What’s the best way of breaking a brand’s loyalty?

What's the best chance of breaking a brand's loyalty?

All along marketers have believed that satisfied customers are loyal customers. All along marketers have believed that loyal customers mean profits for companies. But data by behavioural scientists are making us revisit established theories of consumer behavior and marketing.

For example, research by Reichheld and Teal has revealed that between 65% – 85% of people who switch brands are either satisfied or very satisfied. If satisfaction was the key to keeping customers loyal, why are satisfied people switching brands?

Another research by Szymanski and Henard reveals that on its own, satisfaction predicts very little of people’s behavior, perhaps as little as one-quarter.

This actually makes sense. As we have seen by recent previous posts ‘Think you can predict your own behavior?’ and its Part II, strong habits rule over intentions. In the face of a strong habit, we sometimes don’t buy the things we intend to. Instead, we buy what we bought before.

Says Jeremy Dean of PsyBlog when the initial choice is made to buy a product and subsequently made again and again, in the same context, then it’s likely to become a habit. Meaning we make the same choice without considering the options, because deliberation hurts the brain.

Habits can be so strong that according to research by Lal and Bell, habitual shoppers often don’t respond very strongly to incentives like special offers. Which makes creating shopping habits an even more profitable activity especially for brands.

So what is the best chance a brands got at breaking another brand’s loyalty?

The answer is – major life events. Consumer behavior expert Alan Andreasen was one of the first to point out that there are particular moments in people’s lives when their consuming habits are most ready to change. He figured the more major life events people experienced, like changing employer, getting married, moving house or the biggest of them all, having a kid, the more they had changed brands. Major life changes mean change in situations, change in environment, which means old habits get disrupted and the opportunity to break in increases.

Sources: F.F. Reichheld and T. Teal – The loyalty effect: The hidden force behind growth, profits, and lasting value – Cambirdge, MA: Harvard Business Press, 2001

D.M. Szymanski and D.H. Henard – Customer Satisfaction: A meta-analysis of the empirical evidence– Journal of the academy of marketing science 29, no.1 (2001): 16-35

R. Lal and D.E. Bell – The impact of frequent shopper programs in grocery retailing – Quantitative marketing and economics 1, no. 2 (2003): 179-202

Psyblog – www.psyblog.co.uk 

If you want something to happen, write it down

If you want something to happen, write it down

Hopefully by now you are beginning to appreciate how a seemingly small design intervention can make a huge difference in behaviour change. Here’s one more story that illustrates this point.

British psychologistsPaschal Sheeran and Sheina Orbell conducted an experiment in two of Scotland’s busiest orthopaedic hospitals. The participants were elderly patients from low and middle class households, who had undergone hip or knee replacement surgeries.

Recovering from a hip or knee surgery is incredibly arduous. While recovering the smallest movements can be excruciating. But it is essential that patients begin exercising almost as soon as they wake from surgery, even before the muscles and skin have healed, or the tissues will clog the joint, destroying its flexibility. But exercising is so painful that many patients skip out on rehab sessions, especially the elderly ones.

So the patients were each given a booklet after their surgeries that detailed their rehab schedule, and in the back were thirteen additional pages – one for each week – with instructions: My goals for this week are _________________? Write down exactly what you are going to do. For example, if you are going to walk this week, write down where and when you are going to walk.

Three months passed. The patients who had written exact plans in their booklets had started walking twice as fast as the ones who had not, as well as, getting in and out of their chairs, putting on their shoes, doing laundry, all of it much faster, than the ones who had not written anything in the booklet. Why did that happen?

The psychologists examined the booklets of those who had filled it and found it filled with specific detailed plans about the most mundane aspects of recovery. Like one patient wrote that he would walk to the bus stop on a particular day to meet his wife coming back from work at 3:30pm and the time he would leave, the route he would walk, what he would wear and which pills he would take if the pain became too much. Someone else who would exercise each time she would go to the bathroom, wrote that she would automatically take the first step right away after standing up from the couch, so that she wouldn’t be tempted to sit down again.

All focused on how they would handle a specific moment of anticipated pain. They built plans around inflection points when they knew their pain – and their temptation to quit – would be strongest.

Patients who didn’t write out any plans were at a significant disadvantage, because they never thought ahead about how to deal with pain. They didn’t deliberately design their habits. So their resolve abandoned them when they confronted the first few steps.

So if you want something to happen, write all the steps down.

Source: Paschal Sheeran and Sheina Orbell – Implementation intentions and repeated behaviour: augmenting the predictive validity of the theory of planned behaviour – European Journal of Social Psychology Volume 29, Issue 2-3, pages 349–369, March – May 1999

We learn better from failure than success

We learn better from failure than success

I’m sure you’ve been through many training programs or ‘workshops’ as they are commonly called if you’ve been part of corporate culture, no matter which part of the world you are from. Besides these workshops being much-wanted breaks from regular work, we have doubts about how many translate to improving real productivity. Most of the training programs focus exclusively on the positive – on learning how to make good decisions via successful cases, but behavioural science shows that there is a better way of training.

Behavioural scientists Wendy Joung, Beryl Hesketh and Andrew Neal chose a group of firefighters as participants because their decisions carried important consequences. Training and development sessions were conducted amongst two groups of participants that included several case studies. One group learned from case studies that described real-life situations in which firefighters made poor decisions that led to negative consequences (error-based training). The other group learned from case studies in which firefighters avoided negative consequences through good decision-making (success-based training). Researchers found that firefighters who underwent error-based training showed improved judgment and were able to think more adaptively than those who underwent success-based training.

The reason for the efficacy of error-based training is that it increases attention of participants during training and makes the training a more memorable experience. The discussions after each case study in the error-based group were much more animated, with participants eager to find better ways to have resolved a problem and avoid mistakes, while the success-based groups were more subdued in their conversations and otherwise indicated that they were less engaged overall. Engaged trainees are going to learn more and retain more than their less-engaged colleagues.

So the next time you think of conducting a workshop you could benefit by having case studies, videos and anonymous testimonials of mistakes followed by a discussion of what actions would have been appropriate to take in those similar situations.

Source: Wendy Joung, B. Hesketh, A. Neal – Using war stories to train for adaptive performance: Is it better to learn from error or success? Applied Psychology: An International Review: 55, 282-302 (2006)

Behavioural Design on comedy show ‘Cyrus Says’

Behavioural Design on comedy show Cyrus Says

Human behaviour is funny. That’s why popular comedian Cyrus Broacha invited us to understand what Behavioural Design is all about.

We spoke about why Indian men stare at cleavages, touch inappropriately, spit in public, why we honk indiscriminately, don’t allow pedestrians to cross in India, why we behave irrationally in general and what can be done about it. We spoke about how men look at women’s bodies and how women look at men’s bodies, how to reduce smoking, how to avoid over-eating, why its time for the Indian Government to begin applying behavioural science like the US and UK governments are applying. We spoke about behavioural science principles like social proof and overconfidence and our projects Bleep and People Power. Download Saavn to hear the non-sense – http://www.saavn.com/s/show/Cyrus-Says/2/2mYLF,EZgkk_

Need a favor? Ask your opponent

Need a favor? Ask your opponent

Most of us feel shy asking for favors. And if it comes to asking for a favor from an opponent or someone who doesn’t view us in a particularly favorable light, we see it as totally objectionable, lest we get rejected or disliked. But behavioural science tells us that such hesitation is unwarranted.

In a study by behavioural researchers Jon Jecker and David Landy, participants won some money from the experimenter in a contest. Afterward, one group of participants was approached by the experimenter, who asked them if they’d be willing to give back the money because the experimenter was using his own money and had little left. Almost all agreed. The other group of participants was not approached with any request. All the participants were then anonymously surveyed about how much they liked the experimenter. Jecker and Landy found that those who were asked to do the favor rated the experimenter more favorably than did those who were not asked to give the money back.

Robert Cialdini, Professor of Psychology and Marketing at Arizona State University says, “People are strongly motivated to change their attitudes in ways that are consistent with their behavior.”

The participants who returned the money back must have said to themselves, “Why did I go out of my way to help this experimenter I don’t even know that well? He seems like a good person”, when asked how much they liked the experimenter.

Often we are in need of some kind of help from a colleague or neighbor who for whatever reason doesn’t view us in particularly favorable light. We might hesitate to ask for the favor because we’re afraid of rejection or dislike. So we put off asking for a favor, whereas doing it would be a brave thing to do and more importantly, as the research indicates, is likely to work. Try it. You don’t have much to lose anyways. At most, the person won’t do you the favor. But if the person does it, he/she will counter-intuitively start liking you.

Source: Jon Jecker and David Landy – Liking a person as a function of doing him a favour – Human relations Volume 22, no. 4, pp 371-78

All’s well that begins well

All's well that begins well

Any event that has a good ending is good even if some things went wrong along the way. That’s why ‘All’s well that ends well’. But ‘All’s well that begins well’ can be true too. Especially in the case of customer loyalty programs. Every retailer looks to increasing customer loyalty by offering incentive programs like frequent flyer programs or a club membership program. But amongst so many kind of programs which ones manage to perform better?

Behavioural researchers Joseph Nunes and Xavier Dreze conducted a research to find out. They handed loyalty cards to 300 customers of a local car wash. Every time the car was washed the loyalty card was stamped. There were two types of cards: one required 8 stamps to receive a free car wash and the other required 10 stamps, but 2 stamps were already affixed to the loyalty card. So both cards required 8 washes to get the free car wash.

After several months of the researched program, the researchers found only 19% of customers in the 8-stamp group made enough visits to claim their free wash compared to 34% of the 10-stamp, All’s-well-that-begins-well group. The latter group also took less time to complete their 8th wash, taking an average of 2.9 fewer days between car washes.

According to Nunes and Dreze, reframing the program as one that’s been started but not completed, rather than one that’s not yet begun, motivated people to complete it. Additional findings from research suggested that the closer people got to complete a goal, the more effort they exerted to achieve that goal. Data revealed that the amount of time between visits decreased by about half a day on average with every additional car wash that was purchased.

Now we know when to ask people for help on a project. One that’s already underway but incomplete, rather than one that has to start from scratch, is likely to be the project that gets help. So get started, help will be on its way.

Source: Joseph Nunes and Xavier Dreze: The endowed progress effort: How artificial advancement increases effort: Journal of consumer research 32: 504-12.

Post-it Notes can be really sticky

Post-it Notes are really sticky

Behavioural scientist Randy Garner has done an intriguing piece of research that demonstrates the power of handwritten Post-it Notes.

He sent out surveys to people with a request to complete them. The survey was accompanied by either (a) a handwritten Post-it Note requesting completion of the survey, which was attached to a cover letter; (b) a similar handwritten message on the cover letter; or (c) the cover letter and survey alone. More than 75% of people who received the survey with a Post-it Note filled it out and returned it, compared to 48% of the second group and 36% of the third group.

Garner wondered whether it was due to the attention-grabbing neon colored sticky notes. So he sent out a new batch of surveys. A third of the surveys came with a Post-it Note with a handwritten request, a third came with a blank Post-it Note, and a third had no Post-it Note. The handwritten Post-it Note got a response rate of 69% compared to 49% for the blank Post-it Note and 34% for no Post-it Note.

Why did it happen? Although handwriting a Post-it Note is so simple and seemingly insignificant thing to do, people recognize the extra effort and personal touch and feel the need to reciprocate this personal touch by agreeing to the request.

Garner found that the handwritten Post-it Note did more than just persuade people to respond to the survey: those who received the survey with the handwritten Post-it Note returned it more promptly and gave more detailed answers to the questions. In fact the handwritten Post-it Notes that were more personal with initials and a ‘Thank you’ had response rates higher than the rest of the handwritten Post-it Notes.

Using Post-it Notes can not only earn a profit for 3M, but for you too.

Source: Randy Garner – Post-it Note Persuasion: A Sticky Influence – Journal of Consumer Psychology (2005)

There’s at least one benefit of having a common name

There's atleast one benefit of having a common name

Everyone I know who is told that his/her name is common gets peeved, including myself. But hey we found one huge benefit of having a common name.

In a study by researcher Randy Garner surveys were sent by mail to complete strangers. Accompanying the survey was a request to complete and return it to the person whose name was either similar or dissimilar to the name of the survey recipient. So a person whose name was Robert Greer got the survey from Bob Gregar or a woman named Cynthia Johnston got the survey from Cindy Johanson, in the similar name group. The dissimilar name group of course got surveys from dissimilar-sounding names. Those who received the survey from someone with a similar-sounding name were twice as likely to fill out the surveys than names that were dissimilar (56% compared to 30%).

Findings such as this one show the power and subtlety of similarity as a cue that people use to decide whom to help. That’s why pointing out similarities in any domain, including names, birth dates, religion, hometowns, schools, alma mater, etc. in discussions with any person before making your request or presentation could get you a favorable response.

Alternatively, if you’re designing a program/project/initiative/product for a particular client, you can harness the power of people’s natural tendency to be attracted to things that remind them of themselves in the name, title or label that you give it.

Source: Randy Garner – What’s in a Name? Persuasion Perhaps – Journal of Consumer Psychology (2005)

When should you admit that you are wrong?

When should you admit you are wrong?

Imagine you are the Marketing Director of one of the reputed airlines and your airline has frustrated hundreds of passengers due to lack of preparation and poor decision-making in the face of severe winter weather. All other airlines cancelled flights in anticipation of severe weather and returned to normal service within few days. In contrast the airline that you are the Marketing Director of, gave hope to passengers that the planes would fly – yet remained out of service for many days. In short your airline let customers down. Would you focus the blame on external weather conditions or on internal factors relevant to the company’s operation?

If you chose external weather conditions, you should leave your job and join an airline like Air India. You will probably find a lot of like-minded people there. Or may be the organization you work with is like Air India and would not support your decision. But if you chose to focus on internal factors relevant to the company’s operations, consider yourself a brave person, with a good sense of humility, to have admitted one’s mistake. Indeed a very rare thing amongst people and organizations. And if you would have chosen to acknowledge internal factors, not only would it benefit your organization, it would benefit your career too. Let me tell you why.

Says behavioural scientist Fiona Lee and her colleagues say that “Organizations that attribute failures to internal causes make it appear as having greater control over its own resources and future. The public might assume that the organization has a plan to modify the internal features of the organization that may have led to the problems in the first place.”

Lee and colleagues have tested this idea by conducting a study in which participants read one of the two annual reports of a fictitious company, both of which explained why the company performed poorly over the last year. For half of the participants, the annual report blamed internal (but potentially controllable) factors for the poor performance and for the other half, the annual report blamed external (and incontrollable) factors for the poor performance. Turned out that the first group viewed the company more positively on a number of different dimensions than did the second group.

Not just that, the researchers collected statements from actual annual reports of 14 companies over a 21-year period and discovered that companies that pointed to internal factors to explain failures had higher stock prices one year later than those that pointed to external factors.

Organizations that attribute failures to internal causes come out ahead not only in public perception, but also in terms of profit line. No reason to believe why it should not work for individuals. So next time you make a mistake, admit it and follow it up with an action plan demonstrating that you can take control of the situation and rectify it.

Source: Lee, F., & Peterson, C., & Tiedens, L. – Mea culpa: Predicting stock prices from organizational attributions – Personality and Social Psychology Bulletin 30(12): 1-14 (2004)

Mirroring others behaviour can get you likes

Mirroring others behaviour can get you likes

Often during a meeting or a negotiation we subconsciously mirror our colleagues’ or negotiators’ posture. The typical response is to change our posture, as if there were something wrong with being influenced by the other. However the following research suggests the exact opposite: Mirroring behaviour results in better outcomes for both.

Researcher William Maddux and colleagues conducted an experiment wherein MBA students were instructed to subtly mirror their partner during negotiation (e.g. lean back if the other person does) or not asked to mirror their partner. When one party was instructed to mirror the other, the two parties reached a deal 67% of the time. When they weren’t told to mirror the other, the parties reached a deal only 12.5% of the time.

Based on additional data from the research, they concluded that mirroring behaviour led to increased trust, and that increased trust typically led one negotiator to feel comfortable disclosing details that were ultimately necessary to break a stalemate and create a win-win situation for both parties.

Another research by Rick van Baaren and colleagues found that waiters at a restaurant increased their tip size by nearly 70% simply by matching their customers’ verbalizations, repeating back word for word the customer’s order, as opposed to saying “okay” or merely nodding.

Social psychologists Tanya Chartrand and John Barg say that matching behaviour of others creates feelings of liking and strengthens bonds between two people. It makes us say “yes” and do nice things for people we like.

At the same time, you don’t want your interaction to come across as mocking the other person. So the key is subtlety.

Sources: William Maddux, Elizabeth Mullen and Adam Galinsky – Chameleons bake bigger pies and take bigger pieces: Strategic behavioral mimicry facilitates negotiations outcomes – Journal of Experimental Social Psychology 44, no. 2: 461-68 (March 2008)

Rick van Baaren, Rob Holland, Brejge Steenart, Ad van Knippenberg – Mimicry for money: Behavioral consequences of Imitation – Journal of Experimental Social Psychology 39, no. 4:393-98 (July 2003)

Tanya Chatrand and John Bargh – The chameleon effect: The perception-behavior link and social interaction – Journal of Personality and Social Psychology 76, no. 6: 893-910 (June 1999)

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