Wouldn’t it be great if you could truly predict Customer’s behavior. Well you can! Welcome to the world of behavioral economics.
I have recently been included in Brand Quarterly’s ‘Top 50 Marketing Thought Leaders over 50’ and they asked me an interesting question: “What do I think the next industry trends would be for the year?” I thought I would expand on my thoughts here and give a better explanation.
For those of you that do not know about this, behavioral economics embraces the fact that often Customers make irrational decisions and as a consequence this affects what they buy. In short, you need to embrace the fact that Customers are irrational.
In our bland world everything is the same to many marketers who still only focus on the 4P’s (Price, Place, Product and Promotion) and use this as a crutch. Marketers need to recognize that human decision making is far more complex than this. They need to elevate their thinking to a new level of understanding and embrace behavioral economics to break through the glass ceiling that is engaging them.
Let us start with three simple questions:
- What emotions are you trying to evoke in your Customers?
- Do they drive value for your organization ($)?
- Have you designed these emotions to be evoked in your marketing?
Not sure? Well you should be. To do your job effectively you should understand how emotions are evoked and design this into your Customer Experience or campaign. You therefore need to understand behavioral economics and how to make the most of Customer’s irrationality. When you have mastered this I then suggest you look into the whole area of predictive analytics and define how you can predict customer’s true behavior.
The last piece of the jigsaw is making this ‘live’ in an experience. Imagine that you have just designed a campaign that drives the customer into a store and they then have an interaction with store personnel. How are you going to ensure that the emotion you want to be evoked is actually evoked during the ‘in store experience’? The answer is that the store personnel need to be trained on recognizing how the Customer is feeling when entering the experience. This is achieved through advanced soft skills training. This covers recognizing Customer’s verbal and non-verbal cues (facial expression, body language, tone of voice ,etc.) in order to identify how the Customer is feeling. Then the store personnel can implement their training to convert how that Customer feels, maybe from ‘confused’ to one of the specific emotions that drive value for their organization.
Sounds far fetched? It’s not. This is what our more advanced clients are doing today with great success. One client moved their Customers from:
- ‘Feeling out of control’ to ‘in control’ by 25%.
- ‘Feeling Anxious’ to ‘feeling at ease’ by 10%.
- When Customers were asked, “Would you hire this person?” , a reply of ‘yes’ increased by 25%.
So, understanding that Customers are irrational, embracing behavioral economics, using this to predict their behavior and finally designing your experience and training people on how to convert customers emotions is the new world. Welcome to the new world of practical behavioral economics!
Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of five bestselling books and an engaging keynote speaker.
Colin is proud to be recognized by Brand Quarterly’s as one of the ‘Top 50 Marketing Thought Leaders over 50’.