The Secret of Pricing

Academia has a problem with names. They are not always, well, intuitive. Hyperbolic Discounting is an excellent example of a pertinent business area disguised in a difficult-to-interpret label.

Hyperbolic Discounting does not mean what you might think. If you take a look at the words in the name, you probably imagine it means embellished markdowns. However, Hyperbolic Discounting is a vital psychological concept that influences your customer’s behavior and could be getting in the way of your customer-driven growth.

Hyperbolic discounting describes how we undervalue the benefit of something that happens in the future. Also, the concept covers how we overvalue the cost to us for waiting for something. In other words, we want what we want right now, and if we have to wait, then you better offer us something good for our trouble.

Unlike many psychological concepts, Hyperbolic Discounting is easy to predict. Why? It is easy to anticipate because all of us have this bias for immediacy. When faced with a situation where we choose between gratification in the short term vs. more significant rewards in the long run, we feel tempted to choose the former over the latter. It is one more way that we, as a human race, are irrational.

Now, we can overcome our bias and make decisions that have long-term benefits, especially when it is something essential, like retirement savings or investing in life insurance to protect our family if something happens to us. However, with less critical choices in life, options with long-term benefits often get passed over for opportunities with immediate gratification.

One example from life is my diet. I know that if I eat less and exercise more, I will lose weight and feel healthier than I do now. However, the cookie I have in my hand will taste good now.

This episode of The Intuitive Customer explores the critical (and poorly named) concept of Hyperbolic Discounting. We explain in more detail what it means and how Academia came up with the name, as well as how you can recognize it in your customer’s behavior. Perhaps most importantly, we discuss how you can use it to promote customer-driven growth in your organization.

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.

This podcast is produced by Resonate Recordings. Click here to see how they can help you.

How AI will Change CX for the Future

Customer loyalty is what most businesses want. The more your customers buy from you, the more you improve your bottom line, not only in increased sales but also in decreased customer acquisition costs. Improving your Customer Experience to foster customer loyalty is often an expense that senior management can get behind.

However, there is a common misconception that customers are loyal to you based on the Customer Experience you deliver. The truth is that customer loyalty is based on memory. In other words, customers are loyal to you based on the customer experience they remember you deliver.

How memory works is a fascinating thing. There are experiences, thoughts and feelings, and facts and ideas that all mix to comprise them. Also, there are associated memories that connect, some more closely than others. Furthermore, other people’s memories can mix in there too and connect to the personal memories a customer has of your brand.

We often compare memory to a fishing net, where each knot of the net represents a memory. If you imagine picking a net up off the floor by a knot, you can picture how all the related knots in the net rise with it. You are holding the one knot, but all the other knots are there dangling close by, too.

Artificial intelligence (AI) has some exciting capabilities to create these fishing nets on behalf of your customers. It can analyze past customer behavior to predict their future actions. It can make connections between experiences based on the data it explains. Then, once it has constructed the virtual fishing net, it can tell you what knot the customer wants to make next.

But will AI get it right or wrong?

This episode of The Intuitive Customer explores the relationship between customer loyalty and the future applications of AI in Customer Experience strategy. We take a look at the complicated way memories associate to influence our behavior. We also look at how AI can mimic this process and use the results to predict customer behavior. Finally, we discuss what you can do to prepare for this technology and how you can use it to personalize a Customer Experience that gives that individual customers what they really want next.

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.

This podcast is produced by Resonate Recordings. Click here to see how they can help you.   

1 in 4 Will Lose Their Job in 2020

At the end of 2019, global research firm Forrester predicted that 1 in 4 Customer Experience jobs will be cut in 2020. While we find this prediction grim, we do not disagree. We believe that this reality has been on the horizon for some time now.

There are many reasons why it has come to this point. One of the most significant is a misconception about what Customer Experience is and how it affects the bottom line.

Customer Experience requires an investment in time and resources. It should be no surprise that businesses expect to see a return on investment. When Customer Experience programs lack proper measurement of their results, how can senior management justify their expense?

Another reason Customer Experience as a concept is under fire is because many organizations do not understand what it requires to improve it. They underestimate the importance of tackling the more significant causes of dissatisfaction in favor of smaller (and easier) changes. However, these less significant areas will not produce the results needed to justify the programs moving forward.

I began working in Customer Experience nearly twenty years ago. I was into Customer Experience before it was a corporate term bandied about by consultants and marketing conferences. I have seen it rise into the spotlight and saw the bandwagons roll by, crowded with the latest organizations that decided they should embrace the idea of Customer Experience because “well, everyone else is.”

Unfortunately, many organizations don’t understand how to improve the Customer Experience. One thing I have learned over the years is that Customer Experience is, in many ways, a mindset. Once you have it, you realize how it works and how it is integral to everything that happens at an organization, not the least of which is customer-driven growth for your bottom line.

Many things come together to create success for the concept of customer-driven growth. It is essential to understand what drives value for your organizations and design ways for you to engage customers and promote that value to them. Perhaps most importantly, you need to measure your results, if for no other reason than to prove it works to people who do not share your mindset of putting the customer at the center of everything you do.

In this episode of The Intuitive Customer, we explore the ways that Customer Experience professionals can be a part of the 75 percent that keep their jobs and what they can do to facilitate an environment that nurtures customer-driven growth.

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

 To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.

This podcast is produced by Resonate Recordings. Click here to see how they can help you.

If I asked you for $100, what would you say? My guess is no. You probably have a rule against giving people money just because they asked you.

But what if I asked you for $1? Most of us would probably be okay with that. Sure, it’s still giving money, but it’s only $1, and that isn’t the same thing.

However, by saying yes to giving me $1, you broke your rule about giving people money just because they asked you. It’s not a big deal, of course, but it does make it more likely that if I came back and asked for $5, $10, or $20, that you would give it to me. Moreover, if you discovered that you didn’t mind giving me money, you might say yes the next time I ask for $100.

There is a name for this method of getting people to do what you want. In psychology, it’s called the Escalation of Commitment. In laymen’s terms, it’s called “in for a penny, in for a pound.” We refer to it as making it easy for your customers to say yes.

Escalation of commitment works on more than just money. It also works for time, like volunteering, or effort, like getting someone to work harder or run farther. The idea is you make it easy for someone to say yes to you over something small and then slowly increase the amount of whatever resource you want from them over time.

In this episode of The Intuitive Customer, we explore how Escalation of Commitment works and applies to Customer Experience. We also explain how you can use it to segment your customers to give you an idea of where they are on the commitment spectrum with you. Finally, we caution you on what not to do when getting your customers to yes to avoid creating negative feelings toward your brand and organization.

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.

How to Ensure You Make Good Decisions

I am an Apple Superfan. As a loyal customer, I notice all the positive moments in my Customer Experience with them. They reinforce that my brand is the best and buying from them was a good decision.

Moreover, if I ever see an article that is negative about Apple, or positive about a competitor of Apple, I don’t believe it or, worse, don’t read it. I don’t trust that it will be accurate, useful, or trustworthy to listen to that garbage.

My customer behavior here is indicative of Confirmation Bias. The psychological concept describes how people hold tightly to their beliefs and seek out support for what they “know” to be true. It also says that people will resist or ignore information that is contrary to their viewpoint. Moreover, if we do get information that is contrary to our view, we will interpret it in a way that supports our opinion.

Confirmation Bias is why we think that when our team loses, it is because the referees made bad calls, not our beloved team’s performance.

Confirmation Bias is why people with one type of political view watch one new network, and people with the opposing view watch the other one.

Confirmation Bias is why people worked on the three presidential campaigns of US Politician Ralph Nader, even though he did not have support from either Democrats or Republicans and absolutely no chance to win the election.

Everyone is affected by Confirmation Bias. We all have beliefs that, when challenged, trigger our defenses to protect what we know deep down in our hearts to be true by denying the other point of view’s validity. Because we all have it, overcoming Confirmation Bias is challenging and, in some ways, emotionally draining and existentially exhausting.

This episode of The Intuitive Customer explores Confirmation Bias and how it affects our decision-making as humans. We also take a look at how you can overcome your Confirmation Bias to make decisions that improve your Customer Experience, your Work Experience, and your organization’s bottom line.

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.

The Biggest Thing We Learned in 2019

If there is one thing we have learned in 2019, it is that customers give us a lot to think about regarding their behavior. How they behave and why are fascinating topics and one that has much influence on our Customer Experience outcomes. As we embark on a new year and a new decade, it is an excellent time to reflect on what we have learned and what made the most significant impact on us regarding customer retention and loyalty. 

For example, one concept about Customer Experience that has gradually proven to me to be essential to customer loyalty is the whole area of customer memory. This year, as in years past, we talked a lot about how the customer’s memory of experience forms. From Nobel-prize winning economist professor Daniel Kahneman, memories follow the Peak-End rule. His rule tells us that what customers remember most about an experience is the point when they felt the most emotion (the peak) and how they felt at the end of it.

However, this year, I also learned how memories are connected, like a fishing net. We may consciously remember one thing about an experience, but also our subconscious memories attach to that conscious memory. If you picture the conscious memory as one of the lines in a fishing net that you grab with your fingers, the subconscious memories are all the lines of the net that you draw up with it, connected and continuous. The image of it fascinates me because it illustrates how influential and essential memories are in Customer Experience management at a conscious and subconscious level. 

This concept is my favorite because we know that people don’t choose your experience based on the one you gave them. They choose it based on the one they remember you gave them. The Peak-End Rule, in this case, has significant implications on how you manage your Customer Experience. The Peak-End rule and the essential nature of customer memory is an example of how the lessons we learn and embrace can change the trajectory of our actions moving forward.   

Among other things, this episode of The Intuitive Customer is a year in review, a chance to take stock of what we know now about the reasons that customers do what they do in your experience. Understanding customer behavior and the drivers behind it can help you take your Customer Experience and the results you get from it to the next level in the new year and the new decade. 

The Intuitive Customer podcasts help you take your Customer Experience to the next level by unlocking the “hidden” aspects of your experience and determining what really drives value for your customers.

To find out more about how your organization’s marketing can improve customer loyalty and retention, contact us at www.beyondphilosophy.com.

To subscribe to The Intuitive Customer and never miss a podcast, please click here.