Consumer behaviour – Page 4 – Behavioural Design

All’s well that begins well

Published April 5, 2016 by Anand Damani

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 8^th 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.

Why focus groups cannot be relied upon

Published September 2, 2015 by Anand Damani

Marketers rely a lot on traditional research like focus groups to understand consumer’s motivations toward their brand, product and category. Researchers ask people for their opinion about their product, packaging or concepts to pick insights about their appeal, and get wonderful feedback that is sincere, detailed, and emphatic but has little relation to the truth.

Imagine you’re coming back from a party that was at a lavish penthouse of an industrialist. You say you had a lovely time and I ask you what you liked about it. You say “the drinks”. But did your joy really come from talking to the attractive woman who wrote the latest fictional best seller? Or was it something you really relished like the food? Or was it something subtler, like the quality of the music? Or the scent of citrus that filled the house? Or was it the fact that you got to network with influential people?

Leonard Mlodinow, author of many books including ‘Subliminal’ says, when we come up with an explanation for our feelings and behaviour, our brain searches our mental database of cultural norms and picks something plausible. In the above case, your brain might have asked ‘Why do people enjoy parties?’ and chosen ‘the drinks’ as the most likely hypothesis, if ‘drinks’ happen to conform to a set of standard reasons, expectations, cultural and societal explanations for a given preference.

In a study mentioned in ‘Subliminal’, women were shown four pairs of silk stockings that were absolutely identical, except that each had a different and very faint scent applied to it. The women were asked to choose their favourite and they found no difficulty in telling why one pair was better than the other. They spoke of perceived differences in texture, weave, feel, sheen and weight. Everything but the scent. In reality, stockings with one particular scent were rated the highest, much more often than the others, but the women denied using scent as a criterion. In fact only 6 out of the 250 women even noticed that the stockings had been perfumed.

Truth is we most often don’t understand our own preferences. Despite that, we usually think that we do. And when asked to explain why we feel a certain way, most of us, after giving it some thought, have no trouble supplying many reasons that sound plausible.

It’s a market researchers nightmare – you can’t even trust people to know what they prefer, leave alone why. That’s why we rely on the knowledge of the human brain, human physiology, cognitive neuroscience, behavioural economics and proven experiments conducted by the best in the world to understand human behaviour and create Behavioural Design solutions.

Small ideas make a big difference

Published May 5, 2015 by Anand Damani

There are lots of small everyday things that could benefit from being designed better. Things we take for granted in everyday life. But when designed well, things just work, leading to enhanced experience, satisfied customers, appropriate actionability, increased sales, etc. This post is about few of such small everyday ideas.

Like handles on doors. If there is a handle on the door, the tendency is to pull it. But almost all doors have a handle on the side it says push, too. If the door needs to be pushed, why have a handle? Simply keep it flat and we’ll push it.

When composing emails, wish there was a reminder to attach our files, when words like ‘attached’ or ‘attachment’ were found in the composed email.

‘No Parking on Odd dates 1 3 5’ and ‘No Parking on Even dates 2 4 6’ tend to be so cumbersome. We need to first think about what date it is today, then figure that its ‘No Parking’ on that side, which means we can park on the opposite side. Instead what if we had ‘Parking on Odd dates only’ and ‘Parking on Even dates only’.

Because there are two traffic signals in view at all times, one after the zebra crossing and one much ahead on the other side of the junction, we Indians always push ahead wanting to be first (in whichever race that is) therefore not stopping at the zebra crossing and not allowing pedestrians to cross. So to get cars to stop at the zebra crossing, only one traffic signal needs to be there, placed just before the stripes begin.

Instead of having to choose from financial retirement plans with complicated numbers, what if we could choose, by looking at pictures of different homes (1, 2, 3, 4 BHK) that could be bought with different levels of retirement income.

I often get asked about what mega-pixel camera on the phone is good. Fact is that we don’t understand what mega-pixels mean. What will be useful to us is the information of what mega-pixel matched what size of print. But we know this one won’t happen, else phone and camera manufacturers won’t be able to convince us to mindlessly upgrade.

Remember using the plastic card key in your hotel room to start and switch off the power. Wouldn’t it be convenient to have one in our home, so that we could start/switch off the power with one stroke and do away with the nagging feeling of not having turned off the geyser or gas or some other appliance after leaving home?

The tendency is to think of these design ideas as small (insignificant) ideas, but they are the ones that make for the most awesome product, service experiences and of course get us to behave.

The way a restaurant bill gets split affects what’s ordered

Published March 31, 2015March 31, 2015 by Anand Damani

How do you split the bill while eating out at a restaurant with friends? Equally? Or depending on whose had what?

In Germany diners usually figure out the price of their individual bills and no one feels bothered. But in Israel or US or India for that matter, such behaviour may be considered rude. Irrespective, the interesting part is how splitting the bill affects ordering behaviour.

Behavioural economist Uri Gneezy and colleagues divided students who didn’t know each other, into 3 groups of diners, based on how they paid the bill. In the first group, six diners (three men and three women) paid individually. In the second, they split the bill evenly. In the third, the researchers paid for the whole meal.

Turns out, the way you split the bill affects what you order. Of course people ate the most when the researchers paid. But when it came to the equal bill-splitting group, people tended to order more expensive items, than they did when each person paid for his or her own meal. Because for every rupee/dollar they ordered, they had to pay only one-sixth of the cost. So why not order the most expensive dishes? It’s about the incentives, not about individual personalities.

Uri Gneezy, says, “This is an example of negative externality – someone else’s behaviour affects your well-being. Let’s say you are a non-smoker, and a smoker sitting next to you decides to light up. He enjoys his cigarette, but you are also ‘consuming’ his smoke. The guy smoking has bestowed a negative externality on you. The party consuming the goods is not paying all of its cost. In the bill-splitting situation, the person enjoying the large, expensive lunch is doing the same thing. People simply react to the incentives they are facing.”

Source: Uri Gneezy, Ernan Haruvy and Hadas Yafe – The inefficiency of splitting the bill – Economic Journal 114, no. 495: 265-280 (April 2004)

Talk on Investor behaviour (Franklin Templeton)

Published November 8, 2017December 29, 2014 by Anand Damani

We spoke on Investor Behaviour at Franklin Templeton’s Independent Financial Advisor convention in Bali on 12th December.

Our presentation was about investor’s biases, heuristics and rules of thumbs. We also conducted a live auction that brought alive our irrational behaviour amongst the audience who participated in it.

The rest again is confidential material. But we will be posting many articles on behaviour – consumer, employee, shopper, investor, public that we promise.

Have an awesome year.

Behavioural Design for The Economist

Published February 11, 2015December 9, 2014 by Anand Damani

In a pilot for The Economist India, Briefcase demonstrated 20% savings of the customer retention budget.

In the challenging environment of magazine subscription renewals, Briefcase achieved similar subscription renewals as existing levels, but at 20% lesser cost. Thus demonstrating a 20% savings in the customer retention budget.

The rest of course is confidential.

The science behind Facebook’s experiment

Published December 9, 2014August 4, 2014 by Anand Damani

Read about Facebook’s experiment? The one in which they manipulated which posts showed up on the news feeds of 6,89,003 Facebook users. For one week, some users saw fewer posts with negative emotional words than usual, while others saw fewer posts with positive ones. People were more likely to use positive words in Facebook posts if they had been exposed to fewer negative posts throughout the week, and vice versa. Read about it here.

Love it or hate it, here’s the science behind the experiment.

Our behaviour is often influenced by sub-conscious cues. Priming shows that people’s behaviour may be altered if they are first exposed to certain sights, words or sensations. In other words, people behave differently if they have been ‘primed’ by certain cues beforehand. Priming seems to act outside of conscious awareness, which means it is different from simply remembering things.

Here are few other fascinating priming-related researches. Social psychologist John Bargh et al got participants in the first group to unscramble five words like ‘he it hides finds instantly’. For this group the random words were just to keep them busy, but for the second group, the sentences had lots of words, which were stereotypically associated with old people – old, lonely, grey, careful, wise, stubborn, courteous, etc. Then the two groups of people were made to walk a 9.75-metre strip. Those who’d been fed old-related words took a full second longer to cover the distance, than those who hadn’t.

Those primed were reminded about the idea of being old. Because we have habitual ways of thinking about old people – this idea got activated subconsciously and they acted in line with these stereotypes without even realizing it.

But we can improve people’s performance by just the same method. In another research, Asian-American participants were invited to take a test. Before they did, some were primed with the words that would activate stereotypes about Asian people, namely superiority at maths. This was done by flashing words on a screen for less than a tenth of a second: too quick to be perceived consciously, but slow enough for the subconscious to register.

Asian-Americans who had been primed with the stereotype got almost twice as many of the questions right as the other group. When researchers saw the data closely they found that after bring subliminally primed with an Asian-American stereotype, Asian-Americans attempted more questions. As if the stereotype made them try harder – a habit of persistence.

In another research asking participants to make a sentence out of scrambled words such as fit, lean, active, athletic made them significantly more likely to use the stairs, instead of lifts.

Says Jeremy Dean of www.psyblog.co.uk, “Everyday we are bombarded with subtle and not so subtle cues of how to behave. We process these automatically and subconsciously, and over time these impulses emerge as our habits, which we start performing without conscious thought.”

Feel like sipping some cocktail by the beach?

Sources: John Barg, M. Chen, L. Burrows – Automaticity of social behavior: Direct effects of trait construct and stereotype activation action – Journal of Personality and Social Psychology 71, no. 2 (1996): 230

M. Shih, N. Ambady, J.A. Richeson, K. Fujita, H.M. Gray – Stereotype performance boosts: the impact of self-relevance and the manner of stereotype activation – Journal of Personality and Social Pyschology 83, no.3 (2002): 638

Wryobeck and Chen (2003) Using priming techniques to facilitate health behaviours. Clinical Psychologist 7:105–108.

Think you can predict your own behaviour?

Published December 9, 2014June 2, 2014 by Anand Damani

Your answer is most probably a yes, right? You may even be saying how stupid it would be, if I couldn’t even predict my own behavior. But as with most posts on behavior, you may be surprised to know the difference between intention and behavior.

One of the studies by Ji and Wood titled ‘Purchase and consumption habits: Not necessarily what you intend’ tested if participants could predict their own consumption of fast food, how much they watched TV news, and how often they took the bus over a week. Each person was asked how much he or she intended to carry out each of these three behaviors over the coming week (intention). They were also asked how often they had performed each behavior in the past (habit). Importantly, over the next 7 days their actual behavior was recorded.

The results showed that when the habits were weak, the intentions tended to predict behavior. So if you didn’t watch TV news that much, your intention for the coming week, was likely to be accurate (whether the intention was to watch more, less or the same). So far we seem to be right in predicting our own behavior.

Here’s the interesting part. When the habits were strong, the intentions tended to predict behavior less. So if you were in the habit of visiting fast food restaurants, it didn’t matter much whether you intended to cut down or not. Chances are that your habit would continue irrespective of your intention.

It gets worse. Participants, who had the strongest habits and were the most confident in their predictions, were the least successful at predicting their behavior. Ouch. So much for our perception of self-control.

Says Jeremy Dean, author of popular blog www.psyblog.co.uk, “When we perform an action repeatedly, its familiarity seems to bleed back into our judgments about their behavior. We end up feeling we have more control over precisely the behaviors that, in reality we have the least control over.”

When you think about the things you might do on a weekly basis in the same context – visiting a restaurant or meeting up with friends – it feels as if these decisions are highly intentional. But the research suggests that we have less intentional, conscious control over these types of behaviors than we would like to think. That’s why our intentions fall weak in the face of habits, and need Behavioural Design to change them, rather than campaigns aimed at increasing motivation.

Source: M.F. Ji and W. Wood titled ‘Purchase and consumption habits: Not necessarily what you intend’ – Journal of Consumer Psychology 17, no. 4 (2007): 261

Ecommerce will soon be bigger than you can imagine

Published December 9, 2014September 10, 2013 by Anand Damani

Let us tell you why we think so. Our starting assumption is that most of the shopping online in India in the future will be done via plastic card (credit or debit card) rather than cash, because of convenience. We understand that cash on delivery is convenient too, but you still got to have cash to pay, so it’s not as convenient. And paying by card is a lot different than paying by cash.

Paying by card fundamentally changes the way we spend our money. When we buy something with cash, the purchase involves an actual loss – your wallet feels lighter. Credit cards, however, make the transaction more abstract and we don’t really feel the downside of spending money. As George Loewenstein, neuroscientist at Carnegie Mellon says, “The nature of credit cards ensures that your brain is anesthetized against the pain of payment.” Brain imaging experiments suggest that paying with plastic literally inhibits the insula. Insula is the region of the brain associated with negative feelings. It’s the brain area responsible for making sure you don’t get ripped off. So when the insula is inhibited, it makes a person less sensitive to the cost of an item, making him/her more willing to buy.

Spending money by card doesn’t make you feel so bad, so you spend money easily. And buying stuff over an app is even easier with the pressing of the ‘Buy Now’ icon. Not to forget, the Internet is full of deals that make people end up buying things that they don’t even need.

A way of boarding that saves time and lowers blood pressure

Published December 9, 2014June 24, 2013 by Anand Damani

Warning: This post is the longest we’ve ever written, but we think you are likely to find it rewarding.

There are long queues at boarding no matter which airline you travel by. And once inside the plane, we’re often waiting in line once again for someone in front us whose is trying to keep his/her cabin luggage overhead. Imagine the time that gets wasted for you and the airline. In this industry, more than any, time is money. The quicker the airline can board, the more it will be on-time, the more satisfied will be its customers, the more money it can make. But how can this be made possible?

Southwest Airlines in the US has a unique solution to this problem. Southwest doesn’t have seat assignments. Here’s how it works:

In airlines that assign seat numbers, when you’re trying to get to your seat, you’re not only waiting for someone to find their seat, you’re also waiting for them to put their bag in the overhead bin. So if you’re assigned to say, Seat 26A, you must wait until Seat 22C puts his/her bag in the overhead compartment.

But if you’re on Southwest Airlines, the procedure and behaviour of passengers is completely different.

So let’s say you’re flying on Southwest with a carry-on bag. You’re anxious about getting a window seat and making sure your bag gets in the compartment, so you check-in online 24 hours beforehand (the beginning of the check-in window), and are placed in boarding group A. Group A gets to board first.

Southwest keeps in mind that most people don’t care if they sit in row 10 or row 25, but they are likely to have a strong opinion about having a window or an aisle seat.

Fast forward to the airport. You arrive and get into the queue for group A, confident that there is a very good chance that you’ll get the seat you want and overhead space.

Now you’re walking onto the plane and suggested to move towards the further rows. The person in front of you has a bag and spots an aisle seat in row 25, and stops to put their bag in the bin. You’re a window person, and see one in row 21. The person behind you also wants a window, and stops at row 18. Notice what happened here: no one was held up because of the person in front of them. You all sit down, and the process repeats.

The boarding process becomes similar to a conventional boarding process as the seats fill up – if you’re in Group C (last to board) and say there’s only one window seat left and it’s at the very back of the plane, you have to wait 20 seconds for the person in front of you to claim their aisle seat at the front.

Compare this to a conventional boarding process: not only would you have had to wait for Seat 21C to put his bag in the compartment, Seats 21 A, B and D have to fight with their bags, and the other seats’ bags in order to fit their bags in. Multiply this by 30 rows, and you can see how this adds time to the boarding process.

What Southwest has done is eliminate that 20-to-30 second delay for 80% of passengers and instead limited it to, say, the 30% of passengers at the end of Group C. These passenger-to-seat delays add up quickly; and with roughly 130 seats each at 20 seconds each, that’s potentially 43 minutes of delays during seating! This, among other reasons, means that Southwest can turn around their planes in about 25 minutes, the fastest of any airline.

And not to forget, lower your BP. Travelers who are the most anxious about getting their preferred seat and their bag in the bin are more likely to check-in at the first second, earning them a coveted spot in Group A. But people in group B know there is, say, a 50% chance they’ll get a good seat and space in the overhead bin. Group C knows their chances are slim of getting either. The point here is that everyone has a rough idea of their probabilities and also that the probability is the direct result of their own actions, i.e., how quickly they checked in.

And the best thing I like about this way of boarding: I’ll never be seated in the wrong seat!

Big thanks to Michele Walk, Operations Manager at Engage for the information.

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