The Green Sheet Online Edition
August 24, 2009 • Issue 09:08:02
The irrational truth of customer behavior
In All Customers Are Irrational: Understanding What They Think, What They Feel and What keeps Them Coming Back author William J. Cusick, Chief Executive Officer of the Chicago-based marketing consulting firm Vox
Inc., makes use of the Maslow hierarchy of needs to contextualize consumer behavior.
The hierarchy, developed by American psychologist Abraham Maslow, uses five categories to rank human behavior from primal aspects such as breathing and eating up to more complex endeavors like creativity and problem solving. In the middle is where customers go.
According to Cusick, consumers are driven by the need to belong and are drawn to companies with which they identify or that fit their "life stories." As evidence, the author cites studies that show customers identifying more with products that are anthropomorphic, meaning they exhibit human traits.
The author discusses a recent ad campaign from Apple Inc., in which a hip young actor plays the part of an Apple computer and is contrasted with an older, more stilted gentlemen meant to symbolize a computer using a Microsoft Corp. Windows operating system. The campaign's effectiveness is rooted in a very personal appeal to the identity of its audience, Cusick asserts.
"There is a delicate interplay between our logical but subservient conscious brain and our more powerful subconscious or irrational brain," he writes.
Power of the subconscious
Indeed, the book describes the various ways in which consumers are led around by their subconscious thoughts and how companies are best able to exploit that tendency. Cusick said most companies don't and instead rely on traditional profit models built on the long-held presumption that customers are, in fact, rational people.
The book's introduction states, "Year after year, budgets for marketing, advertising and prospecting swell with the goal of increasing amorphous categories like 'awareness' and 'mindshare.' Customer experience has been an afterthought."
Cusick asserts that, despite the claims made by consumers in survey after survey - which usually indicate very methodical, deliberate spending habits - most of them make decisions somewhat arbitrarily, based more on gut reaction than conscious thought. To back this up, he cites scientific studies that show the brain processing thousands of different things at one time, but only a tiny percentage of those consciously.
Cusick argues that consumer decision-making can be influenced by things as simple as the color of a room or the way employees are dressed - or even whether the shopper is holding a cold beverage or a warm one. In one study, a group of consumers were shown four pairs of the exact same pantyhose, and invariably chose one pair as being the best one - a decision made without rational or factual basis.
Not surprisingly, Cusick dismisses "customer satisfaction" surveys as misleading and trivial. He advocates that companies actually observe the behavior of their customers to get a sense of their habits and not rely on answers from people who often either lack self-awareness, are reluctant to offend or are simply too incensed to fill out a survey to begin with.
Indeed, Cusick points out that the most dissatisfied customers rarely take part in such things. For that and other reasons, surveys tend to represent customer sentiment as being more favorable than it is. Thus, most companies don't do enough in the way of customer service.
Too often, it is viewed as an onerous or merely adjunct chore, Cusick says. He repeatedly turns to a quote from department store founder Marshall Field: "Customers are your only profit center." They should not, in other words, be viewed as anything less than the centerpiece of your mission.
However, the Web has given rise to better marketing and customer retention tactics, according to Cusick. For example, many Internet companies practice what the author believes is the best way to gauge consumer behavior: Rather than ask their customers questions about their preferences or feelings, they observe real-world behavior.
Sites like Amazon.com have used such observations to devise ways to make shopping easier or more pleasant and to facilitate purchasing - like recommending specific books, authors or musical artists to consumers based on where they usually browse or what they've historically purchased.
Cusick is especially enamored with Internet shoe retailer Zappos.com Inc. He points out that the notion of selling shoes online appears totally incongruous, since buying shoes normally requires trying them on.
But in a demonstration of how powerful good customer service can be, Zappos has overcome that obstacle by providing an array of other great services: Consumers receive their merchandise promptly in the mail, can return any item for a full refund and will always reach real people if they call the company's customer service hotline. There is no automated button pushing that so commonly drives people to feel like they're losing their minds.
Alas, Zappos appears to be an exception in a world where single-minded companies tend to cut corners, reduce services and make budget cuts to increase short-term profits at the expense of the consumers - and, ultimately, to the detriment of the company.
Companies irrational, too
In the first chapter, Cusick contrasts the vast amounts of time businesses spend trying to acquire new customers with the relatively little attention paid to retaining existing ones, despite the fact that customer retention is profoundly less expensive than customer acquisition.
Cusick writes that for many industries, "customers are typically unprofitable through the first year, only hitting a break-even point later in the relationship (if they stay). Yet these potentially valuable assets are walking out the door with little thought or effort put into retaining them. The fact is that there is an exponential financial impact of focusing more on retention to drive growth. Yet companies still don't get it."
All in all, the book illuminates the ways in which companies act irrationally almost as much as it does the customers which they serve. On the Maslow pyramid, businesses seem, in many respects, to occupy a layer even below that of their customers - that is, within the "safety" stratum (the desire for, among other things, security and resources) which rates one notch above the lowest category of breathing and eating.
Morality, creativity and problem solving - the most evolved human traits on Maslow's chart - evidently go right out the window when certain institutions become obsessed with short-term gain and forget their "only true profit center."
The actions of companies that nickel and dime or otherwise neglect their most important asset seem very regressive indeed, which is something that even the most irrational customer can see.
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