Neuromarketing has an interesting post about decoy marketing. It illustrates how decisions are made in a relative context, rather than from a comprehensive list that economics may often suggest. In fact, consumers often make decisions looking at the options immediately obvious to them. Below is a little tidbit I picked up in a Consumer Behavior course.
Let’s start off with a generic trade-off curve between Point A and Point B.
Trade Off Curve for Products A & B
Let’s say that anything along that curve is considered equally optimal. And to flesh out this example, we’ll say we’re looking at waffles and the two qualities that people care about in waffles: the amount of syrup on a waffle and how crispy it is. In general people are willing to give up some syrup for more crisp. Point A is a syrup covered waffle, and hence fairly soggy. Point B is a crispy waffle with little syrup.
Now let’s say we offer Waffle A and Waffle B for the people to choose between. To make things simple, half of the market chooses Waffle A and half the market chooses Waffle B.
Now here is the interesting part. We can shift market share around without making any changes to Waffle A or Waffle B. Instead we are going to change the context of the decision by adding in Waffle C, a waffle inferior in both crisp and syrup to Waffle B.
Trade Off Graph with Point C as inferior to Point B
By Simply adding this as an option to choose from, Waffle B now gets more than half of the market. The split is now something like 40% choose Waffle A and 60% choose Waffle B.
Maybe it is because Waffle B is obviously superior to C, makes it more attractive. Perhaps after looking at B and C we don’t want to figure out the trade off between A and B. I’m not sure what exactly the cause is, but we do know that context matters.
The NYTimes has an article that discusses creating habits around a company’s products. It quotes: “OUR products succeed when they become part of daily or weekly patterns,” said Carol Berning, a consumer psychologist who recently retired from Procter & Gamble.
So the question begs, where does your product or service fit into consumer’s lives? Between brushing your teeth and breakfast? Between seatbelt and handbrake? Or maybe you are an every 6-months habit. What cues do you provide your consumers to prompt them into a certain routine? (My dentist sends post cards)
The NYTimes article explains how P&G realized that bad smells occurred too infrequently to make Febreze profitable. In fact too often buyers forgot they had Febreze in the house. It was only when they tied Febreze with cleaning a room did a solid habit form. In fact North America alone bought $650 million worth of Febreze this last fiscal year.
So we, or at least I, have heard over and over again that Starbucks doesn’t sell coffee, they sell the “experience.” This is why they can charge $4 a cup. And the experience I often hear is their coffee shops are lush, well decorated little bits of paradise, but I doubt that. How many times do people go to Starbucks to sit and enjoy the coffee? There isn’t enough room for people to do that, I would say part of the experience is to have fewer people hang around so Starbucks can have a nice open, spacious (and mostly empty) space. Think about when you are looking at houses and how spacious everything feels before you move your stuff. I believe the Starbucks experience is the aura connoisseur-ship and, importantly, the ability to wrap that up into a nice little cup and carry it around with you as a badge.
You buy your coffee somewhere nice and spacious, where the people behind the counter get health insurance, you get to specify exactly how your coffee is made and they call out your name instead of a number when your coffee is done. I think this subtle distinction is rather important, especially if you’re trying to learn from Starbucks. Can you imagine if you tried to open up a coffee shop downtown SF and you believe you need to get people to sit down and enjoy the coffee in the shop? You might end up buying too much real estate not realizing the profit is in people buying cups with a minimal store size.
When trying to create a strong customer experience (or value proposition), don’t give main roles to your supporting characters and vice versa.
I feel that too many times companies, especially startups forget to look at the consumer buying process. They often begin by focusing on their target market and over-zealously trying to convert people into instant consumers or users. Now this can be a good approach, and it sounds like a great mindset. It is very lean marketing and all of it is focused on getting new, targeted consumers.
However, I think it is often misguided. This strategy is not really scalable and doesn’t build momentum. Your marketing plan often looks like a sales pitch, focusing intently on converting as many leads into buyers. All in all the process is far too quick, how often do people make snap decisions? Personally, I dislike having to make purchases without forethought, research, and especially in front of salesmen.
Let’s take a pretty basic buyer behavior model:
Awareness => Interest/Desire => Transaction/Purchase => Repeat/Loyalty
By rushing through potential consumers through all of theses phases makes it an unnatural process. It also takes a lot of effort to push through these phases, and we tend to think that word of mouth only happens after we hit loyalty. In fact I would argue that word of mouth can happen anywhere. If I’m undecided on a purchase I can still solicit advice from someone who hasn’t made a purchase before. “I haven’t tried it, but it seems like something useful” isn’t a strong referal, but it will do if it comes from someone I trust and I more or less merely need justification for my purchase.
My advice, slow down. Stop staring at your number of loyal customers and insist on doubling it quarter over quarter. You build momentum by excelling at each of these phases. There are key success factors in each phase. To get widespread awareness you often need an interesting product/proposition and often a clever campaign. To gain interest you should have a good product with clear advantages over existing competitors. Your lead customers will try first, but many times some sort of referral, weak or strong, is needed to get most people into Transaction/Purchase. Loyalty should be easy as long as you listen to your customers. By making sure you have a well thought out product and then building awareness, you should also start building momentum. People will naturally move into the other phases and you get to stop being so pushy. Just a thought.