Getting inside the customer’s head
What makes people tick? Anthropologists have been trying to crack that question for decades. It’s also the subject of fascination for marketers. Both have made great progress in figuring out what influences us and why we make the decisions we do.
At its simplest, behavioural economics is a discipline that helps us to understand how humans make decisions or why they perform particular actions. It helps us, as marketers, to incorporate that knowledge into consumer journeys and make the purchase process more intuitive. I’ve long been interested in the science and its effectiveness in helping to drive sales and create meaningful relationships between brands and consumers.
An enlightened age
As well as educating consumers through stories, the advertising industry needs to broaden what it provides beyond just product knowledge and benefits. Ads – and brands – need to give consumers experiences (as I’ve mentioned before). In this digital age, we’re all spoilt for choice when it comes to almost every industry, from the magazines we read to where we buy our socks. Brands need to work harder to understand consumers and their needs – and develop relationships with them based on the experiences they provide.
When applied to advertising, behavioural economics allows us to model and design choices that lead consumers naturally to the best solutions. It also enables us to look at consumers in different ways and understand them differently throughpersona research. This knowledge is built up from various decision models, based on an understanding of the consumer’s decision-making process. If we neglect this crucial process then we are in danger of going back to the emotional persuasion techniques employed in the “golden age” of advertising in the 1950s.
There’s nothing wrong with emotional persuasion – it’s still very effective in every channel. But modern communications problems are complex. To account for today’s multi-channel digital journeys and the near-endless choice facing consumers, brands have to create an experience that’s more connected and remembers their previous actions.
The problem with the 1950s model is that it assumes an unlimited media budget to buy awareness through ads. It also works better in less competitive marketplaces where product or price differentiations are clearer. The old model does not care where you buy from and assumes purchases are all made from the same places. Now, with increased consumer choice – which consequently means less product and price differentiation – the landscape has changed. What if you are an online retailer or a supermarket? What if you’re selling the same products as everyone else and want to create differentiation based on user experience? The old model doesn't cater for that.
With behavioural economics, you can align your planning with scientific research and thinking. You can answer the “why will they do it?” question based on factors that are not dependent on media spend but on customer touchpoints and context. Behavioural economics provides fresh perspective that can help to create advertising ideas that use the understanding of people and their actions to yield tangible and measurable business gain.
Step into the customer’s shoes
To leverage behavioural economics effectively, you need to know your customer inside out. Build personas of your typical customers and imagine them in context. Try to put as much detail as you can into who your customers are and why they “need” to buy your product at that moment. Imagine a situation where your product will be useful to them and think about how your communications can fit into that journey. How far away was your last point of communication from their point of purchase? Does their nationality, their location or the time of day affect their decision? Talk in detail about the things they do for fun and for work, the problems they face and what other products help them along the way. Quite often this exercise can open up ideas for potential product partnerships and joint promotions.
You can create as many of these profiles as you need to, but I suggest at least five for each situation – each with some variation in the channel through which a consumer finds you and why they choose to buy your product.
Now add behavioural economics into the mix. This is my favourite part of the journey because it’s where we get into the customer’s head and emulate what they’re thinking at the point of making choices. Treat it as an extension of profiling and use images and relevant content from newspapers and magazines to build a picture of the customer. Include descriptors that you feel are appropriate or make notes about things that would be important to this person. What can you actually help them to do?
To understand consumers, listen closely and follow them across multiple conversations and channels. Try to identify trends and common personalities. Then understand the micro choices they make along the way. In this decision-making journey we can add extraordinary value through behavioural economics.
Previously simple design considerations such as button location and colour now influence these micro choices and allow us to guide the persona on a more detailed path. There are many ways to do this and one example uses “choice architecture” to influence a “majority selection”.
Choice architecture means creating options that will influence the user to make a particular choice the majority of the time. If we offer a choice of three identical buttons, most people will select the middle one. This is the reason that the middle items on a shelf are usually emptied first or that when ordering from a set menu in a restaurant most people opt for items closer to the middle of a page (unless they have a favourite).
We can also consider authority factors. We are designed to trust and listen to figures of authority. If our advertising uses an authority figure it can be used to guide choices or to prompt a person to continue the journey that would otherwise have been abandoned.
These are just a few small examples of how behavioural economics can be applied to help drive sales. In a few weeks I’ll give you my list of the 10 most effective behavioural economics principles so you can take your strategy further.
It’s worth regularly reminding ourselves that it is a competitive world, and the reason brands are out there is to create differentiation and trust. This is partly through the quality of products and partly through the messages we send to consumers, but most importantly, it’s about the experience we give them. Perhaps modeling behavioural economics into your brand experience could give you the edge. Show your customers that you get what makes them tick and use this to give them a better experience. If you put the effort into understanding your customers, the rewards will go far beyond increased sales.
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