Assimilate or disintegrate: How your buyers respond to new information

Last week the Federal Minister for Health Tanya Plibersek condemned Imperial Tobacco's move to introduce a form of stylised plain packaging ahead of the mandatory and uniform olive green, unbranded version.  It is no surprise that the tobacco companies are trying everything to secure their product in market, and so putting the ethics of tobacco products to one side, let's consider a key behavioural lesson from this industry as it reacts to change. 

Assimilate or disintegrate
When faced with new information, we seek to assimilate it with our existing view of the world, much like fitting a piece of a jigsaw puzzle.   We are motivated to maintain our internal narrative - how we explain the world to ourselves - and will actively seek to resolve what is known as cognitive dissonance; the unpleasant sense that something just doesn't fit right.  What do we do to alleviate this feeling? Distort, refute or ignore the new information.  Anyone who has been in a meeting when a stakeholder has flat out rejected new facts/research will know what dissonance looks like..it's officially known as "Information Avoidance".  In fact, just follow how the political parties respond to the release of studies to see reactions to dissonance writ large.

In adjusting its packaging ahead of the government changes, Imperial Tobacco were seeking to bridge the old and new worlds for its consumers with the hope of softening the reaction.  They were assimilating the changes - on their terms - so that their consumers would be less likely to reject the new information.

For your business, consider how any new information - new product or service, pricing, conditions -  will likely be received by your market.  How are you helping to bridge the gap between old and new so that the change will be assimilated rather than disintegrated?

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Behavioural lessons from one of the best websites

My heart began to race.  It was the last one and I knew there were four other interested buyers.  No time to muck around, I better go in for the kill. Where's my credit card?

Welcome friends to the world of booking accommodation online, a goldmine of examples of behavioural economics applied to the customer experience.

Let's look at just three of the techniques used by one of the best exponents, Booking.com.

Sample listing from Booking.com

Create a sense of urgency
No surprise, but part of getting customer commitment is a sense of urgency.  Urgency comes from our fear of missing out, so this is how Booking.com use it;  

• Notice that the number of rooms left is displayed next to the City View room deal. Trust me, when it gets down to 1 you jump pretty quickly.  Chances are you will even stop looking for reviews in your rush to secure the room - the overall rating will do.

Create a sense of normalcy
As much as we deny we are persuaded by what others do, we are.  Being a normal part of the 'herd' is core to our functioning, so here's how Booking.com use it;

• There are 6 other people looking at this hotel - good, because it means I have great taste. But worrying that there are six people looking and only three of the city rooms available!  Urgency strikes again.
• Last booking - others have trusted this hotel enough to book
• Guest reviews - whilst the impartiality of reviews may be questioned, they do carry psychological weight because they are ostensibly written by people like us

Create a sense of value
We need to make estimations of value whenever we are looking to buy.  If the business doesn't control how its price is contextualised we will rely on whatever's in our head - dangerous for any business.  You must therefore anchor the prices relative to others. For example, carry more expensive options to encourage sale of the cheaper option, and always list your original price along with its marked down amount.  Booking.com;

• Notes that the price for the City View room has been marked down, and obviously so.  No good just showing your 'sale price' if you don't also show the original because your customer may not understand how great a deal this is.

I've booked a lot of accommodation over the years and whilst there are many sites - Lastminute.com.au, Expedia.com, Wotif.com amongst them, I keep being drawn back to Booking.com for its interface and communication of information.  Let me know if you agree that it is one of the best, and whether you have used similar behavioural techniques in your business.

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Just make a decision will you!!! Overcoming decision quicksand to get the sale

You've been dealing with this customer for what seems like an eternity.  On paper, the decision is an easy one, some might say trivial, and yet they can't seem to make up their mind.  You are going around in circles, with them demanding more and more information and as a consequence, them getting more and more confused.  Oh no!  You are in "decision quicksand"!

When you make something unexpectedly difficult, you get quicksand
In their study "Decision Quicksand: How Trivial Choices Suck Us in" (2012) Aner Sela and Jonah Berger examined why trivial choices suck us in.  In short, the study looked at the association between difficulty and importance and found that if a choice was unexpectedly difficult, then it's perceived importance increased. What had been trivial has now been elevated into a decision worthy of time and effort.  And what better way of churning up time and effort than seeking out more options, sadly taking us further away from being able to make a choice.

Using quicksand in your business
You can use quicksand in two ways in your business.

Strategy 1. Intentionally make it hard
If you want to increase the perceived importance of a choice, make it more difficult.  Provide more options, use complicated language, complex processes and protracted explanations.  In Daniel Kahneman's language, you will be engaging "System 2" thinking which tends to interrupt an otherwise low engagement decision.  Why would you want to?  To force consideration of your product when you are not the preferred incumbent.

A word of warning though, an unimportant decision that is difficult might increase the time involved but it will likely decrease satisfaction.  Makes sense doesn't it?  We end up resenting being stuck on something that we think we should have easily dealt with.  For those who monitor customer satisfaction, it may be worth looking at how your customers perceive difficulty relative to importance because where effort is greater than reward, satisfaction will suffer.

Strategy 2. Simplify
More commonly, you will want to make the decision process for your customer as easy as possible. Fewer options, simple language, easy to follow processes and straight forward explanations.  Here "System 1" thinking will be most likely ruling the roost meaning your customer will be on 'auto pilot' and go with the flow.  Your job of course is to set up the flow!

Getting out of quicksand
So what do you do with the customer is stuck in decision quicksand? Go back to the basics of what they first talked about and why they contacted you. Fight their urge to get more information by concentrating on framing their decision using simple pros and cons.  Something along the lines of...

"Let's go back to when you first walked in.  As I see it you have two choices in what we've talked about, A or A-.  Now A has xyz whereas A- has 123. From what you've described to me, A- is really what you are looking for.  Does that seem right?  OK. That is a great decision, let's sort out (next steps)".

Knowing that decision quicksand can affect us all should help you come to terms with customers who seem to be frustrating you on purpose.  Take the view that they are not being deliberately difficult and instead look at how you set up the decision for them.  After all, you're the choice architect here!

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(Image from http://www.gsbhealthandsafetysigns.co.uk/danger-quicksand-sign.html)

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 http://www.businessinsider.com/inside-the-man-isle-2012-7?op=1)

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. 

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(Image from http://www.bikyamasr.com/69294/india-launches-first-talking-atm-for-blind/)

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 http://www.imsmigration.com.au/content/Visa_refusal)

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.