that when they resign or are reassigned from a project mid-stream, you would do well to have them conclude their contribution in the form of a presentation to you or other staff.  A handover session is not the same thing - ask them to formally present what the project is, what they did, and what is left to do. Why? Psychological closure for you and them.  Motivation will take a hit it you do not take steps to close-off the work.
- If you provide a loyalty program (like a coffee card) for customers, start them with points/stamps because they will be more compelled to finish the card.
- If you provide merchandise, offer things in collector's sets to compel people to attain them all. (You can look to fast food outlets for examples of this)

So when next devising a project or marketing activity, remember to include the compelling nature of completion to your thinking, making the most of our need to slap the post.

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Thursday, June 9, 2011

What can we learn from the magic of public holidays?

It's probably true that most workplaces are a happier place on Fridays.  People look forward to the promise of the weekend, sharing plans for two precious days away from the office. But as good as Fridays can be, that's nothing compared with a P-u-b-l-i-c H-o-l-i-d-a-y!  Public holiday long weekends have a magic about them that is hard to rationalise.  We use them to shape our year, punctuating the monotony of a Monday to Friday work week, and counting down the days as they approach.  And even once enjoyed, there lingers a "short week" psychological benefit upon return to work.

At the risk of over analysing something that may be obvious, what might Behavioural Economics say about our love of public holidays? After all, in purely rational terms, you can take day of annual leave and make it a long weekend anytime. Even better, this means you avoid having to battle crowds and service surcharges. 

Well, part of the enjoyment of public holidays is herding.  Unlike a self-made long weekend, a public holiday long-weekend is shared by many. Whilst this invariably creates crowds, it also creates enormous sense of collective enjoyment that you simply cannot generate otherwise.  Part of the magic is the collective anticipation of the long weekend.

But a larger part of our love of public holidays is that they are 'free'. Public holidays are free days, like unexpected bonuses. We don't have to earn them like annual leave, nor spend them.  There's no risk, no loss, no guilt.  In a sense, the opportunity cost is low. Compare this with a normal day of annual leave where the opportunity cost may be high because what you are trading is the flexibility to take that day at another time.

This is part of the challenge businesses face with staff who do not take sufficient of their annual leave entitlement.  For the business, they carry a large liability. For the staff member, they risk wearing themselves out.  Behavioural Economics might suggest that this is in many ways connected to 'loss aversion' where we don't want to 'lose' our accumulated leave balance; that annual leave is so precious that we only want to 'spend' it on something worthwhile.

So how can we as marketers and business managers apply lessons from the magic of public holidays?

Most obviously, consider time as a reward.
- For staff, an early knock-off time or even an occasional day off in recognition of great performance is probably worth more than any financial reward.
- For marketers, imagine a competition which gave the winner paid leave and/or a temporary resource for their employer to use whilst they kicked up their heels?  Or others like providing laundering or cleaning services to increase free time.

And more broadly, work on the building blocks of public holidays; they are diarised, well known and anticipated by many, offering freedom from the everyday schedule.  Weaving these elements into your staff management or promotional activity may give you a chance at capturing some of the public holiday magic. But most importantly, consider what loss you are eliminating. Make it guilt free and you should find success.

Wednesday, June 1, 2011

The going-to-work side of the street

"We located (our stores) in lobbies and on the going-to-work side of the street".

I just finished CEO Howard Schultz's 1997 book "Pour Your Heart Into it: How Starbucks Built a Company One Cup at a Time" (and no, I did not start reading it in 1997 smartypants) and the simple statement above is one that really resonated.  The going-to-work side of the street.  Simple, uncomplicated language to distill the key to Starbucks store location decisions and which speaks volumes about the clarity of Starbucks' mission to gain its audience.

So what's your going-to-work side of the street for your shop, your website, your sales pitch, your product, your marketing message? What need are you trying to serve? Where will your traffic be coming from? What will your potential customers be doing when you try to interrupt them?  Are you on the right side of the street?