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8 Psychology Hacks Behind The World’s Biggest Businesses - Richard Shotton

Richard Shotton is a behavioural scientist, Founder of Astroten and an author. Humans are predictably irrational. By studying these behaviours through clever techniques, advertisers and marketers have been able to boost sales and influence you in ways you might not realise or expect. So it's pretty important to discover how you're being manipulated. Expect to learn what are the most powerful words in persuasion, which human biases are over tested & overrated, how a small commitment can be the beginning of a huge commitment, which hacks make advertising campaigns stick in people’s minds, how to overcome the problem of analysis paralysis, how to change everything someone believes whilst changing nothing they experience and much more... Sponsors: Get the Whoop 4.0 for free and get your first month for free at http://join.whoop.com/modernwisdom (discount automatically applied) Get up to 55% discount on your Babbel subscription https://babbel.com/modernwisdom (discount automatically applied) Get 10% discount on your first month from BetterHelp at https://betterhelp.com/modernwisdom (discount automatically applied) Extra Stuff: Buy The Illusion Of Choice - https://amzn.to/3XDakP7 Follow Richard on Twitter - https://twitter.com/rshotton Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom #advertising #psychology #biases - 00:00 Intro 01:03 How Businesses Use Discounts to Trick You 07:36 Extremeness Aversion 18:17 Our Naive Reaction to Numbers & Fonts 25:19 Christian Aid’s Engagement Experiment 31:53 The Importance of Framing in Marketing 42:14 How Marketers Manipulate Our Desire for Fairness 52:30 Triggering Consumers’ Righteous Indignation 1:04:05 The Red Sneaker Effect 1:08:54 The Halo Effect 1:17:54 Making the End of an Experience Great 1:27:53 Where to Find Richard - Get access to every episode 10 hours before YouTube by subscribing for free on Spotify - https://spoti.fi/2LSimPn or Apple Podcasts - https://apple.co/2MNqIgw Get my free Reading List of 100 life-changing books here - https://chriswillx.com/books/ - Get in touch in the comments below or head to... Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx Email: https://chriswillx.com/contact/

Richard ShottonguestChris Williamsonhost
May 11, 20231h 28mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:03

    Intro

    1. RS

      One of my favorite studies that isn't very well-known, he gets a large group of people, shows them an e-commerce site and for every purchaser, one of the items they're trying to buy just isn't there. Now, sometimes on the site it's labeled as unavailable, other people see sold out. When he questions those groups as to how irritated they are with the website, he sees a swing of 15% with the people who see unavailable being the most irritated, people who see sold out the least irritated. If the website emphasizes unavailable, they're emphasizing their logistical inaptitude. If the website emphasizes sold out, they're emphasizing how popular this product is. People do not experience events, they experience the description of events, and if you s- change that description, you can radically change people's reaction.

    2. CW

      (wind blowing) So, the last episode that we did, we managed to get through eight out of 16 and a half-

    3. RS

      Yeah.

    4. CW

      ... psychological biases from your fantastic new book, which is now out and people should go and buy right now.

    5. RS

      I like that as a bit of advice, yep.

    6. CW

      Yes.

  2. 1:03 – 7:36

    How Businesses Use Discounts to Trick You

    1. CW

      The first new, this is half of a, half of an insight, base value neglect, what's that?

    2. RS

      Um, so i- i- it's an idea here that people, when they are weighing up numbers, essentially respond to them naively. So, t- if you, um, show people a, you know, a bowl of jelly beans, for example, and one of the 10 beans is a, is a red bean-

    3. CW

      Mm-hmm.

    4. RS

      ... and you tell people that, um, they will get a cash award for picking a red bean. You give them the option we're picking from either a, uh, 10 bean jar with one red or 100 bean jar with eight reds. You find that people will mistakenly want to pick from the larger number. So, even though the absolute chance of winning drops, the fact that there are literally more beans, uh, perverts the- their decision-making. So, so people re- react to the number rather than what the number represents. I think that's where we- we're getting to with this idea.

    5. CW

      Ah, because eight sounds like more than one, but it's eight out of a hundred as opposed to one out of 10.

    6. RS

      Ee- ee- exactly, exactly. So, if you're a marketer you can start to harness that idea to your, to your benefit. So, there's a lovely study from Gonzales, who's at Egade Business School, and she came up with a study where she shows some people a, uh, pack of balloons for 48 pesos. Some people see a 12 peso discount, some see a 25% discount, and in that scenario people prefer the 25% discount, uh, even though they are mathematically the same. Other set of people, she shows a jacket for 480 pesos, some people see a 120 peso discount, some people see a 25% discount. You know, the group that see the 120 pe- peso discount rate it as a better deal than the group that saw the 25% discount. So once again, people are reacting to the size of the number rather than what that number represents. So Jonah Berger heard about this study and he has a wonderful pithy turn of phrase, he said that there is a rule of a hundred. If you're selling a product that costs more than a hundred pounds or a hundred dollars or a hundred euros, you should talk about your absolute discounts. If you're selling a product that costs less than a hundred, you should talk about the percentage discount. You know, that way you're always tapping into this, this insight.

    7. CW

      Didn't you find something to do with why bonuses are more effective than discounts as well?

    8. RS

      Y- yes. You know, i- really similar set of ideas here. So there is a lovely Rao study from 2012 where they sell, um, hand lotion in a pharmacy for 16 weeks. Sometimes they refer to it as a 35% discount, sometimes they refer to it as 50% more. And what they find is that on the weeks that they talk about it being 50% more, there are 81% more sales. Now, even though these two things are mathematically the same, people cannot help to react to the scale of the number rather than what that number represents. So it's interesting there because most brands, most advertisers are fixated with talking about discounts. What Rao study suggests is you should contemplate talk about value added, you know, bonus pack, y- you're getting more, you know, because that will always be a larger absolute number. It sounds like-

    9. CW

      Now-

    10. RS

      Yeah.

    11. CW

      ... it seems like this is, it's, it's how the discounts make people feel. It's like what, what does this mean for me?

    12. RS

      Yeah, that's a really nice way of putting it. I think that's a better way of putting it in fact, because what it gets to is a fundamental insight about how people make small commercial decisions. The, they don't weigh up these purchases in a, in a fully considered way. They don't spend, you know, minutes upon minutes weighing up their shampoo purchase, um, working out whether this is an amazing deal, because frankly, if you spent that long on every purchase, you would grind to a halt in life. So instead what people do is they make faster snap decisions. Now some people call those emotional decisions, but really they're just about, it's about speed, it's about an immediate response. And what people respond to is that number wha- rather than what they should mathematically do, which is respond to what the number, number represents.

    13. CW

      One of the pieces of advice that you have for YouTube thu- YouTube thumbnail writing is to write at an eighth grade level-

    14. RS

      (laughs) .

    15. CW

      ... and then make it...... s- like, more dumb than that because as people are scrolling through YouTube, every millisecond of attention that you can potentially get from somebody is very precious. And if you can convey what this particular video is about in a quicker, more easily understood way than the next video, you're going to improve your click-through rate.

    16. RS

      Oh, yeah, yeah. No, no, no, lovely point. Um, I mean, I think one of the broad things we talked about last time was this idea that small bits of friction have an outsized effect. It might feel like, "Oh, surely I've made such amazing videos. People are going to give me the benefit of the doubt. They're gonna work through some of these small barriers that I put in the way," but most studies suggest that is, is, is not the case. So if people wanted a practical tip, one of the things that I've discovered reasonably recently is there is a wonderful app called Hemingway. So it's completely free. Um, you take your copy, you put it into the website or the app, and it gives you a reading age immediately. And you can sit there playing with your copy and it will tell you in real time, as you make those tweaks, as you make those adjustments, how you're dropping down the, the reading age.

    17. CW

      No way.

    18. RS

      Yeah, it's, it's, it's brilliant. It'll tell you, you know, if you've got too many, um, uses of the passive, if you've got too many l- long sentences, too many complex sentences. And it's lovely because it reacts in real time, so you can see your score i- improving. And I would say in terms of copywriting, you're absolutely right, one of the simplest things you can do is pitch a, a much lower reading age than you, uh, expect. It will, it will help.

  3. 7:36 – 18:17

    Extremeness Aversion

    1. RS

    2. CW

      Extremeness aversion.

    3. RS

      Ah, extremeness aversion. So, um, lovely set of, of studies from originally a psychologist called Amos Tversky. So he was the po- research partner for years and years of Daniel Kahneman. Uh, Kahneman went on to win the Nobel Prize in 2002. Unfortunately, uh, Tversky had died by that stage and you can't give a Nobel posthumously, so he probably would have won the Nobel if he'd, if he'd lived long enough. But back in 1993, he runs, uh, a, a, a famous study, recruits a group of people, and shows them two cameras. So you've got this basic and cheap camera. Let's say... I can't remember what it was, $139. And then a fancy, expensive camera for, say, $200. And he asked people, "Which would you pick? Which would you prefer?" And you get a rough 50/50 split. He then gets another group of people, shows them those same two cameras, but he also offers this new group a third camera for, say, $400 with loads of bells and whistles, loads of, uh, functionality. And what he finds is that only a small proportion of people, it was 21% of people I think, pick that really high-end camera. But what's of interest to us is the proportion of people in those original two cameras shifts dramatically. It's no num- no longer one to one, it's now three to one in favor of the fancy camera. Now, he calls this finding, and it has been repeated with beer, popcorn, coffee, all sorts of different products, he calls this idea extremeness aversion. He says one of these quick rules of thumb that we use to decide, um, h- how to behave is to pick the middle option. We fear that the cheapest option will be tacky and, uh, will look a bit mean. We fear that the most expensive option will be over-engineered and will look like a, a show-off. So th- the interesting thing here is you can shift people's willingness to pay by introducing a super expensive item that you never expect anyone to purchase. So let's say you are selling a subscription to your gym program and you offer people, "Well, you can have a monthly price or you can sign up for annual." And let's say as a gym, you are gonna benefit by getting loads of people to sign up for your annual rather than your monthly offering. What most people would do is just think of, "Well, I'll reduce the annual price. I'll give people more benefits." But if you know about extremeness aversion, what you would do is think, "Well, let's offer a two-year subscription, a three-year subscription." You don't expect many people to sign up for that, but its very presence makes the annual option look better in comparison. And it's that comparative bit that is so important in pricing.

    4. CW

      Are you familiar with Substack? Do you subscribe to any Substacks?

    5. RS

      I don't, no. What's Substack?

    6. CW

      It's a blog platform. It's kind of like what Medium used to be.

    7. RS

      Oh, okay. Yeah, yeah.

    8. CW

      But it's very, it's very, very good. It's super, super popular at the moment.

    9. RS

      Yeah.

    10. CW

      And they have... Uh, they are using extremeness aversion. They're using the exact strategy that you're talking about. You can sign up monthly, you can sign up yearly, and then on almost every single person's or creator's profile, there is a founding member option. And the founding member option is usually the equivalent of maybe three or four or five years. So let's say it's, um, uh, $10 a month, it's $100 a year, or it's $500 for the founding member.

    11. RS

      Yeah.

    12. CW

      Uh, the founding member gets a, a, I don't know, a commemorative pin or some-

    13. RS

      Yeah (laughs) .

    14. CW

      ... some, something that's basically pointless and, and a, a logo. But what you're actually doing here is anchoring people to think, "Well, that, that middle, middle price is not so bad. I'll go for the, I'll go for the $100 one." So anchoring has to be a key bias that extremeness aversion is, is linked in with.

    15. RS

      Yeah. A- a- absolutely. And there is a lovely, um, lesser-known study by Suckley and Lichtenstein that, that suggests that the way that most brands use extremeness aversion could be improved on. So imagine... I'm sure it's probably the same with Substack, but most things, Netflix, Spotify, you go to their site, and there's the basic option, the mid option, the premium option, left to right. The Suckley and Lichtenstein experiment says that is not the perfect approach. What you should do is show people the most expensive option first. So their argument, and it's based on a lovely study in a fancy craft beer bar in America, uh, their...... argument is, it's the first price that you see that is the most powerful anchor. So yes, you want an expensive thing to make everything else look better value, but it's the first thing that people see that sets that expectation. So if people lead, read left to right, you should go high, medium, low rather than what most brands do, which is low, medium, high ?

    16. CW

      Mm.

    17. RS

      ... left to right.

    18. CW

      That's the same ... I'm pretty sure I learned this from you in one of our last conversations, the same reason why restaurants should start their menu with some incredibly expensive platter, uh, e- and six-person tasting menu-

    19. RS

      Yeah, yeah: yeah, yeah.

    20. CW

      ... 350 pounds, uh, which makes the overpriced focaccia bread at the first start of the aperitifs-

    21. RS

      Yeah, exactly.

    22. CW

      Seems to make sense.

    23. RS

      You've broken out into a sweat when you see that $850 thing-

    24. CW

      (laughs)

    25. RS

      ... and you think, "Oh my God, I'm gonna be, I'm gonna be bankrupt." So by the time you get to there, the 10 pound focaccia, you think, "Wow, phew, that was actually-

    26. CW

      Yeah, yeah.

    27. RS

      ... a lot more, lot more."

    28. CW

      Look how brilliant value this focaccia is. Uh-

    29. RS

      Yeah, yeah.

    30. CW

      The same thing goes for wines as well, right? Like just pitch something nice and expensive at the top, anchor everything down off that. Have you ever seen ... I ... Would ... Is there such a thing as making that too, too big? Would it ever scare people away?

  4. 18:17 – 25:19

    Our Naive Reaction to Numbers & Fonts

    1. CW

      neglect.

    2. RS

      ... denominator neglect. Um, now I think I might... Sorry, in my, um, uh, in my idiocy at the beginning, I think I've blended together, um, base rate neglect, which was the Chow Hand Lotion experiment, and I think I raced straight into denominator neg- neglect. So when I was talking about jelly beans, I realized about halfway through, I might have been, um, mis- misquoting. So we have, um-

    3. CW

      They are both very similar, though.

    4. RS

      Yeah. Yeah, yeah. I mean, they, they do. They, um... I think it's that underlying point of the naive reaction to numbers which is, is key. So you want to think, "How can I..." And it's gotta be honest. "How can I honestly quote the largest possible, um, uh, discount?" So, you know, uh, base rate neglect, you're talking about, uh, maybe thinking about added bonus rather than discount. Denominator neglect, well, that's when you move to areas like Gonzalez and the... and, and the rule of 100.

    5. CW

      You had this thing about stacking discounts in ascending order. If you go into... If anyone in the UK that's ever shopped in TK Maxx, I don't know if they have TK Maxxes over here in America, but that's the sort of store where you would see 40% off plus 10% off plus an extra 5% off.

    6. RS

      Yeah.

    7. CW

      And you're like, "I, I don't have the computing power to be able to work out what the price of this item is."

    8. RS

      Well, what people do is they say, "Okay, 40, 10, 5, that's 55% off," but it's not actually, because if you take off 40, your 10 is then off a smaller number, and then your five is off an even smaller number still. So yeah, I'd have to... We'd have to go back (laughs) and do the maths, and I'd probably take about se- 17 attempts, but you end up... It's actually like a 51% discount. So again, it's stacking discounts is a way of making people, as you said, emotionally respond, uh, and feel like they're getting a, a, a, a better offering than that they perhaps are.

    9. CW

      You said as well about adjusting the font size to get people to focus on either the sale price or on the original price, and you can sort of adjust how much weighting people have there.

    10. RS

      Yeah, thi- this is an interesting one. I think that this one from the, the, the Coulter brothers, um, what they show is they recruit a group of people, and half the people say, see a original price of a hundred pounds in small font and then new price 60 pounds in big font. Other people see original price, a hundred pounds in big font, uh, new price, 60 pounds in small font. And what they show is the second group, the people who see the end discounted price in the smaller font, they think there's been a larger reduction in price. So they argue that people conflate, um, physical size of the number with what it represents. So here you want to be a bit careful because it is a one-off study. So is it... Has it got the same probability of working for your brand as something like scarcity or social proof, um, or, or fairness where there've been meta-analyses and hundreds upon hundreds of, of studies in, in these areas? Probably not, but it's another example of a potential experiment that you can, um, apply to your pricing at no cost to yourself and intentionally increase your, your margins. So I think that it's, it's a really interesting one as a... an areas test that if you hadn't heard of their study, you might never ever think of experimenting on it.

    11. CW

      The need to experiment.

    12. RS

      Ah. Well, that, that runs over brilliantly. Um, so what we've been discussing so far is sometimes the results you will get from a study will vary by context, and sometimes you will find a study that sounds interesting, but it's only ever been one runce... one... run once. Now, in those scenarios, so if you're either applying a study in a different place or there's not a huge body of evidence for it, you can't be certain it will work. So you need to set up your own experiments as a brand, as a business to rerun the study, um, but in your category, your specific brand, your specific circumstances. Now, if you are going to do that, you've firstly got a, a great opportunity because all these studies I'm mentioning are in the, the public domain. So you can rerun the methodology quite easily just with those few tweaks that we talked about. And if you do them, though, what you've got to be really careful of is how you test these ideas. So you don't want to be directly asking consumers what motivates them. If you say to your consumers, "Okay, well, I'm thinking about," say, extremist version, "I'm thinking about, uh, not just offering you basic and premium, I'm now gonna offer you basic, premium, and super premium," would that change how you behaved? Your customer will probably laugh at you, swear at you. They'll say, "Well, I'm not a bloody idiot. Of course, that wouldn't affect me. I will weigh up the amount you're charging versus the benefits you give me." So if you're interested in experimenting, you cannot ask people directly. What you have to do is this simple approach of, you know, what would be called a monadic test. Half the audience has seen one of the offerings, so that's basic versus premium. Half of the audience has seen basic, premium, super premium. And if you split things out in that way, if you get a representative sample, you give them... uh, randomize them into one of these two groups, you keep everything in the two settings the same apart from one variable, any difference in performance, any difference in people's reaction to those offerings, you can attribute back to that single change variable. So-Yes, you need to experiment, but make sure the way that you experiment is sophisticated enough in that you don't take people's claims at, at, at face value.

    13. CW

      Okay, so don't rely on stated preferences, wait for the revealed ones. And monadic, is that just change one variable, don't fuck about with anything else?

    14. RS

      Y- y- yeah. I- i- it's, uh, it's, it's a slightly pompous way that... I think that that's the danger with academics, that's the danger with psychology, is they take a basic principle, they give it a fancy name, and they confuse the hell out of people. So all monadic means, I think monad is kind of Greek for one or something, y- people are not comparing side-by-side. You're s- randomizing people into groups and then you as th- with the bird's eye view, you, the experimenter, give both those groups the reasonably same offering, but you change one variable between the two groups. And yeah, absolutely, any difference in performance, you'll attribute it to that, that single changed variable.

    15. CW

      I really enjoyed the story that you told. You had seven

  5. 25:19 – 31:53

    Christian Aid’s Engagement Experiment

    1. CW

      biases that Ogilvy tested. I think it was maybe for-

    2. RS

      Yeah, correct.

    3. CW

      ... charity donations?

    4. RS

      Yeah, yeah, yeah. Yeah, yeah, that's, yeah, yeah, absolutely. Oh, so that's, yeah, a lovely example. So, um, what Ogilvy Change do, or Ogilvy Consult, I think they're called now, is they create an annual report. And one of the wonderful things they do is they include things that didn't work as well as things that, that did. And they ran a test for Christian Aid, I think it was, in 2018. So 1.2 million, um, envelopes go out for Christian Aid and they put a little envelope through your door which basically asks you to donate money into... you put money into the envelope and then they'll come round, say, a few days later and collect it. They tested seven different, uh, messages. So some of those envelopes that went through people's door might have said, you know, "Please donate. The government will add on a- another donation on top, gift aid." Some of the messages said, for example, "You've only got one week to donate." They're trying to move people to action-

    5. CW

      Scarcity.

    6. RS

      ... through scarcity. Exactly, exactly. And then another one of those seven was using heavier, more expensive paper, you know, thicker paper stock for the envelope. Now, that thicker paper generated twice the level of donations. I think it was 39 pence on average per person versus 18 pence for the, for the gift aid offering. I don't think many people would predict that. Um, it might be easy to post-rationalize afterwards. You could say, "Okay, well, it's all about costly signaling. You subtly infer that people are a bit mean if they only give a pound and it makes them want to stick a bit more money in so they don't feel guilty themselves." You know, very easy to post-rationalize it. But to say that was gonna happen beforehand I think is, is unlikely. So to me, it's a lovely example, firstly, of a company admitting what worked as well as what didn't, and then secondly, showing that, you know, it's often very hard. You know, people are complex. It's very hard to know what will work. So if you're in a complex situation, you should be running, uh, experiments to prove some of the i- these ideas that I'm, I'm saying work in g- in generality.

    7. CW

      They really sort of spread the strategies there as well. One of them was, um, there was a special stamp that looked like it had been hand-stamped and they said, "This has been delivered and, and prepared by hand," which was, what's that? Labor illusion.

    8. RS

      Yeah, uh, so people, people call it labor illusion, illusion of effort, yeah.

    9. CW

      Yeah.

    10. RS

      I mean, is it... That, that, that's often, um, works very well, you know? Um, can't remember if we talked about that last time, but, uh, there's a lovely study by Mireles, who I think is at the University of Southern California, where she goes out and recruits people and, um, gives them a list of, say, ten houses that meets their, their requirements. Some people are told that the estate agent generated this list automatically with a computer in an hour. Others are told the estate agent took nine hours and they created the list manually. When people rate the quality of the estate agent afterwards, the group who hear the estate agent went to that extra effort, they rate the estate agent, their ability at 36% higher than the other group. Yeah.

    11. CW

      Oh, we did. No, we did, we did talk about this. We talked about it in, um, uh... The example was Skyscanner and it was-

    12. RS

      Oh, yeah, yeah, yeah.

    13. CW

      ... loading bar of Skyscanner-

    14. RS

      Yeah, yeah. Yeah, yeah, yeah, yeah.

    15. CW

      ... which is technologically totally arbitrary and exclusively performative.

    16. RS

      Yes, absolutely. We might have talked about Dice as well. They're my favorite example. They talk about the 5,127 prototypes they, they got, went through to create the vacuum-less bag. Now you could argue, "Well, doesn't bloody matter how many failures there were. What matters is how high quality the final product is." But what Mireles would say is, "Look, doesn't matter if it should logically be ineffective. What behavioral scientists are interested in, what does have an effect?" And people use efforts expended as an easy way of making a decision about the, the quality of a product.

    17. CW

      Okay.

    18. RS

      So you would normally expect, yeah, that emphasis of, you know, hand-delivered, uh, efforts going, uh, in, in, in to collect the money to ha- have an impact. So, you know, the, the fact it doesn't I think is something that it's very good that this agency admits, uh, occurred. You know, you don't want people just to talk about their successes. We can learn just as much from people's failures.

    19. CW

      Well, you know, looking at the changes in donation that those people had coming back, it was 50% of them were below the control, or a good-

    20. RS

      Yeah.

    21. CW

      ... a good chunk of them were below the control, so there were some things. I think the scarcity, which most people that come from an internet marketing world, this is a one-time offer, the countdown timer begins as you hit the page, you have 45 minutes to claim this once-in-a-lifetime deal. But when you said, "Christian Aid needs all donations by the end of the week," what you actually saw was a decrease compared to the control.

    22. RS

      Yeah.

    23. CW

      So, you know, a- a- and who would have guessed that? Espe- especially coming from a world-

    24. RS

      Yeah.

    25. CW

      ... that's bereft of, uh, of

    26. RS

      Absolutely. And, and if someone works in e-commerce, they're probably right to think that for their own brand. There's a lovely, um-... huge comparative study run by Swarbrick James. I think they looked at 2,600 e-commerce studies, a lot of them in travel, and there's 28 different levers that are used across these different campaigns. And they rank the various different biases or levers, um, on, on their average sales effect. And of the 28 they look at, the most effective overall is volume scarcity, there aren't many of these hotel rooms left. Next is social proof, lots of people have bought this type of hotel room. Third is what I would call time scarcity, what they call urgency, you haven't got long to act. So you're absolutely right, for e-commerce people, I think scarcity is probably one of the first biases, time or volume, that you would think about testing for your product. But I guess going back to that point we made earlier around context is important, what you're probably starting to see here is, well, c- commercial and charity, what works for the two, you know, they're, they're varied enough that maybe you can't translate some of the findings from commercial settings into charity an- and, and vi- and vice versa.

    27. CW

      I'm thinking about my booking.com experience which I use pretty regularly.

    28. RS

      Yeah.

    29. CW

      And I'm thinking, uh, X many people have booked this room today. Uh, like, "Hurry, these rooms are going fast. There's only this many left that we've got in our allocation," and all this stuff. So it's, y- every single bing, there's ticking all of the boxes that you've spoken about there. So the next one,

  6. 31:53 – 42:14

    The Importance of Framing in Marketing

    1. CW

      which I think is-

    2. RS

      Yeah.

    3. CW

      ... very important, and it's important not only for marketing, but I think for personal life too, which is framing.

    4. RS

      Oh, yeah, yeah, very good one. Um, so it's essentially the idea that the same fact can have a markedly different effect dependent on the, the language that's used. So the study that I discuss is a 1974 one from Loftus and Pama, uh, at the University of Washington, and they play a video, and you can get this if you people Google, um, Loftus and Pama experimental video car crash. You will see a 15-second video of two cars crashing into each other. So have a look at that, and then what the psychologist did was get a large group of people and they said to some people, "How fast were those cars going when they smashed together?" Other people, "How fast were those cars going when they contacted?" Other people, "How fast were they going when they collided?" So, they used six or seven different words, and then they asked people to estimate the speed of the two cars in miles per hour. And when the group who heard the word smashed, when they estimate the speed, they think it's 40 miles point eight, uh, per hour. The group that heard the verb contacted, they think it's 31.8 miles per hour. So even though everyone is seeing exactly the same footage, there is a variance of 27% in terms of their speed estimate. Now, the psychologists were interested in (laughs) um, police witness statements, how people could be influenced by a skilled interviewer, and so they were kind of concerned with how a, uh, a dubious police person could manipulate findings. But I think if you're in marketing, what you can take from this is the language that they use to sell your product can be varied to huge impact. So for example, one of my favorite studies that isn't very well known is one from a Texan psych- or a University of Texas psychologist called Peterson, and he gets a large group of people, shows them an e-commerce site, and for every purchaser, one of the i- items they're trying to buy just isn't there. Now sometimes on the site, it's labeled as unavailable. Some people see out of stock, other people see sold out. When he questions those groups as to how irritated they are with the website, he sees a swing of 15% with the people who see unavailable being the most irritated, people who see sold out the least irritated. Now everyone is, is essentially, like the Loftus and Pama study, they are experiencing the same thing on an objective level. It's just the language that's used to describe that situation varies. And if the website emphasizes unavailable, they're emphasizing their logistical inaptitude. If the website emphasizes sold out, they're emphasizing how popular this product is. Uh, they're harnessing social proof. So the argument here is people do not experience events, they experience the, um, the description of events. And if you s- change that description, you can radically change people's reaction to the same situation.

    5. CW

      One of my favorite examples of this was from Sam Harris, and he says that everybody knows (clears throat) what it's like to finish a workout. You are sweating and panting on the floor, and you've got the taste of metal in the back of your throat and, and you're hot and your heart rate's through the roof. This is a situation which oddly, despite being kind of-

    6. RS

      Ooh.

    7. CW

      ... objectively uncomfortable at the time, is actually oddly enjoyable exclusively because of the framing that you place around it. Now if you were to spontaneously feel that while you were sat in traffic on your way to work, you would-

    8. RS

      Yeah, yeah, yeah, yeah, yeah. ... ring the hospital. Yes, yeah.

    9. CW

      You would think that there is something terrible with me. So our story of what we tell ourselves around an experience very much is the determinant of the experience as well. Like the story that we tell ourself largely influences what the experience feels like to us.

    10. RS

      Yeah, uh, so that, that, that's a l- I've not thought about it that way. That's a lovely example. Never really th- often don't think about these, uh, experiments in a personal setting. I'm always thinking about them from a, a commercial setting. But I, um, I came back from a �� once and the flight.... uh, landed very badly. And I'd always been, uh, not particularly keen on flying, but that freaked me out and I developed a fear of flying. So, I'd have to fly for, for work, yet I spent the entire flight thinking, "What would it be like to fall for five minutes from this plane that's bound to, um, explode in the air?" Now, I tried all sorts of things to distract myself, you know, having a drink, um, getting into a book, doing a crossword, whatever it was, all th- all these different things to try and get over this. None of them worked. The thing that worked was listening to, uh, heavy metal, rap music, anything that has a, you know, a adrenaline-fueled reaction in normality. So, I'd listen to it as we were taking off and I think it, over time, changed my response from thinking, "This is a signal that, that my adrenaline's a signal that this is a very dangerous situation, I'm gonna die," to the adrenaline flooding my body. "Well, that's just how I normally react to this particular song."

    11. CW

      Oh, wow. You, you don't-

    12. RS

      So, I'd never put the two and two together, but I think you're absolutely right. That's an example of reframing exactly the same decision by putting a, a different lens on it.

    13. CW

      Yeah. You'd, you'd used ... This isn't like a cue that people would play calm music in order to be calm. This is a cue from your body, "I am full of adrenaline, so I will play music which is associated with adrenaline." That's funny.

    14. RS

      Yeah. Yeah. So, I always listen to exactly the same song. Uh, I'm not particularly into rap, but, um-

    15. CW

      What is it?

    16. RS

      I have a workout playlist and one of them is, um, Kanye West, um, School Spirit. So it's something He's canceled. He's canceled now, Richard. We can't, we can't, we can't talk. We can't talk about it. (laughs) Ah, okay. Well, I'll, um, I will, I will change the, change that one up.

    17. CW

      Oh, no. You can still listen to him. You just can't-

    18. RS

      Yeah.

    19. CW

      ... can't take his views on the Jews too seriously. Um-

    20. RS

      Well, yes. I will tell you his music, yeah.

    21. CW

      So, you ... There was another thing to do with, um ... And everybody's a- aware of this. When you buy mince, or, or ground beef as it's called out here-

    22. RS

      Yep, yep, yep.

    23. CW

      ... do you wanna call it 75% lean or 25% fat framing?

    24. RS

      Uh, uh, yeah, absolutely. So there's a ... I think that is a Levin study. I might get the, the name wrong, but essentially, it's describing the same situation. But if you say 75% lean, people will think the meat will be tastier, uh, they think it'll be less greasy. If you emphasize 25% fat by drawing p- people's attention to that particular element, you get a very different, different reaction. Um-

    25. CW

      You, you also had a thing about, um, using ... the benefit of using nouns rather than verbs.

    26. RS

      Oh, yes. So, there is the idea that if you remind people that they are a voter, they're more likely to follow through and v- uh, and, and vote on the actual election day than if you say to them, um, "Will you vote?" Say, "Will you be a voter?" And they agree-

    27. CW

      You should be voting or whatever.

    28. RS

      Yeah. "Will you vote?" And they agree, they are more likely to follow through if they have described themself as a voter. Probably because the voter, that noun describes who we are, you know, it's, it's part of our identity and nature. If you're just referring to an action, that's something that's fleeting and not particularly hypocritical or not, not Oh. ... to follow through on.

    29. CW

      I wonder how you get people-

    30. RS

      So yeah, that, that's the idea. So, so we, we, we've tried ... Yeah. So we've tried to, um, we've tried to apply this commercially, and I haven't seen any results yet. But reminding people that they had been a subscriber to a magazine and therefore should renew rather than saying to people, um, you know, "You once subscribed. You should renew."

  7. 42:14 – 52:30

    How Marketers Manipulate Our Desire for Fairness

    1. RS

      Oh, yes. This is one of th- the most interesting areas, I think, when I was researching the book. Um, and it's the idea that ...... people's reaction, even in commercial situations, is remarkably driven by fairness. We're not just interested in a good deal in an absolute sense, we are interested in being treated fairly compared to others. So the study that- that- that caught my eye was, I think it's in 1996, so it's quite an old study, and it is with students, so, you know, take it with a pinch of salt, but it's the Blau and Bazeman study. And when people arrive the first day at campus, they are asked whether they would help the psychologist the next day with a, um, an experiment. They're gonna have to turn up at the psychologist's lab, do 40 minutes of math puzzles, and they will be paid $7. Now, the people who are asked that, 72% of them agree to take part. Next group of people, um, they are given the same basic request, "Come to our lab tomorrow, do 40 minutes of math puzzles," but this group are told, "You will be paid $8." However, they then follow up with a little white lie. They are then told that, um, other people earlier were paid $10, but unfortunately they've spent all their cash and they can only offer eight now. Now, in that scenario, there is a 25% drop in what people are prepared to, uh- uh- uh, to accept, so you get 54% of people agreeing to take part. Now, this is fascinating because what a classical economist would say is, "Well, it doesn't matter what other people are paid. All you should focus on is whether or not $8 is worth 40 minutes of your time." So you should have this increase. But if you think about the principle of fairness, people are enraged by this idea that others have got a- a- a better deal. Now, that study, I think, is fascinating because you could apply this in big and small ways if you're a brand. You can apply it in a big strategic way and think, "How do I reframe my competition as treating their customers unfairly?" And if you can do that, you can tap into this pool of anger that will motivate people to want to switch, come to your brand. Or, if we're getting super tactical, you could apply this on your e-commerce site. So think about what virtually every e-commerce site does. You know, you're shopping for a pair of trainers, you've picked these trainers, uh, $100, you love them, they look amazing, you're completely happy. You put them in your basket, you go to checkout, and then above the checkout button, what is there normally? You know, normally there is a giant box, you know, throbbing, giant white box that says, you know, "Add your discount code." Now that transgressed fairness norm, so essentially what you've done there is told your customer, you told these people who are completely happy to hand over their money, that other people are getting a better deal. That will enrage them and they will go off and look for a discount code, most of them will probably- probably never come back. So yeah, fairness I think is a interesting area that too many brands ignore. Too many brands think that people are cold calculating machines. But actually, an awful lot of the behavior is driven by, you know, not the absolute benefit of the offer, it's, "Am I get- relatively getting a good deal compared to other people?"

    2. CW

      Shopify, interestingly, if you're on mobile, it's not the same as if you're on desktop but I would guess that probably at least 50%, maybe 70% or more, of shopping is done on Shopify on mobile.

    3. RS

      Yeah.

    4. CW

      Their discount field is hidden behind a dropdown toggle.

    5. RS

      Yeah. Great, yeah. Yeah, yeah, that's- that's a really nice idea 'cause I think what that's working on... And U- I think Uber do something similar with like a, um, you know, if you've got a promo code, it's a very recessive little link you can add. And I think they're working on the principle that people who have a code will be really looking for the way-

    6. CW

      Precisely.

    7. RS

      ... to, put it. People who haven't won't. So that's one thing-

    8. CW

      By default, by default, given the fact that probably fewer people will be shopping with a code than without a code, by default, to make the code-

    9. RS

      Yeah. Yeah.

    10. CW

      ... and this big advert that you're paying-

    11. RS

      Yeah.

    12. CW

      ... more than you probably should do, and more than other people potentially are-

    13. RS

      Yes. Yeah, yeah, no, but I think that-

    14. CW

      Why would-

    15. RS

      Absolutely. You could have a, um, you could only show the discount box, for example, of people you've driven there via affiliates. Uh, you could put up your prices by a percent and then populate the box with a 1% off code, and then anyone else who has an actual code could overwrite it. You know, there's loads of different ways you could ?

    16. CW

      Did you see, um, talking about fairness, I think this has stopped over the last few years but there was a period, especially when Black Friday first became big in the UK, where fast fashion companies and jewelry companies would slowly creep the price of their product up throughout October into November or they would just-

    17. RS

      Oh.

    18. CW

      ... switch it over one week and then the discount... And people were using Wayback Machine and In- Internet Archive and stuff to go back and look at what the old price of this product was, and what they realized was that with the discount, the price of the product was the same-

    19. RS

      Yeah.

    20. CW

      ... as it was when you could have purchased it at the start of October.

    21. RS

      Yes. So, I mean, I think there is an opportunity there potentially for competitor brands to shine a light on that. Um, I think there is also a self-interested doubt that you should have a- at the back of your mind about some of these tactics which is the difference between the short and the long term. In the short term, you will generate extra cash by, um, some slightly nefarious tactics. The danger you have is pe- if people ever feel they have been manipulated too far, then you get this- this kind of, um, uh, uh, retribution. So y- you've got- always got a bit of a balance of how much you should push some of these pricing tactics.... uh, and there's a lovely idea from, I think it's an American philosopher called John Rawls, who talks about, I think it was the publicity principle. And he basically talked about morality as if someone knew you were applying this tactic, would they be angry with you? And if they are, then it should set off some alarm bells, and at least you can, should consider whether it's worth doing. You know, it's a debate, I think, of the, the Richard Thaler goes back and forth on at the beginning of his book, Nudge.

    22. CW

      Are you familiar with Goodhart's Law?

    23. RS

      Yes. I, uh, isn't it something along the lines of once a metric is used as a target, that metric loses all validity?

    24. CW

      Correct, yeah.

    25. RS

      O- obviously not its intent, but yeah.

    26. CW

      So, um, the, you, you nailed it. Yeah, it's when a, let's say that your outcome that you wanted to get, um, that the metric that you were optimizing for was email subscribers.

    27. RS

      Yeah.

    28. CW

      So you say, "I want as many email subscribers as possible." So that's a target. What you're actually looking for, the outcome that you're looking for is something more like, "I want lots of people that care about what I say to be interested and receiving my emails in a warm and welcoming way on a weekly basis." Like, that's what you're actually optimizing for, but the measure that you're using as the outcome proxy is email subscribers. But if you start-

    29. RS

      Yeah.

    30. CW

      ... to optimize exclusively for that, what you could see is a world in which you said, "Uh, sign up to my mailing list, and every person that does will be given a million pounds and-

  8. 52:30 – 1:04:05

    Triggering Consumers’ Righteous Indignation

    1. CW

      to do stuff.

    2. RS

      Yes. I, I kinda think this is something that isn't really used enough. I'm, I'm, I'm interested in fairness because we've talked about the Blount and Bazeman study, and people would rather have a smaller fee that everyone's getting than a large fee, but le- which is less than, than, th- the, the, than others. Now, you also see that in, uh, animals. There is an amazing video online that I would strongly recommend people Google afterwards. If you put in Frans de Waal capuchin monkeys fairness video, what you will see is a pair of monkeys happily performing all sorts of tasks for a slice of cucumber. But if one of those monkeys is paid in grapes, which they rate as a better treat, and one is paid in cucumber, the monkey that is now being paid in cucumber will lose their rag. They will not perform for this, uh, this, this, this payment. So again, it's, it's a bias that you can see in humans and something we shared a common ancestor with three million years ago. When you see these drives of behavior straddling the species, you'll know you're, you're on something powerful. So if I was a brand, I would look at b- at ways of reframing my competition as behaving unfairly. So if I was launching a, um, a competitive taxi brand to Uber, surge pricing I think is their Achilles' heel. Uh, most banks, if I was trying to compete with them, if I was a new fintech startup, I'd be talking about, uh, or reaching people when they have just been hit by a fine. They've gone, you know, two pounds over their overdraft limit. They've just been hit with a 20 pound fine. That's a rare moment when people are so enraged they're probably open to, to, to switching. So how do you reframe what your, um, competition are doing as a, as a, as a, as a fairness transgression?

    3. CW

      Very nice. Freedom of choice-

    4. RS

      Mm. (swallowing sound) so, this is an interesting area. There's, um ... And my pronunciation is, is never very good. I was, I was always horrendous at languages (laughs) at, at school. So, uh, it is a French psychologist, I think called Gaggenem and he came up with an idea called the but you are free principle. So, (laughs) one of many bizarre psychology experiments where it involves the psychologist dressing up as a beggar. Uh, there's another one by a guy called Santos called the, um, the Peak Effect, uh, all around how surprising requests generate more num- uh, more donations. But on this one, Gaggenem goes up to people, uh, at a, or near a bus stop, and he says, "Can you give me some coins so I can get a bus?" And I think it's 10% of people give him some coins. Next group of people, he goes up, exactly the same request to begin with, but then at the end he says, "But you are free to accept or refuse." And the proportion of people who give him money jumps to, I think, 48%. That's a huge swing in behavior. What's so interesting is, of course, everyone in both of those settings always had the ability to say no. All that's changed is the requester has drawn attention to the other person's ability to say no. So the argument here is one of the things that we love is to retain a sense of agency, a sense of control in a situation. So if you are trying to persuade someone to take out a subscription, to, um, give you a rise, what you should be doing is drawing their attention to the fact they can say no. What Gaggenem's study suggests is that will increase the probability, slightly paradoxically, of them agreeing to your demands.

    5. CW

      So you want to involve people in the decision process in a way?

    6. RS

      Yes, but I think remind them of their right to say no. So it's not just, um, involving them. I think it's gi- reminding their sense of control, uh, i- i- is the key thing. Now, of course, uh, you know, situations with beggars are a little bit bizarre. That five-fold increase is a very, very large one. So, th- it's not just that situation where this but you are free principle works. Um, (smacks lips) I think it was Carpenter who ran a meta analysis, about 15 studies, I think, where he looked at lots of different people had run experiments where they had emphasized the other person's freedom to refuse, and there is a consistent increase in compliance. Now, it might not be as high as Gaggenem's study, but it's a consistent-

    7. CW

      Wow.

    8. RS

      ... consistent increase.

    9. CW

      That's very reliable. What ... So something else that seems to make sense here is if you were overly assertive when communicating with customers, and there was a, uh, a place in Austin, a recovery, uh, center, that had some internal strife and it, it was gonna change and all of the management was going to drop-

    10. RS

      Yeah.

    11. CW

      ... and they also decided to, along with that ... So there was sort of a, how would you say, a foundation, a baseline of ambient sort of discontent because there was some social murmurings and gossip about what was going on behind the scenes. And then one Saturday morning, every single member of this recovery place got an email that said, "Prices are going up," and it was going up by maybe two X or two and a half X, "and you will be billed and the new prices kick in in 48 hours. Reply if you wanna, i- if you, if you wanna-

    12. RS

      Yeah. Yeah.

    13. CW

      ... cancel," or something like that. And the number of people that I know who were really, really sort of upset, put off by that, and one of-

    14. RS

      Yeah.

    15. CW

      ... one of the main things that happened there was it was the kind of language that was used. It was basically like, "Price is going up, uh, like it or lump it. Uh, you know, if you ... R- reply if you wanna cancel," type thing.

    16. RS

      Yeah. Yeah. Yeah.

    17. CW

      And that overly assertive language, I think, didn't do them very many favors.

    18. RS

      Yeah. Yeah, there were ... It seems like they've got a kind of perfect storm of problems there. I think the one thing they did that ... Or the couple of other things they did, they said that the price rise was gonna be immediate. There's a lovely set of studies, um, by people like Liam Delane at the uni- he was at the University of Stirling, into what's called the present preference bias. So I think in one of his, his studies, he says to people, "Do you wanna pay me 13 pounds now or 16 pounds in a month's time?" And a s- uh, of the order of 60% of people would rather pay the larger amount in a month's time. Now, if you turn (laughs) that into a monthly interest rate, I think it's 23%. If you turn it into an annualized interest rate, it's some- it's over 1000% a year. It's a phenomenal interest rate, but people would prefer to pay it than give over the money in that instant. So what he argues is what he calls present preference bias. We overweight pleasure and the pain in the now, and we discount pleasure and pain in the future far, far too much. So if I was gonna push that price rise through, I would give people loads of notice and tell them it's happening in two or three months' time, because spending an extra 10 pounds a month in that distant time period won't affect me. Knowing I've gotta hand over 10 pounds tomorrow, that's aggravating.

    19. CW

      Mm. So, give me the, the justification for charming versus cajoling, uh, uh, an audience member. It seems like charm is always going to work.

    20. RS

      Yeah. The, the ... I mean, there are always ... With all these, there are a few nuances. One of the interesting ones is, um ... The original kind of experiments are far earlier than, uh, Gaggenem, was a guy called Brehm, I think it was Jack Brehm, and he came up with an idea called reactance. So, um, (smacks lips) uh ... It, it's the argument that if you feel your freedom is being curtailed, you can often push out against this. And the b- one of the early studies was by a guy called Pennebaker at the University of Texas, and, and, um ... (smacks lips) So he puts up signs in a men's washroom that s- either says, "Please don't graffiti," or, "Do not graffiti !!" And he sees, I think, of the order of twice the amount of graffiti on the authoritarian sign.... but what's interesting... So that's the same basic finding as, you know, w- w- y- you're discussing. We've got with, again, the if you're overly authoritarian, it can backfire. But one of the interesting nuances is the extent of that backfire effect depended on the authority level of the communicator. So if the sign was positioned as coming from the head of security, it really aggravated people. If the sign came from the groundsman, it didn't have much of a negative reaction in the, in the authoritarian manner. So the, the point being here is reactance is far more likely to occur if the message comes from someone in a position of power. So if you are doing peer-to-peer communications of equal people, it might not be too much of an issue. If it is a letter coming from the tax office and they are, um, behaving authoritarianally, it's much more likely to create this, this negative reaction. So thinking about who the message comes from, uh, is, is an, is an important one.

    21. CW

      I'm trying to work out why this effect would exist. You know, fairness makes a lot of sense. It's reciprocal altruism. It's not being taken for a ride. We could see how that would be adaptive. Having, I don't know, this, this pushback against a, a tyrannical leader almost, even if the tyrannical leader happens to be a badly worded poster or a poor email-

    22. RS

      Yeah, yeah. (laughs)

    23. CW

      ... with a 48 hours notice-

    24. RS

      Yeah.

    25. CW

      ... about a price rise.

    26. RS

      Yeah. Yeah. Yeah.

    27. CW

      Um, it, it... I, I find it fascinating that it seems like embedded in our psychology is a way that we react to the local ecology in terms of how tyrannical it is, uh, how authoritarian it is. Uh, it's mediated by the person that is giving that request in a way which also s- suggests that we have some kind of softness bias toward people that are lower down the totem pole. I think the implications of this are really interesting.

    28. RS

      Yeah. I- I think, uh, I think it's an interesting question about why it happens. And I wonder if... You often look to some of these biases as could there be an evolutionary explanation? And maybe it's a sense of, well, if we fear that we are losing control, that, you know, reduces our life chance essentially. If, if someone else is in charge, they're probably gonna look after themselves rather than us maybe. Maybe we are, are queued up to r- r- respond in that way, but that's slightly speculative, yeah.

    29. CW

      There is, uh, some good evidence that talks about two different types of leaders that would have happened ancestrally. So one that rises-

    30. RS

      Yeah.

  9. 1:04:05 – 1:08:54

    The Red Sneaker Effect

    1. RS

      so a lovely set of studies from Francesca Gino at the, the H- the Harvard Business School, and the basic idea is if we see people breaking conventions, we assume they are higher status. So my favorite part of her study is a pilot study she did. So when she's testing out the basic idea, she goes out to academic conferences. And this is early 2000s, and the norm of behavior at these conferences, the convention is you should dress smartly. So if you're a bloke, you'd be expected to wear shirt, jacket. So as people are arriving at the conference, she monitors, uh, their smartest dress and she notes it down. She then goes and finds those people and says to them, "How many publications you got? How many, uh, citations you've got?" So citation is one review of your, or one mention of your work, your academic work, in a peer review paper. So more citations, the more successful you are. You know, crude metric, but, you know, pretty accurate. When she crosses the two bits of data, she sees a very clear inverse correlation. So the super successful academics, you know, the people who go on talk shows, uh, you know, write s- newspaper columns, they're the ones who are most likely to be breaking the convention and dressing really scruffily. Whereas if you go down to the other end, the people with barely any citations, the people who've barely published anything, you know, people who haven't got tenure, people who are just starting out in their career, they are much, much more likely to abide by the conventions. Now, Gino's argument is that you need status to break a convention. So imagine a situation in which, um, you're at work. The CEO turns up wearing Bermuda shorts. Well, in that scenario, no one is gonna send that person home. No one's gonna criticize them. But if the intern does it, they get sent home. They get pilloried. So what Gino argues is you need a degree of social capital to af- to afford, uh, or to be able to break a convention. You can ignore some of the, the punishments and what... Or they won't be applied to you. And what she says is that people, and this is what her later studies show, is people are remarkably well attuned to this. So we see people breaking conventions, we assume they must be higher status. So I love this because many advertisers have heard the argument that if you behave distinctively, you're more likely to be noticed.What Gino adds is another layer, which is if you behave distinctively, if you break convention, you're more likely to be seen as high, higher status too. So it's a bit more kind of new news to most brands, to most businesses, to most communicators.

    2. CW

      How would you apply this?

    3. RS

      So I think for most brands, there are an awful lot of conventions in their category. If you think about how watch ads behave, how perfume ads, how car ads behave, most of them, uh, abide by the same conventions. You know, think about a, a press ad for a car, right? Nine times out of 10, it shows a beautiful mountainous scene, a bend in the road, and then there's the, the car in, you know, a, uh, in a kind of profile shot. What Gino would say is if you unthinkingly just repeat this convention in your advertising, you'll be, um, seen as low status. What you should do is think of your category, think of all the different conventions, split those conventions into two groups, some of which are there for a very good reason, leave those well alone, others are just there for tradition's sake. If you break those conventions, firstly, the Von Restoff effect says you'll be noticed, but also the red-sticker effect says you're likely to be, um, b- believed to be higher status, admired more.

    4. CW

      And this is mediated at least a little bit-

    5. RS

      Mm-hmm.

    6. CW

      ... by the, um, existing awareness, the positioning of the brand. If-

    7. RS

      Yeah.

    8. CW

      ... Kia decides to break convention, it's different to if Audi decides to break convention.

    9. RS

      Yeah, absolutely. So yeah, you're absolutely right. With all these studies, there are nuances, and, and Gino looks at a few. I think one of them is you need to be, or the audience needs to know you're breaking this on purpose. If they think you're breaking a convention through ignorance, it can backfire.

    10. CW

      Mm-hmm.

    11. RS

      Uh, and then secondly, yes, if someone is already perceived to be high status and they break convention, the rewards are much, much greater. If you get down to someone who is perceived already to be low status, and they break convention, it can again backfire. So yeah, there's, there is a variance on those two, those two criteria.

    12. CW

      The halo effect.

    13. RS

      Ah, the halo effect.

  10. 1:08:54 – 1:17:54

    The Halo Effect

    1. RS

      So this is an interesting one. It's essentially the idea that peoples do not evaluate each element of another person discretely. If they feel that someone is superior in one respect, it ripples a- out to all their other attributes. So the classic study... Well, there are classic studies going back to the 1920s, but the one I really like is a 1977 study by Nisbett. Recruits 118 people, and they all see a video of a Belgian academic giving a lecture. Now, half the people see a video, same content, but the academic's a little rude and comes across as a bit cold. The other half of people see the academic, uh, being more friendly and warm. Now, as you'd expect, when the two groups rate the likability of the academic, the group who see the warm, friendly academic rates them as 72% more likely. So you, just as you expect, you behave in a nice way, you're more likable. What's interesting though is Nisbett also asks about loads of other attributes of the, the lecturer. You know, what's their appearance like? How irritating is their accent? And he finds that when the lecturer was behaving in that friendly manner, people are twice as likely to enjoy the accent, think that he's good-looking, as in the other scenario where he's behaving like a bit of an idiot. So the argument is here if, if you have one dominant, uh, positive or negative characteristic, that will affect how your other unrelated characteristics are, are interpreted. So what's interesting here is if you are a business and you're trying to communicate how amazing you are, how trustworthy you want to be, how high quality you are, you don't have to just communicate those things. You could pick another area which is easier to impress people on, and then the expectation would, all of your, uh, attributes and your metrics would, would, would improve. So it's almost a different way of thinking about what you should communicate. Don't necessarily communicate what matters, communicate what is easy to impress people on. And I think one area here for brands is think about, well, coming across as witty and charming. You could actually do that in an advert. You can actually be funny. How you convince someone you are trustworthy or high quality, well, that's a nebulous thing that it's harder to do in a, a, an advert. So work with the limitations of the kind of communication medium, uh, uh, uh, and try and emphasize the metric that you can move, not necessarily the metric that you think matters.

    2. CW

      That's very interesting. I, I like-

    3. RS

      Mm-hmm.

    4. CW

      ... the fact that, um, with the halo effect, which, uh, in pop psychology is traditionally to do with pretty privilege basically, that you have good-looking people and everybody produces-

    5. RS

      Yeah.

    6. CW

      ... everything that they do is better. What you're saying here is that there are a number of different vectors upon which you could win if you were charming, if you were funny, if you were polite, if you were good-looking, if you were tall, if you were reputable, if you were whatever, whatever, like educated, well-informed, so on and so forth. You can use whichever of these you can win at to trickle down and try and cascade all the rest of them. And I would imagine as well that there are some that are longer levers than others. I would imagine wit, humor, personability, sort of charm, uh, politeness, pleasantness, generally from an interpersonal perspective, are going to be things that will trickle downstream, uh, more effectively because they're much more universal.

    7. RS

      Yeah, I- I- I- from a- from a communications perspective, I- I think, and this is where it's- we're kind of moving to speculative territory, so it'd be interesting in- in- in challenges on this one. But I wonder if something like behaving wittily, y- y- you can do that in an advert. You can make a joke. You don't just have to claim that you're funny. The problem with when it comes to attributes like tru- trustworthiness or premiumness, it's very hard to absolutely demonstrate. You have to make a, a claim. And the problem with claims is why would anyone believe them? Because if you are low quality or high quality, you're both gonna say you're amazing quality. You know, a claim is- is completely empty. Much more powerful to focus on things that can be demonstrated rather than claimed. And I wonder if that's why you're right on- on areas like wit, it's something you can demonstrate rather than just state.

    8. CW

      What about being too clever? There must be such a thing as that.

    9. RS

      Oh, that's interesting. So I mean, I wonder, the closest study I've seen there is the Prattfall Effect, the original 1966 study by Elliot Aronson. So he recruits a, uh, colleague of his taking part in a quiz, and the guy is given secretly the questions and the answers by Aronson. So does amazingly well, I think gets 90 or 92% of the questions right, wins the quiz by miles. Now, when people are played a recording of that amazing quiz performance, he... and they're asked how much they like the conquest- contestant, the listeners give a so-so rating. Next group of people, they're played the same recording of the amazing quiz performance, but there is an additional 30 seconds, and in the final moments of the quiz, the contestant makes a cock-up. He spills a cup of coffee down himself. In that scenario, the listeners who get that recording rate the contestant as 40 or 45% more appealing. So I think you're right there. It can be this thing of perfection can be irritating if someone comes across as this amazing, um, genius. Well, uh, you know, our reaction is maybe to hate them somewhat because we feel worse in comparison. If they spill a cup of coffee on themselves, they're no longer seen as maybe quite so much of a threat, and therefore they can come across, uh, uh, as a bit more appealing. So I think there is... there might be some... yeah, I think there is something in what you say, um...

    10. CW

      In the world of online content creation, there's a-

    11. RS

      Mm-hmm.

    12. CW

      ... a number of people who are really struggling at the moment because they never show vulnerability. People know that they've got vulnerability. People know that they... their self-righteousness or the fact that they are, you know, unperturbed by whatever criticisms come from the internet, and a lot of these people are, like, quite worthy of criticism, but that has galvanized huge Reddit threads. There's hundreds of thousands of people in certain sub-corners of the internet that basically are trying to find the vector on which they can finally get this person to show that something is actually bothering them. And I think that it's almost that sort of too perfect concern that we've got here.

    13. RS

      Yeah. Yeah.

    14. CW

      If someone never shows any, um, weakness, vulnerability, we become skeptical of that because we see it for ourselves. The w- you know, first off, we're skeptical because we think everybody has this. Secondly, we are, um, untrusting of them because we presume that they must be hiding what it is they've got behind it. Thirdly, we would say, "Well, I'm going to continue to poke and poke and poke because this is a fun game to see how much this person can take before they do end up breaking." Uh, yeah, it kind of creates a perfect storm to galvanize people to try and take someone down. I've seen this multiple times and it's basically the same formula.

    15. RS

      Yeah, I think, I think, um, there's a, I think you're absolutely right. There is a, um, there's a lovely study by Northwestern University where they look at likelihood to purchase products after reading a product review. So it's all numeric product reviews, zero to five, five being perfect, zero being crap. And what they show is as the review gets better, people become more likely to purchase. And they look at 100,000 different, um, offerings. That's a huge sample. But what they find for every of the 20, 25 categories that they look at, for every th- every one of those categories, the highest rate of purchases is not a fi- uh, a five out of five reviews. It's, uh, somewhere between, I think, 4.2 and 4.5. Now, that's where purchasing peaks. If the reviews get any better, purchase rates decline. Their argument is exactly as you say, which is that perfection is too good to be true. If you find a kind of, I don't know, a random supplement brand that you've never heard of and it gets 10,000 five-star reviews, what's more likely, that it's actually perfect or something's being manipulated? People, if they see 4.7 or 4.8, therefore they're more likely to believe these are honest and give it the, um, the, the credence it, it deserves. So I think you're right. There are some studies commercially that show perfection can be, can be off-putting.

    16. CW

      Peak-End

  11. 1:17:54 – 1:27:53

    Making the End of an Experience Great

    1. CW

      Rule, which a lot of people listening will be familiar with, the original study that was done with endoscopies, colonoscopies?

    2. RS

      Oh, I think it was colonoscopies.

    3. CW

      Yeah.

    4. RS

      Um...

    5. CW

      Not a fun procedure.

    6. RS

      No, no, no (laughs) . Not a fun thing. Not- not something that normally gets experimented upon. Yeah, there's a- there's a lovely, um, Kahneman and Reitemeyer study. They recruit a group of people, and these are genuine patients going in for colonoscopies. Every patient is given a handheld device that buzzes every minute, and when it buzzes, the patients have to turn a dial to say how much pain they're in. Zero, none at all, 10, excruciating. So average colonoscopy lasts 15 minutes. So they get 15 ratings from what they call the experiencing self. These are in-moment ratings.Next, they get a rating from the patient as they're leaving the hospital, and then two months after the operation. And that is another rating reflect on how painful overall the operation was. The expectation before the study was the- the average ratings from the remembering self, those reflective ratings, should be roughly the same as the average rating from the experiencing self. But that is not what happens. The average amount of pain people experienced is only a poor guide to what people remember. What's a much better guide are two moments in particular, the peak moment, the single worst moment of that operation is disproportional important, and the final moments. So, you could, for example, have a low level of pain for 13 minutes, and then a medium level of pain for two minutes, and that person would remember the experience worse than someone who had a medium level of pain for 13 minutes and a low level of pain for- for two minutes at the end. It's the final moments that are disproportional important. It's the single worst moment that's disproportionately important in shaping memory. Now, that's fascinating because that can be applied by brands. You might think cone hospitals are far too different a- a world, but that idea that some moments matter more than others can be applied to any brand experience. So, couple of examples. I love a restaurant in London called Flat Iron. Steak restaurant, reasonably priced, like 15 pounds for a steak, $20. You have your steak. After they've given you the bill, they give you this tiny little pair of miniature steak knives and they say, "Oh, just hand these in as you're leaving." You hand them in to the person at the cloakroom by the door, and in return they give you a salted caramel ice cream. Now, most restaurants end on the worst moment, they end on the bill, the paying, the faffing around with splitting the- the cash, all that kind of stuff. What Flat Iron do so cleverly is they create a high for that final moment as you leave, and I bet you most people who remember, uh- uh, who mostly visit a Flat Iron will remember that single instance. So-

    7. CW

      Is this something to do with the effort of it not just being everybody on the way out gets a salted caramel ice cream, it's that you have to take the thing, get the thing, give it in?

    8. RS

      Oh, that's interesting. So, I- I was thinking, I wonder if some of the appeal is it's unexpected and it's surprising. It's also done after the bill. It doesn't feel like it's some kind of commercial transaction, "Well, if you come into my restaurant, I'll give you an ice cream for free." That's just negotiation. This seemingly is done out of the large S, uh, uh, uh, uh, uh, you know, the- the, you know, the- the, it's done out of the kind of, um, beauty of their soul as it were or whatever. They don't seem to have an obvious financial benefit. I wonder if that makes it so- so positive.

    9. CW

      Have I told you about the thing we did with lollipops at night clubs?

    10. RS

      Oh, I don't think so. Go on.

    11. CW

      Okay. So I learned about the peak-end rule-

    12. RS

      Ah.

    13. CW

      ... six or seven years ago.

    14. RS

      Yeah, yeah, yeah, yeah.

    15. CW

      Um, and we were encountering a number of challenges. One of them being that a lot of night clubs are in high built-up city center neighborhood places.

    16. RS

      Oh. Yeah.

    17. CW

      Noise abatement orders come not only from the sound of the speakers, but also from the sound of egress when people leave, and-

    18. RS

      Yeah.

    19. CW

      ... if you dump 1,000 18-year-olds on the street at 3:00 in the morning, they start chanting things-

    20. RS

      Yeah. (laughs)

    21. CW

      ... they run around and scream and- and laugh-

    22. RS

      Yeah.

    23. CW

      ... and fight and kick each other. So, we needed to come up with a solution, and I tried my best to come up with a peak-end rule that did both of the things that we needed.

    24. RS

      Nice. Nice.

    25. CW

      So, what we did was as people were leaving, we had two good-looking girls stood with buckets of lollipops, like just little sweet lollies. Giving them a lolly meant that they had something in their mouth, which meant they were much less likely to start chanting and singing.

    26. RS

      Yeah.

    27. CW

      The sugar high seemed to have a reduction in the number of people that hung around afterward because it gave them enough of a little bit of energy to get them into a taxi and home.

    28. RS

      Yeah.

    29. CW

      It meant that they didn't hang around the takeaways and do that stuff for quite so long. And hopefully it gave them a, "Oh, that was- Wasn't that nice? Do you remember that lollipop that we gave?" Or whatever.

    30. RS

      Yeah.

Episode duration: 1:28:47

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