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Libraries, Kindles & Product Recommendations

Recently, I found myself in my local library, casually browsing over a wide selection of books. Best-seller lists tried to capture my eye by being first in my line-of-sight. The burgeoning shelves of the non-fiction world, filled with countless variations on the tried and tested ‘who-dunnits’ made their presence felt. The relatively unknown world of sci-fi winked coyly at me from the opposite side of room. And two thoughts occurred to me.

Firstly, I’m most likely a statistical anomaly; the only person in London between the ages of 11 and 65 who’s in possession of an actual, physical library card. And secondly, I can choose any book I want to.

Books

Books, books, large and small, one and all

I can go with what I know and look for a familiar authour’s name or genre. Or I could venture as far out into uncharted territories as I dare. Or something inbetween. And that’s what I did. I quite literally started judging books by their covers (front & back, though, of course – I’m not a total literary heathen). And out I walked with two; one I enjoyed immensely from a genre I knew and another which was fairly underwhelming, from an area new to me (I gave up 1/3rd of the way though; life’s too short to trudge through bad books or bad coffee – and certainly never at the same time). The latter was clearly out of my comfort zone. But learning what you don’t like is just as important as its reciprocal. You still learn all the same, more so in many cases.

And then it dawned on me. The chances of my having a similar experience online these days are growing more and more limited. My entire online ecosphere is designed around providing me with more of what I’ve bought before, my prior histories, what I’ve consciously sought out – most likely aligned to my prior tastes and experiences. It’s more of the same, over and over again. The conclusion of that line of thought leads to a narrowing of my consideration sets over time to even more of the safe, tried and tested options, time and time again.

That sounds like a special kind of hell to me. One that’s so much worse than the experience of learning that a certain style of book isn’t for me. It’s the reason why many Facebook feeds serve only to entrench prior held beliefs; we simply see more of the views that we’ve expressed an interest in before. We’re becoming less likely to meet a fresh way of looking at an old problem. And if, by chance, we do, we’re so entrenched and awash with prior held views, we’re likely to dismiss it as an opponent’s extremist view more readily than we might have in the past.

kindle

Please, sir, I’d like some more

For me, this is where Kindles fall down. Netflix, too. Potential pitfalls in the highly successful Amazon  approach. Recommended shows that are a slight variation on what you’ve just watched. Other users who enjoyed this book also liked this other, pretty similar one. Try this shirt to go with the new jeans you just bought, it’s kinda different to the last one you bought.

The joy of discovering the unknown, the unfamiliar, and the learning that goes along with it becomes easier and easier to pass us by. We’re awash in a world of big data, telling us what we like to read, how we like to dress, what we like to watch. But lacking in a world that helps us to discover the unfamiliar to us. And that’s a truly emotional experience. That’s an opportunity to delight, reframe and reposition a brand, service, product in our eyes. Change our previously held perceptions or stances. Open up our consideration sets.

discovery

It’s not a world where reams of data that delve into past behaviours will ever reveal to us, but it’s a world where so very many real people actually exist and live. And one that brands, through their online strategies, are increasingly closing off.

 

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Taxes, Letters and Social Proof

Wrongly or rightly, one of the biggest challenges towards Behavioural Economics is the question of “Yes, so what?”. To varying or lessor degrees, people might find an interest in the subject but inevitably a discussion around the topic will turn towards practical implications involved with the discipline.

And therein, for me, often lies the problem. Behavioural Economics is not an answer to all of your societal or marketing problems. It’s more often than not something that’s even new to us. What it provides us with is a framework for understanding decision-making and a vocabulary for explaining what we intuitively feel to be true. And what does all that mean? It means that it’s the little things that count.

Mum: here for one’s money.

Here’s a practical example. Britain’s official tax collecting body, Her Royal Majesty’s Revenue & Customs (HMRC – great name, by the way, saying no to Mum is always harder), was struggling to effectively manage the process of tax receipts. To combat this, a variety of letters and communications were written and targeted towards late-payers. Typically, these approaches focused on the penalties at stake for late or non-payment, more often than not financial or legal ones. And, to be fair, they worked for some people but for many others they simply had no impact.

So the HMRC adopted a new approach. It involved adding one single sentence to their standard letter. This sentence led to the collection of GBP560m of the GBP650m debt that was the focus of a pilot study – a clearance rate of 86%. By way of contrast, the previous year’s standard letter led to the collection of GBP290m of a possible GBP510m – a clearance rate of just 57%.

What was this sentence that carried so much weight? All that was required was to simply and truthfully inform letter recipients of the large number of fellow citizens who do pay their taxes on time. Social proof. People’s behaviour is largely shaped by the behaviours of those around them, in particular those with whom they strongly identify.

We’ve all been in that photo

This isn’t a new concept. It’s not break-through or radical. But it’s a scientific backing to explain something we’ve all experienced – peer pressure. It’s powerful. It’s influential. Using this empirically sourced knowledge in small, seemingly indiscernible ways can have a large, financial impact on our communications or efforts to influence.

In a world where marketeers are increasingly battling to ‘cut-through’, create awareness of just simply be noticed – however briefly – doesn’t it make sense to make the small, cost-free changes that have proven abilities to influence decison-making?

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Uncategorized

Make Me Suffer en route to Berlin

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This September, instead of running away from a problem, I’ll be running for one – as I take on the Berlin Marathon on behalf of MacMillan Cancer Support. It’s a charity that is intimately close to my heart for a variety of reasons. My goal is also to use it to join our colleagues across the pond and qualify for the Boston Marathon.

In my efforts to raise money for this worthy cause, I’m going to level with you:

I can’t offer delicious homemade baked goods.

I can’t offer family entertainment in the form of song and dance.

But I can offer my body. (Not in that way, apparently that’s illegal in the UK) – …I can run.

To kick things off – I’ll be running the inaugural Hackney Half Marathon this Sunday. If you make a donation before Sunday (22nd June) and email me (chrisjames531@gmail.com) your prediction of what time you think I’ll run, I’ll enter you into my competition. The Top 3 predictions closest to my official finishing time will each receive a prize…

Please feel free to donate whatever you would like, but as these things are, let’s be honest, always a little bit tricky – a starting point could be that JustGiving estimates average donations on their site amount to £14.25.

Lastly – there’s nothing better than enjoying a good lie-in, safe in the knowledge that some sucker is out there at 6am running – trust me, I’ve been there, I know. So as my offer to you, I’ll be your sucker in one of 2 other donation options:

  1. £20+ Donation – I’ll dedicate a 15km to you with personalised proof of route and exhaustion
  2. £30+ Donation – I’ll dedicate a 20km+ run that I’ll suffer through for you – complete with proof, too.

To find out more about why I’m doing this and of course to donate – please click here.

Thanks – I’ll be off now,

Chris

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Behavioural Economics

Baggage Claims, Walking & Customer Experiences

You can be forgiven for rolling your eyes and sighing when you hear the phrases ‘customer experience’ or ‘customer journey’. They’re ubiquitous in the meeting of any marketing-minded groups. But they’re important because, however jargon-laden the phrases might be, they’re a part of each one of our daily lives – like it or not. We all have them. And nothing embodies the concept more than the process of Queuing.

A Zero Sum game?

No one likes to queue. There’s no reason why you would. It causes us to feel any range of emotions, none of them pleasant. But a logical assumption with queuing is that the longer the queue, the worse the experience. Let’s probe this by looking at one of the location of a common queuing experience – the airport.

Houston Airport was recently experiencing a large number of complaints from customers due to the length of the waiting time at baggage carousels. The airport responded to this by employing more staff in order to increase the efficiency of handling baggage. As a result, they significantly reduced the waiting time down to 8 minutes. But the complaints still continued.

Airport staff then turned to observing customers. And what they noticed was that, on average, customers spent 1 minute walking through the terminal to the baggage claim and then the remaining 7 minutes waiting at the carousel. So they approached the problem from a new direction – literally. They moved the arrival gate further away and re-routed the bags to the furthest carousel. As a result, customers now had to walk 6 times longer to claim their bags, but once they arrived at the carousel, their bag was waiting for them. Complaints dropped to zero.

The reasoning is simple – occupied time (spent walking) feels shorter than unoccupied time (waiting at the carousel). And this relevant impact has a huge effect on our overall experience.

This isn’t a ground-breaking revelation and it’s not meant to be – that’s not what behavioural economics sets out to achieve. But it does represent the common ways in which we approach problem-solving – from the perspective of efficiency. How often do businesses turn first to problems of efficiency when debating customer experience improvements? Efficiency may be the friend of rational man, but it’s not always the first port of call for us humans.

Changing your perspective of a problem is a great way for any marketer to start changing an experience.

The interminable wait

There’s plenty more to learn about the queuing process and behaviour – stay tuned for future posts on the topic.

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Behavioural Economics, Heuristics

Healthcare, Pills, and Chunking

The issue of a national healthcare system is a hard pill to swallow for many countries, globally. It seems to be a debate that rages on constantly in the news; whether its ObamaCare in the US, the complete infeasibility of such a system in my home country, South Africa, or the seemingly endless list of complaints directed at the NHS in the UK. At the crux of many of these arguments is the cost to implement such a system. These are likely to be too prohibitive to ever lead to the creation of a successful system in South Africa. And for what it’s worth, for all those who complain about the NHS and its problems, coming from a world where such a system is likely to only ever be a pipedream – you don’t know how good you got it. But personal opinions aside, there’s no getting away from the fact that the costs involved can potentially be cripplingly expensive.

So let’s look at one of the NHS’s biggest expenses; the vast amount of pills that people don’t take because they fail to complete their course of medication. In some cases, this may simply amount to wastage but for other drugs, antibiotics for example, failure to complete the course can render the treatment completely useless. This results in repeat consultations being needed, further drug sales and time and money wasted across the board. People were being told by doctors that it is crucial to complete the course in order to feel better – so why would you not follow this advice?

One big task..

It turns out that people prefer parts, bite-size chunks, to wholes. They’re easier to take on. In other words, “the way that a task is presented affect’s people’s willingness to take it on and complete it.”* So what did this mean for the NHS? It meant that if a course of antibiotics consisted of taking 24 of the same pills 3 times a day, many people simply didn’t last the course. However, if they made 18 of those pills blue and 6 of them red and provided people with the following instruction; “Take all 18 of the blue pills first, then take the remaining 6 red pills” – with the pills being exactly the same – we saw a different effect. A higher proportion of patients now took all 24 pills. It seems that when we perceive a meaningful path of progression and assume phases of action, it can nudge us to a better desired overall result – in this case, completing the course.

“Chunking” leads to more effective actions

You would think that incentives are simple things. Traditional economists have based vast sections of theory on them in attempts to influence behaviour. But when it comes to humans, rarely is anything so simple. The incentive of feeling healthy should be one of the simplest and most powerful examples, surely enough to get people to take 24 pills in a row? But we don’t. Hell, I didn’t complete my last course (they were all the same colour, incidentally). But breaking big, whole tasks down into easier, more manageable “chunks” drives action. We see this in force when we draw up to-do lists, draft project management plans and read motivational books – why don’t we see more of it when trying to help people take medication effectively, improve decision-making or impact on the way consumers use our products?

*Referenced from the IPA’s publication, “Behavioural Economics: Red Hot or Red Herring”.

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Behavioural Economics, Biases

Sports Leagues, Momentum & Loss Aversion

I’ve made mention of my love of football on this blog before. That was way back at the start of the English Premier League season, 6 months ago in fact. Since then, as with any sporting season, its progress has been marked by ups and downs, wins and losses, upsets and surprises. And two quite contrasting tales or ‘narratives’ for two particular teams have started to emerge.

leg table 2

Click to enlarge

The two teams highlighted above have an almost identical record. Same games played, same number of wins, same number of draws, same number of losses. Same number of points. As a (not surprising) result, they both find themselves in the same situation – just 4 points from the top of the table with 10 games left to play. With 3 points for a win, 1 point for a draw and 0 for a loss – therefore a maximum of 30 points still up for grabs – it would be fair, nay rational, to conclude that both teams are still in the running to win the title after 38 games.

However, do a Google search, listen to any analyst or ask any fan (jubilant or down-trodden, depending on which you ask) and they’ll tell you – Liverpool have a chance, a shot at the ultimate glory; Arsenal are definitively out of the running. Now ask anyone who has no interest or context of the league at all as to who they think might win – or ask them to toss a coin, perhaps, for all that’s worth. To find out what’s going on, let’s take a look at each team’s Form Guide, wins & losses, specifically over the past 6 matches:

form guide

Click to enlarge

Ah. This looks like a classic case of the all important sporting phenomenon of ‘momentum’. Liverpool are on a ‘winning streak’ with 0 losses in their last 6 matches while Arsenal are stumbling with 2 losses in their last 6. So is the focus on an ethereal feeling of ‘momentum’ or ‘fate’, or is there something more definitive at play?

For those who might remember, Loss Aversion is the cognitive bias where, for the vast majority of us, we value losses greater than gains. This not only influences us when we’re placing bets or weighing up options, it also has an impact on the way we feel about future events. We project future possibilities based on current feelings. And in this case, even though these two teams are in an almost identical position, we discount the losses of one far more than we regard the gains of the winner – i.e. Arsenal are definitively seen to be out of the title race, while Liverpool still have a chance, albeit an outside one. Loss Aversion drives the behaviour and perceptions behind sporting ‘momentum’.

It is one of the most powerful cognitive biases that influences us on a daily basis. In fact, it’s ultimate theoretical culmination, Prospect Theory, was the reason why Professor Daniel Kahneman, a research psychologist, was awarded the Nobel Prize in Economics in 2002.

You’ll undoubtedly experience your own Loss Aversion example over the next 24hrs – feel free to share it with others in the comments below.

Now, if Arsenal could develop a slightly stronger aversion to losses over the remaining 10 games – I know I’d be far happier.

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Behavioural Economics

Shark Attacks, 16 and Pregnant & the Availability Heuristic

“My House.”

I’m from South Africa and I am terrified of the ocean. I love it, but am terrified of it. Let’s forget rip tides and the awe-inspiring power of the ocean in general and point to the elephant of the deep – sharks. I’m yet to have one interrupt me while I’m having a casual beer in a pub, so I’m not about to interrupt them by stepping into their domain while they’re winding down from a tough day of seal-clobbering.

But fundamentally, I regard a fear of sharks as rational – just look at the bugger above. But what about a fear of the risk of a shark attack; is that a rational fear? Let’s look at some stats:

  • You have a 1 in 63 chance of dying from the flu
  • You have a 1 in 218 chance of dying from a fall. Not a fall from a height, just a fall.
  • Every year, toilets, yes toilets, injure roughly 40,000 Americans. In 2013, sharks injured 54.
  • You have a 1 in 3,700,000 chance of dying from a shark attack.

In my experience, however, the fear of the risk of being attacked by a shark is far higher than the above stats suggest it should be. We should be far more concerned of the risk of a fever. So why is this the case? For starters, the homeless person who dies from the flu on a quiet street corner unfortunately doesn’t make the front page. But a shark attack does. A shark attack prompts fresh national debate over shark nets, chumming and other seemingly pertinent issues. And this is a great example of the availability heuristic. 

As you might remember, a heuristic is a mental shortcut that our brain uses so that we don’t have to think too hard. And in this case, the availability heuristic is a mental shortcut that relies on immediate examples that come to mind. Front page “Jaws” headlines are easy to bring to mind, as are references to the infamous movie. In another example, reserach has shown that in the weeks and months following a major natural disaster, home insurance sales increase in the affected and surrounding areas – even though the risk of being hit by a future disaster has not changed.

Melissa S. Kearney, a Senior Fellow at the Brookings Institution and an Associate Professor in the Department of Economics at the University of Maryland, has potentially revealed a positive side of the availability heuristic and how it can influence social behaviour. She did it, somewhat remarkably, by looking at MTv’s reality show “16 & Pregnant” (if you haven’t seen the show, the title tells you all you need to know):

In summary, since the airing of the show, teen pregnancy rates have dropped in the US. Melissa argues that this may be due to the audience resonating with those on the show and that this can influence actual behaviour when it comes to birth control. I think there is a slightly different explanation. By simply having the show on TV, frequently airing it and bringing the challenging realities of teen pregnancy into the public consciousness in an easy to absorb way allows its audience to bring these stories more immediately to mind. A perfect example of the availability heuristic. They become more aware and pay greater attention to the issues of teen pregnancy simply because they are able to recall immediate instances of it more readily. In turn, this has the potential to impact on behaviou – in this case to encourage an audience to consider the consequences of teen pregnancy.

And that is why marketers will forever aim to create a product, service or proposition that is “top of mind“. It’s not solely about influencing or persuading a person to make a decision. It’s about creating awareness, just to be considered, so that you may possibly influence behaviour to your advantage down the line. A process that people (and necessarily consumers) are naturally prone to, whether you like it or not.

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