Let me make you an offer you can refuse: does loyalty work?
Can you buy loyalty? Brands across the world are spending billions of dollars trying to find out. But TRA’s Andrew Lewis says most companies are ...
Research by the US Wine Society has shown the single biggest thing you can do to help people enjoy wine is to tell them it’s expensive. And while we like to believe we’re rational creatures, a huge number of our decisions are made unconsciously. So, as our understanding of the way the brain works improves, Ben Fahy looks at whether marketers and agencies are effectively making use of this knowledge.
Before 1870, diamonds were a very scarce resource and were only found by the handful in Brazil and India. But after the discovery of diamond pipes in South Africa, there was a sudden glut, which meant their intrinsic value was likely to decrease. To limit that, a cartel (now called De Beers) was created in 1888 to control the global supply and maintain the perception of scarcity. But the cartel also needed to increase demand for diamonds. So in the late 1930s, it set its social engineering plan in motion in the US with the help of ad agency NW Ayer.
Over the next few years, the cartel paid movie producers to include scenes featuring leading men giving women diamonds, it helped create the famous song about diamonds being a girl’s best friend, it provided society photos to newspapers and magazines that focused on the stars and their large stones, it developed the ad campaign ‘a diamond is forever’ (and, so, shouldn’t be sold), it had fashion designers talk about the trend towards diamonds and it even gave lectures about diamonds in high schools. So by rigging the game and manipulating culture in its favour, the idea that diamonds equalled romance—and that the bigger the diamond, the bigger the love—took root.
If you look at it rationally, it’s a manufactured con. But humans are, as Dan Ariely’s book suggests, predictably irrational creatures and the strategy to play on our emotions and create social norms worked brilliantly. As investigative reporter Edward Jay Epstein wrote in his famous Atlantic story of 1982, the ‘diamond invention’ managed to convert “tiny crystals of carbon into universally recognised tokens of wealth, power, and romance” all around the world and, as of last year, 75 percent of American brides wore a diamond engagement ring at an average of US$4,000.
Nudge nudge, wink wink
For many, these various ‘nudges’, a phrase coined by Richard Thaler and Cass Sunstein in their 2008 book, have made buying a diamond for a loved one an almost sub-conscious short-cut; a tangible—and close to inevitable—manifestation of love. And, depending on your view of the world, it’s either one of the greatest or most manipulative examples of consumer influence the world has ever seen.
World-renowned ad man Rory Sutherland is a vocal proponent of governments and businesses using the principles of behavioural economics (BE) to improve human well-being and economic progress and he helped set up a specific business unit called #ogilvychange to help its clients do just that. And while this area is complex, confusing and often contradictory, he offers a concise rundown on what those main principles are in the 2014 Guide to Behavioural Economics: “1) Small changes can have large effects, 2) Psychology is really important. 3) People can’t always explain why they do what they do, or what they want. 4) Preference is relative and social and contextual, not absolute. 5) Trust is never a given; commitment really matters. And 6) People satisfice [a portmanteau of satisfy and suffice].”
He says these six things are not widely assumed in decision making and the theory of the rational man that always optimises his utility has held sway in economics for decades. But most agree the so-called ‘homo economicus’ is largely mythical and Sutherland believes the neo-classical model of economics is largely disparaging of marketing and doesn’t really factor in irrationality and the importance of sub-conscious thinking.
Of course, marketers and advertisers have been attempting to influence consumer behaviour in subtle and not-so-subtle ways for decades, perhaps even centuries. And one of the criticisms often levelled at the industry—and particularly the retail sector—is the idea that it’s practising some form of mind control. What those critics tend to forget is that the world is full of influence. The architecturally designed spaces we inhabit, the signs on the road, the music in a restaurant, the most-read stories on a website, the average-use table on your water bill, the type of floor you’re standing on, the wine list you receive when you sit down at a restaurant, the stories you hear in the media, the uniforms worn by those in authority, the values instilled by your family, the recommended retail price … they are all subtle cues that condition us to a certain mode of behaviour.
As Jeff Malone, the man who has recently arrived in New Zealand to run the local outpost of #ogilvychange, says “there is no such thing as neutral choice architecture.” What the critics also forget, he says, is that no matter how well you understand human behaviour, you can’t make people do something they don’t want to do. If someone doesn’t like bananas, it’s unlikely you will be able to convince them to eat a banana. But as Sommer Kapitan, lecturer (assistant professor) in marketing at AUT, says, you can try to push people who may be inclined to eat a banana in a certain direction by understanding how information is processed by the brain. And, if the smell of baking bread being pumped out of the Subway store works for one in ten people, then the importance of the subconscious—or as she calls it, sensory marketing—becomes an enticing prospect.
Sutherland believes the advertising industry has been deceiving—and under-estimating—itself for decades in this regard: “Unnerved by books such as The Hidden Persuaders, by attacks on motivational research and by an experimental study of subliminal advertising effects in cinemas (which it later transpired was bogus) they disingenuously played a get-out-of-jail-free card by pretending that advertising worked exclusively within the realm of conscious awareness. This act of denial had some terrible side-effects. It created a strange culture within marketing where everyone pretended that all persuasion occurred through reasoned argument alone. As a result of this convenient fiction, important aspects of human behaviour were effectively off-limits for about 50 years. The denial of subliminal effects also made marketing/psychology much less influential than it deserved to be.”
For him, “our perception of, and reaction to, reality is subjective. How you feel about products, or even about your life, is at least as important, and probably much more important, than the product or your life’s objective characteristics”. FCB’s planning director David Thomason believes the best advertising is proven to be over the long term. And while the bean counters might not agree with the view that “there is no sensible distinction to be made between value created in a factory and value created in an advertising agency,” he is in Sutherland’s camp and thinks that advertising is part of the product.
“It probably sounds like an ad agency trying to defend itself, but you don’t just buy the physical item. You buy what’s attached to it and it genuinely adds enjoyment to it and neuroscience proves that’s correct. If it’s got a Coke label on, you’re actually getting more excited, it’s not just the chemical interaction on your taste buds.”
Lewis Road Creamery’s chocolate milk was a great product, but the madness seemed to be less about the taste and more about the enjoyment derived from finding it and sharing that experience. And Kapitan agrees. She points to a study that gave women empty Victoria’s Secret bags to carry around a mall and just doing that made them feel more elegant. Another study had MBA students use a Harvard pen and it made them feel more confident and powerful. Thomason says it even applies to the type of undies we’re wearing, even though most people, thankfully, aren’t going to see them.
“It’s the idea that we can subtly get in there and change attitudes,” Kapitan says.
Or, as ICG executive director Mike Hutcheson likes to say, you’re drinking what you’re thinking, something proven very literally by a study that saw more German wine than French wine purchased when German music was being played in the store. Of course, when asked why they chose the German wine, none of the customers mentioned the music as the reason.
In the real world
Thomason believes a lot of the academic stuff is just catching up to what those working in the persuasive arts intuitively knew. Creatives have long worked on the basis that something likeable and emotional will be more effective, something that was brought into sharper focus during the creative revolution in the 1960s; Kapitan says advertisers have always looked at what attracts peoples’ attention best, whether it’s the colour used, the size of the imagery or the fluency of the reading; and the main goal of branding is to create a short-cut in the consumer’s mind (Ries and Trout’s concept of positioning). So Thomason doesn’t believe a deeper understanding of cognition is completely changing the sector, but it is a form of scientific validation for the industry’s long-held beliefs and in many cases, the principles of behavioural science are being used to make creative work even more effective.
"Essentially we want to be talking about the same movie, or the same brand. Of course there are exceptions, but we are a herding animal. And I think most people would say this has the biggest impact on our behaviour." David Thomason
In an age where efficiency often seems to trump imagination and where accountability is demanded, Malone believes the language of marketing often comes across as bullshit to everyone else in the c-suite. So he thinks BE could also help solve what he feels is marketing’s PR problem.
“BE doesn’t just open up new opportunities. It gives marketers a better way to sell them into their organisations.”
Thomason, who is part of FCB’s global Decision-making Institute, says the New Zealand office’s early focus on behaviour change (which is now being rolled out around the world) initially came about as a result of all the work it was doing with government clients. He says social marketing has recently gone through something of a revolution and it shifted from ‘don’t do this because bad things will happen’, to ‘here’s a funny ad and something you can do to get a positive outcome’. So is this change in approach based on science? According to one of the world’s leading authorities on positive vs. negative incentivising in social marketing, ‘we don’t know’.”
Thomason says it’s all about culture, about what’s trendy at the time, although he believes government has learned from commercial marketing, where the product or service being advertised always provides an answer to a problem.
“We shifted to positive role modelling with ALAC. We did a big study on how people responded to that plus we were reading all about BE stuff and it’s bloody obvious when you think about it. You can’t tell people what not to do. People run from problems. You have to offer a solution.”
In the commercial realm, he points to its work on Mitre 10’s ‘Easy As’ as one of the best examples of using BE techniques to help customers and drive sales. The company’s core purpose is about ‘the unique satisfaction of a job well done’, so he says it uses the herding principle (DIY is in our DNA, so if you don’t have it you’re not part of the herd), the identity principle with the two guys standing side by side in the ad (‘you don’t want to be this guy’) and chunking, or splitting tasks into manageable bites, as seen in the practical videos. Similar behavioural principles were also applied to the Electricity Authority’s ‘What’s My Number’ campaign, which encouraged them to take the first step without mentioning the trickier steps that followed and the showed other people’s savings, and The Journal, a step-by-step online programme that aimed to help those with depression.
“It’s about making decisions easy,” says Thomason. “… Authority is a shortcut, ads are a shortcut, what that brand says about me is sort of a shortcut.”
This can also be seen in action when you look at recommended settings, because the more unsure we are about something, the more likely we are to go with the default option (we’re also less likely to add options than to delete them, hence dodgy airlines automatically adding various extras online).
So does knowledge mean power? Can we beat the system if we know we’re being persuaded and make a rational decision based on the information at hand? Sort of, although Kapitan says that while you may think you’re finding the best deal, frugal people have been proven to be more susceptible to messages about sales, so you’re probably still being influenced. Some rationalists believe that because information is now so freely available, the power of brand is declining and rational choices can be more easily made. But Thomason says there’s very little talk about what happens before that searching starts. Why did you decide to go to Fiji? Why did you put Subaru on your list when thinking about a new station wagon? Why do you think of Mitre 10 when you need a hammer? And that’s why Kapitan says planting the seed in someone’s mind is so important.
“The idea is that once you’re on the ‘customer decision journey’ we’ll influence you along the way, but most of the stuff that’s influenced your decision happened to you before you had a kid or needed nappies. You just happen to know that Huggies is a good brand.”
There are no simple answers here. And as Thomason says, one of the biggest issues with BE is figuring out the behaviour you’re trying to change.
“One of the things that’s been concluded about BE is there’s not much consistency in which principle will apply in different contexts.”
And making it even more difficult is that for every rule (eg. make it easy, something marketers have been taught to do for years), there are often contradictions (eg. make it difficult so you create a sense of scarcity or exclusivity, as can be seen with many luxury brands, ivy league schools or the cable company that made customers dig their own trench).
“Sometimes if you put hurdles in front of them it makes it more appealing, more of a challenge and it makes it more sticky,” Thomason says.
So are marketers using behavioural economics principles well? Thomason believes we’re understanding more about it, but a lot are getting worse at it by making things difficult and asking customers to interact with them on a variety of different channels. And the rise of personalised communications, while cool to a point, does have its drawbacks.
“You don’t want to choose a brand that no-one knows about. That’s a big danger for direct. We want to talk to the one guy who wants to buy a brand new 5 series BMW and no-one else, but he wants everyone else to know what this is about … Essentially we want to be talking about the same movie, or the same brand. Of course there are exceptions, but we are a herding animal. And I think most people would say this has the biggest impact on our behaviour.”
Of course, BE isn’t just advertising or communications. That’s just one little piece of the equation. But Malone says most ad agencies are guilty of talking about attitude change or awareness rather than using these principles to create actual behaviour change, something #ogilvychange hopes to address in this market. Thomason admits shifting attitudes doesn’t necessarily shift behaviour, but sometimes it’s a precursor to that, something that NZTA has shown over the years with its Safer Journeys work.
“When you’re a hammer, every problem looks like a nail,” says Malone. “Conversely, when others see you as a hammer, they’ll only give you more nails. It’s why marketers often only give agencies problems they’ve already decided can be fixed with an ad.”
"It’s natural for people to think that big problems require a big solution. It’s called the proportionality bias, but that’s not always the case." Jeff Malone
If you’re embracing BE wholeheartedly, Thomason says it has to be used in the call centre, in IT, in merchandise and in all the other areas of a business, “otherwise you’re just talking about something rather than changing the experience”.
He says the modern agency is in a rush to say ‘we’re not just comms’, “but if we’re honest the vast majority is still comms and it will be for some time.” He also says many agencies have a bias towards big ideas that are crafted until they’re perfect, so it’s difficult for them to embrace the trial and error mentality that’s required to make the most of behavioural science.
Ironically, retail advertising, which is often maligned for its quick and dirty nature, has long employed behavioural tactics, whether it be 50 percent off, while stocks last, or as seen on TV. Retailers have also been experimenting with instore techniques for decades. And while some of the tactics have been used so much that they’re borderline cliché, they still work.
So should marketers focus on the emotional or the rational? A paper written by one of his colleagues in South Africa called ‘The Big Easy’ talks about targeting everyone to make it look like everyone’s doing it and then making it easy to do whatever it is you want people to do.
“That’s the fundamentals of all behavioural thinking.”
Thomason believes there is currently a tension between short- and long-term effectiveness and it appears as if the short term is winning that battle because results can be seen almost instantly.
“If you’re trying to get a short-term result, then you probably are more towards the rational end of things, but you still use scarcity and it’s less about creative. But even a retailer needs to be positioned as the go-to option. Think of John Lewis and their Christmas ads. [Effectiveness expert] Peter Field’s magic number is you should be doing 60 percent brand, 40 percent retail. It becomes very difficult to separate them, and I don’t know what the methodology was, but that’s their formula.”
Interestingly, he says studies from the IPA and AdMark say that under six months (ish), creative, award-winning campaigns are actually less effective and over six months they’re more effective.
“That’s a fucking huge issue, because increasingly a lot of the campaigns we’re doing and winning awards for don’t even run for six months. It’s got to be a major generalisation, and there has to be some stuff that gets more attention in the short term because it’s cool and creative, but for real brand building stuff, that’s a correlation.”
It may seem like a cop out to promote both approaches. But that’s what the research shows—and, as Daniel Kahneman’s book Thinking, Fast and Slow says, the two-system set-up is also how our brains work.
“The biggest effects of advertising are long-term,” says Thomason. “It sounds like a weak defence to say ‘if you didn’t do that campaign your sales would’ve gone down’, but if you don’t do it, ten years later that will be the case. Being known is important as well. In some debates about advertising effectiveness they say there are only two things that matter 1) you get seen by the audience and 2) they know who it was for.”
And all the rest, such as the creative idea, emphasises those two things to try and ensure the brand is the first one to be associated with a category, or at least a sub-category.
Malone says Virgin Atlantic realised brand building wasn’t all about comms when instead of getting rid of the salt and pepper shakers that were regularly stolen by business class passengers, it added the words ‘pinched from Virgin Atlantic’ to the bottom (it also made ice cubes in the shape of its founder Richard Branson’s head). He says it realised it’s often the small things that matter most and that people remember. And this aligns with one of Sutherland’s famous suggestions: instead of taking the rational approach and spending billions to shave a few minutes off a train journey, it would be a better (and far cheaper) idea to hire supermodels to serve you champagne, thereby enhancing the experience and changing the way you think about travelling.
“It’s natural for people to think that big problems require a big solution,” says Malone. “It’s called the proportionality bias, but that’s not always the case.”
Thomason says digital brands are probably the masters of using BE techniques, but many of the small changes that often create results are just not very exciting. Google’s really simple home page is a good example. And Facebook has also created big changes from small tweaks on its platform (last year it was lambasted for its role in an experiment it conducted on users without consent that showed it was able to modify users’ emotions through changes to its algorithm).
“It’s shifting from communications to engineering experiences, but it’s not novelty that matters in that case, it’s ease.”
Malone believes government institutions are also leading the way in the area of BE because they often don’t have large media budgets. For them, it’s often about efficiency, which is the core of strategy and planning. And they also have to be accountable. Following the principles of BE allows governments and businesses to experiment in small areas, rather than spend money on big campaigns or conduct nationwide research that is most likely based on claimed behaviour, rather than actual behaviour. We can’t explain our unconscious decision-making, which means there’s little point asking a rational, logical question like ‘does enjoying this ad make you more likely to pay more for the product in the future?’
“Who’s going to say yes to that?” asks Thomason (who points out that pre-testing campaigns is proven to make them less effective and the only thing that correlates with effectiveness in pre-testing is likeability).
Keep it simple
Sometimes the most efficient solution can be the simplest. As an example, Malone points to a highway in Chicago that had some dangerous curves and where speed was an issue. Rational messaging about the danger didn’t help. But painting some narrowing lines on the road to trick drivers into thinking they were going too fast did. It was basically a brain hack and Thomason says a similar principle applies to shared pedestrian zones where different road surfaces are proven to make you slow down.
These are evolutionary responses and our behaviour is affected when we sense a change in our environment, he says. Kapitan points to a study by one of her colleagues who pumped the subtle scent of strawberry through a lecture theatre. When students were asked to take a lolly at the end, all the red lollies were taken. When the smell wasn’t present, red and green lollies were taken equally.
“The idea is that you can change really big important things by making these little tweaks and they use the same examples over and over again,” Thomason says, such as the experiment in a hotel room to get guests to re-use their towels. Focusing on abstract concepts like ‘saving the environment’ or ‘this hotel does three tonnes of washing every day’ is far less effective at changing people’s behaviour than showing them that the majority of people who stayed in the hotel reused their towels.
Another oft-used example is the major e-commerce site that replaced the “register” button with a “continue” button and added a message saying that registration wasn’t required to checkout. As the case study showed, this simple change increased sales by 45 percent—$15 million in the first month, and $300 million in the first year.
It’s unclear if that site was selling diamonds. But, given the industry’s understanding of human behaviour, it wouldn’t be entirely surprising.
This story originally appeared in the May/June edition of NZ Marketing.
Can you buy loyalty? Brands across the world are spending billions of dollars trying to find out. But TRA’s Andrew Lewis says most companies are ...
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