Behavioral Economics and Your Brand
How science can streamline your customer journey
What inspires you to make the choices you do? What inspires anyone to build a relationship with one business or brand over another?
If people always made rational choices, our work as brand champions would be so much easier. We’d refer back to the recipe for moving prospects through our funnels, like following the instruction card in a Blue Apron meal kit.
But we know that prospects don’t always act rationally. In fact, they act intuitively almost all the time, even when they have credible supporting data at hand. And so, brand marketing feels a little more like intuitive cooking… a little more of this, and a pinch less of that. It’s the life’s work of brand managers. And because we live in a constantly changing world, that recipe continues to be nuanced and tweaked.
Really? Shouldn’t we be using a little more science and a little less tweaking in adapting our recipe to change? As a matter of fact, there is a science that can help us break down the psychology of decisions into highly predictable human biases. As brand leaders, understanding these biases can help us move through evolving trends and build a more predictable—and satisfying—customer journey.
Deep down, human nature remains the same
You’ve probably felt mystified at times by the unpredictability of changing buyer behaviors. Even within a single generation, trends change. But while human behavior and tastes can feel mysterious, we actually know a lot about the way people think when making decisions.
You may be familiar with the work of Daniel Kahneman and Amos Tversky. They’re among a small group of innovative thinkers credited for the concept of behavioral economics, an idea that crystallized in the 1960s. The natural assumption was—and often still is—that when faced with a decision, people draw upon all the information available and logically weigh out their options. But that’s rarely what actually happens.
The truth is people usually make choices by intuition. And our intuition relies greatly upon mental shortcuts (aka biases or heuristics), that most people use, most of the time.
Behavioral economics defines a comprehensive set of these mental shortcuts and tells us how they factor into the decisions we make.
Make It Easier for Your Potential Clients to Choose You
Kahneman’s book, Thinking, Fast and Slow, explores these themes further. What we learn is that we engage two systems of thinking: System 1 and System 2. “System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical.”
These days, people live in a fast-paced digital environment. Purchase decisions are made and relationships won and lost, often without the benefit of face-to-face interactions. Kahneman demonstrates that the biases and intuitive shortcuts of System 1 guide customers through the choices they make.
By providing those customers what they want — System-1 guidance — we can streamline their journey.
System-1 biases and how brands use them to help their customers
Here are a few Behavioral Economics heuristics (intuitive shortcuts) that can help make customers feel at ease as they make the journey toward your brand.
Humans usually focus on only one or two choices even when there are several possible outcomes. Much like horses wearing blinders, we become very narrow in our consideration set.
The grocery retailer, Trader Joes, makes it easy for customers to make quick decisions while remaining in System 1. By narrowing product selections down to just six SKUs per category, TJ’s prevents customers from using uncomfortable System-2 thinking in comparing labels all day. The limited selection helps people get in-and-out the door and on with their life.
For you, this means even if you can identify ten compelling reasons your brand is better than your competition… PLEASE DON’T. Your prospects won’t retain that long list of reasons, and soon they’ll feel System-2 exhaustion kick in. Suddenly, what they remember about you is that you make them tired or anxious — just as they might feel when they’re in a store with a giant floor plan and infinite options.
Clarity is critical. Brand taglines express one differentiating characteristic. Unique Selling Propositions build one — maybe two — points of value into their phrasing. Need some ideas? Here’s are seven examples of effective USPs from Zoom Info. Of course, the VergeX team is always ready to help you develop a USP that will be magnetic for your target audience.
When our beliefs and actions are inconsistent, we feel a tension — called cognitive dissonance. To release that tension, we need to change reality or change our perception of it by altering the narrative.
Medium.com contributor, Jasmine Bina, published a 2017 article titled The Cognitive Dissonance Hiding Behind Strong Brands. In it, she diagrams the distance between our perceptions about things and reality. She then offers ways that brands can help close that distance.
Some brands will use Cognitive Dissonance to grab our attention… as this shirt does (clearly not a real brand but acting like one). Others may attempt to provide a satisfying solution within their value proposition.
As humans, we either try to fix a dissonant issue or we walk away. We can change our perception to bring it closer to reality or we can change the reality to bring it closer to our perception. Two consumer financial services companies demonstrate those two opposite approaches to reaching the same goal.
The dissonance that both firms addressed was between two conflicting thoughts for their audience:
1 — I waste money
2 — I should be saving money
Digit, a competitor, recognizes that even if you know how you waste money, you may not be able to change your spending habits. They offer a forced savings approach “so you don’t have to think about it.”
One of Kahnemann’s major insights is that almost everyone finds losses to be 1.5 to 2.5 times as painful as gains are pleasurable — so we work very hard to avoid loss. Think about the phone app trial you opted into recently. The seller probably called it a “risk free” offer rather than a free trial. The seller also knew that, when your trial ended, you wouldn’t want to lose the utility that the app provided. And so you would be more likely to pay up. Customers are more worried about what they’ll lose by NOT doing business (time, money, influence) with you than what they could gain.
As prospective customers consider a relationship with our brands, we need to either “push” them away from painful experiences in their past or “pull” them toward satisfying outcomes in their future. Very often, brands often promote pain avoidance.
In his book, The Primes, Chris McGoff outlines a process for defining what’s at stake for your customers. McGoff asks us to build marketing language around Push and Pull characteristics of our brand and tie them to rational, emotional, and financial triggers (head, heart, and wallet).
In VergeX branding workshops, we go a step further. We challenge teams to express the unique push and pull characteristics of their brand to build streamlined message maps that speak to a range of audience segments during different stages of the relationship cycle.
Allstate Insurance plays both Push and Pull strategies at the same time through their “Mayhem” and “Safe Drivers” TV spots.
Allstate pushes us away from the pain of cut-rate car insurance.
Allstate pulls us toward the satisfaction of saving 40% on premiums.
When recalling an event, we make a judgment based on the two most significant moments: the peak (highest intensity) and the end. It pays big dividends to focus more of your effort on these parts of the customer experience.
Have a look at GoHighNote.com, a brand VergeX developed. When a potential client first visits the website − or encounters an ad elsewhere − they most likely engage System-1 thinking. We want to keep them there and build on their intuitive decision making. Through colors, images, words, and more, the brand identity pulls the viewer into:
The peak experience: easier, better, faster
The end experience: success, elation, and exhilaration
When a customer digs more consciously into a System-2 mindset, they come to pages like About Us, which outlines a verbal promise that connects with their hopes of finding the right partner.
Processing Fluency Bias:
The ease with which information is understood can impact behavior. White text on a black background can impair online fluency for your customer, for example, and make them think working with you is harder than it really is.
This is why website design is vital to your customer journey. Visitors to your site are assessing your brand with every click, whether they’re aware of that or not. They’re assessing verbal and non-verbal aspects of your message, sensing the fluency of the customer journey, and taking subconscious notes on how easy it is to find what they need.
Don’t get in their way. Really nailing the user experience requires sitting down with customers and prospects to explore the journey and every decision within it.
We think we’re unique and react against forces that say otherwise. There’s danger in telling people they are merely products of social norms or their environment. Upon hearing statements like that, people usually go in the opposite direction of your brand. Remember, we are not unique in thinking we are!
Customers LOVE feeling unique and that your brand is there to make their lives better. When you’re developing a strategy for a large audience, stories of individual users show that your brand caters to each unique customer’s needs. The “Share a Coke with..” campaign did exactly that by putting customers’ names right on the label, and then building commercials around those individual identities. How thrilling to see your name on such a well-known product! That is one way of including your audience in your brand story.
In this world, there’s a huge competitive advantage in building a brand that adapts to the unique needs of individual customers. Any opportunity we find to deliver that personalized value will pay off big. And, when you don’t offer this, you risk losing your customers. In fact, recent Gartner study determined that brands are at risk of losing 38% of their customers because of poor personalization.
Your customer journey should be an easier trek
Is your brand leveraging cognitive biases to streamline the customer journey for your most important prospects? (see that… a “Pull”) Or is your customer journey laden with cognitive obstacles that cause prospects to disconnect? (… and a “Push”)
Either way, now’s a great time to revitalize your Brand Experience and help the right buyers find an easy pathway to your door.
That’s brand forward thinking!
An enduring devotee of communication design and strategy, I’ve dedicated my 40-year career to delivering outstanding brand value and client experiences. I created Verge Experience Strategies (VergeX) to help you do the same. VergeX works closely with business owners, CMOs, and entrepreneurs to identify and express their brand’s unique value. We then help them build credibility and engagement to win the loyalty of customers, employees, and communities.
Join me as I continue to explore and muse upon the evolution of human communication.