Monday, August 27, 2012

Special aisle for blokes? Rethinking the shopping behaviours of your market

A great little story grabbed my attention the other day.  A supermarket in New York had set up "Man Isle", an aisle dedicated to the shopping needs and behaviours of men.

According to the Business Insider, Westside Market created the section containing chips, beer, razors, condoms and beef jerky based on two things; more men were shopping and there were common goods that the guys were shopping for.

What can we take from this?

1. Reduce pain points for an under serviced market segment
Structuring their supermarket around the buyer's experience was a great way of reducing pain points and encouraging habituation.  The signifiant pain point? Overwhelming choice. The Man Isle reduces choices to a minimum and positions complementary items (eg beer and chips) together.  The lesson is always to look at your business from your customer's perspective and ensure you make doing business with you as easy as possible.

2. Target a Profitable segment
Westside had researched the trend toward male shopping and determined the segment was worth targeting. This is important - it's only worth customising the experience if you expect to gain a return on your investment through market share, volumes or margin.  Part of the consideration should of course be any impacts on the rest of your market. For instance, if Westside had been very aggressive in its targeting of male shoppers it may have inadvertently disenfranchised female shoppers, so striking a balance in how it catered for different shoppers was vital.

3. Give it a try

The team at Westside created the aisle on the basis of insight, observation and throwing a list of ideas together.  They knew what they liked shopping for, so that was the basis of how they stocked the aisle and they are willing to test and learn on the basis of market response. We can sometimes forget that our own expectations of customer service are a great source of knowledge for how our customers like to be treated - after all, we are all consumers, and that the main thing holding us back from growth is fear of failure.

Westside have differentiated themselves by rethinking how their business can better serve customers.  I hope you can too.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

(Image from

Monday, August 20, 2012

Don't underestimate the impact of fees on consumer behaviour

Imagine you are at an ATM withdrawing cash. Before you do, a message comes up reminding you that there will be a $2 fee for accessing your money through an ATM that is not part of your bank's network.  Do you proceed or do you cancel the transaction?

If you were an economist with the Reserve Bank of Australia (RBA), you would have predicted that most would proceed with the transaction. After all, it's only $2.  We lose that behind the couch.

Well, much to the chagrin of RBA financial wizards, they didn't count on the impact of consumer 'irrationality'.  Instead of consumers banking like they had in the past, when the fee for a foreign ATM withdrawal was buried in terms and conditions and you only found out when you looked at your account statement, consumers have turned away from using these ATMs. 

What can you learn from the behavioural economics of ATM fees?

Red rag to a bull
People are more likely to adapt to a new price if they are not constantly reminded of it - it's like a red rag to a bull.  In this case, there was no choice for the ATM owners - the communication of the fee was mandatory, but in your business you may have more flexibility.  If you can, parcel the fee in with the price point and/or change once and not every time the customer pays.

I'm buying the good not the service
In previous posts I've talked about delivery fees.  For instance, order through Amazon and you pay less for the book but get hit with shipping.  Order through Book Depository and you pay more for the book but shipping is 'free' (ie included).  

People hate service fees so much because they decouple the value of the good from the service in getting it to them. Why? Because you retain the product not the service. Your opportunity is to gain  advantage by offering to wipe the cost of service (ie offer "free delivery" or "free installation") because 'free' is extremely persuasive and 'free' on a hated cost of service even more so.

Choose your number 
Was the fact that the fee is $2 the issue?  I think it did have something to do with it.  A lower fee structure, say 50 cents or 90 cents and more customers would have proceeded with their transactions  because dollars and cents are psychologically different.  If I told you that you are entitled to a $2 discount after you've purchased $30 worth of groceries does that hold more or less appeal than me offering you 4 cents off a litre of petrol (which works out about $2 a tank if you are lucky)?  Judging by our slavish devotion to petrol vouchers, 4 cents is extremely persuasive.  As a business you therefore need to consider the number context of the fee or discount you are using.

The big lesson out of the RBA experience is that people's irrationality should not be underestimated. Where something looks inconsequential on paper, it can have dramatic behavioural impacts. Your job is to make sure irrationality works in your favour, and behavioural economics is your guide to knowing how. 

To find out more about what happened with $2 ATM fees, read Peter Martin's article "Banks' $2 fee has big effect"in The Age. 

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

(Image from

Monday, August 13, 2012

Customer refusals: The difference between "I don't" and "I can't"

When talking a customer through their objections, how much attention have you been paying to the way they say no?  A recent study looked into the differences a "don't' vs "can't" can make to behaviour, so let's tune our ears into the implications for business.

I Don't vs I Can't signal different motivations

Imagine you are trying to eat more healthily.  You are offered a piece of cake.  Do you say "I don't want it" or "I can't eat that"?  According to Patrick and Hagtvedt's "I Don't" versus "I Can't": When Empowered Refusal Motivates Goal-Directed Behaviour" (2012) you will be much more effective in dodging temptation if you use "I don't"and this is because it provides you a stronger sense of underlying empowerment.  In essence, you are more resolved to say no as an extension of who you are.   If you say "I can't"you are really externalising your refusal, inferring that you would except that you can't for some external factor.

However, Patrick and Hagtvedt also discovered that there are times when "I can't" can be more effective then "I don't".  The difference is in whether the motivation behind the goal directed behaviour is internal (it's who I am) or external (it's for a specific reason eg wedding).  Therefore, if I was eating more healthily to lose weight for a wedding, saying "I can't eat cake till after the wedding" will be more effective in the short term than "I don't eat cake (because this is who I am").  The stronger impact of "can't" in this scenario was due to it shifting from simply being an impediment to something the person "must not do", signalling accountability for any breach.

Overcoming your Customer's refusal

So where does that leave you when handling your customers?

Turn I Don't into I Might
A customer who uses "I don't" is likely to be internalising the decision.  No doubt it is scary to have them state "I don't need this widget...", and you may feel it is all over.  Your best bet to talk them around is to address how their sense of self is going to be affected by your product/service.  Appeal to them as a smart decision maker, as someone who is looking for the best outcome.  To get on the right wave length, imagine your customer saying "I am someone who decided to buy this widget"; what would it do for them in terms of status, authority, esteem, and/or profile?

It is extremely important in this scenario to give them easy ways out of their "I don't" commitment so use language like  "similar clients have opted to test using our widget so they could be sure they were getting the best value from their current supplier."  Shifting them from "I don't" to "I might" is at least a change in the right direction.

Turn I Can't into I Will

For customers using "I can't", you may need to delve a bit deeper to understand if they are giving you the "I can't (but I really can if you talk me into it)" or "I can't because (external reason)".  Probe them on what is preventing them from proceeding - is it just an impediment that you can overcome (I can't because I haven't budgeted for it) or are they at serious risk of breach (eg I can't because I am currently contracted to another supplier).  Your goal is to get them saying "I will" because this infers you are both  working to a future state where they have overcome whatever is holding them back right now. 

In relation to what is probably the most common objection in business, "I can't because I just don't have the budget", you will know yourself that money can usually be found if the desire is there.  It's therefore your job to flame the desire whilst mitigating budget issues (through payment options, timing, pricing and so on).

So are your ears better tuned into your customers now?  Remember to pay attention to the words they are using to communicate their refusal so that you have the best chance of changing their minds.  You can do it.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

(Image from

Monday, August 6, 2012

Three tips for influencing your buyer

Decisions, decisions. If you are in the business of influencing buyers to buy then you have lots of decisions to make about how best to communicate your message to secure the behavioural outcome you want.  Here are three tips to get started.

1. Eliminate barriers to buying
The Red Box eliminates a barrier
Often we get stuck by convention, and it's only when a new market entrant pops up that we see opportunities for doing things differently.  For instance, a few short years ago it was convention to buy clothes from a bricks and mortar retailer, and now that has been changed with the emergence of online. The barrier of "what if it doesn't fit?" has been mitigated by free return policies.

And convention has been that you have to wait for your dry cleaner to open their doors to drop off your clothes right?  Not in a suburb of Sydney where The Red Box allows its customers to get on with life according to their schedule, not the shop's.

Tip: Look for any barrier to the buyer doing business with you.  Opening hours, location and trading policies (eg payment options) are a great place to start.

2. Reduce choice regret 
Part of your buyer making a choice is assessing whether they will regret their final selection. Buyer's will try to avoid putting themselves through any pain of regret which means they may defer their purchase unless you help them over the hurdle. 

Coles' My5 forces choice
On the subject of choices, I think one of the failings of the Coles' FlyBuys program's "My5" is that it forces people to make a choice about which items they will buy most often and commit to that as the basis of their discount.  The risk is that whenever they buy things other than those nominated they regret their decision - creating an unhappy psychological tension that will dilute the 'loyalty' proposition.

Tip: money back guarantees and/or price match guarantees can reduce choice-regret.

3. Normalise the behaviour
We all want to be normal.  I know, I know, you are above average but for most of us we are greatly persuaded by what others are doing and we seek social acceptance. Why else would be buy ridiculously expensive cars and use Facebook?  If you can tap into the desire to be normal through your marketing communications you will increase your chances of success.
Rexona ad uses normalising

One of my favourite advertising examples is Rexona deodorant's "Do you sweat more than normal?". This works because no one really knows what a 'normal' amount of sweat should feel like, we just know how we sweat.  The ad plants the seed of doubt that we are not normal and provides a solution to that tension. 

Tip: Use "most popular" and "best selling" to help guide your buyer's choice but be selective and authentic - buyer's will be able to smell if you are lying.

Communicating with your buyers in an effective manner is a deceptively complicated task. Set yourself up for success by being clear on what behaviour you want from the buyer, eliminate any barriers to buying, reduce any risk of regret and use the desire of the buyer to be socially accepted to influence their decision.

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.