Category Archives: Consumer Psychology

Ode to a Grecian Eurozone

comm-crisis I’d like to comment on the Greek debt crisis. But I don’t know anything about it. Zip..or, as they say in Athens – μηδέν. I do, however, know how to say zero in Greek, thanks to Google Translate. At least for the next few minutes. I also happen to know rather a lot right now about the Tour de France, how to wire RV batteries, how to balance pool chemicals, how to write obituaries and most of the plotlines for the Showtime series Homeland. I certainly know more about all those things than the average person. Tomorrow, I’ll probably know different stuff. And I will retain almost nothing. But if you ask me what in the world is happening right now, I’ll likely draw a blank. I’d say it’s all Greek to me, but a certain Mediapost columnist already stole that line. Damn you Bob Garfield!

I’m not really sure if I’m concerned about this. After all, I’m the one who has chosen not to watch the news for a long time. My various information sources feed me a steady diet of information, but it’s all been predetermined based on my interests. I’m in what they call a “filter bubble.” I’ve become my own news curator and somewhere along the line, I’ve completely filtered out anything to do with the Greek economy. It’s because I’m not really interested in the Greek economy, but I’m thinking maybe I should be.

(Incidentally, am I the only one who finds it a bit ironic that the word “economy” comes from – you guessed it – the Greek words for “house” and “management”)

The problem is that I have a limited attention span. My memory capacity is a little more voluminous, but there are definite limits to that, as well. To make matters worse, Google is making me intellectually lethargic. I don’t try as hard to remember stuff because I don’t have to. Why learn how to count to 10 in Greek when I can just look it up when I need to. I’m not alone in this. We’re all going down the same blind cornered path together. Sooner or later, we’ll all run into a major crisis we never saw coming. And it’s because we’ve all been looking in different places.

40 years ago, to be well informed, you had to pay attention to mainstream news sources. It was the only option we had. We all got feed the same diet of information. Some of us retained more than others, but we all dined at the same table. Our knowledge capacity was first filled from these common news sources. Then, after that, we’d fill whatever nooks and crannies were left with whatever our unique interests might be. But we all, to some extent, shared a common context. Knowledge may not have been deep, but it was definitely broad.

Now, if I choose to learn more about the Greek economy, I certainly have plenty of opportunities to do so. But I’d be starting with a blank slate. It would take some work to get up to speed. So I have to decide whether it’s worth the effort for me to inform myself. Is the return worth the investment? Something has to tip the balance to make it important enough to learn more about whatever it is the Greeks are referendumming (referendering?) about. And in the meantime, there will be a lot of other things competing for that same limited supply of information gathering attention. Tomorrow, for instance, it might become really important for me to find out how close BC is to legalizing pot, or what the wild fire hazard is in Northern Saskatchewan, or what July’s weather is like in Chiang Mai. All of these things are relatively easy to find, but I have to reserve enough retention capacity to use the information once I find it. Information may want to be free, but the resources required to utilize it depletes our limited stores of cognitive ability.

Perhaps we’re saving more of our attention for on demand information requirements. Or maybe we’re just filtering out more of what we used to call news. Whatever the cause, I think we’re loosing our common cultural context, bit by byte. A community is defined by what it has in common, and the more technology allows us to pursue our individual interests, the more we surrender the common narratives that used to bind us.

Feed Up with Feedback Requests

Sorry Google. I realize this is my last chance to tell you about my experience. But you see, you’re in a long line of companies that are also desperate for the juicy details of my various consumer escapades. Best Western, Ford, Kia, Home Depot, Apple, Samsung – my in box is completely clogged with pleas for the “dets” of my transactional interactions with them. I’ve never been more popular – or frustrated.

I appreciate the idea of customer follow up. I really do. But as company after company jumps on the customer feedback bandwagon, poor ordinary mortals like myself don’t have a hope in hell of keeping up. It could be a full time job just filling out surveys and rating every aspect of my life on a scale that runs from “abysmal” to “awesome” The irony is, these customer feedback requests are actually having the opposite effect. Even if my interactions with the brand are satisfactory, the incessant nagging to find out if I “like them, I really like them” are beginning to piss me off. In the quest to quantify brand affinity, these companies are actually eroding it. Ooops! Talk about unintended consequences.

So, if we accept the fact that knowing what our customers think about us is a good thing, and we also accept the fact that our customers have better things to do with their lives than fill out post-purchase surveys, we have to find a more elegant way to get the job done.

First of all, customer feedback should be part of a full customer relationship continuum. It should be just one customer touch point, not the customer touch point. You have to earn the credibility that gives you the right to ask for my feedback. Too many companies don’t worry about gauging satisfaction “in the moment.” If you don’t care enough to ask if I’m happy when I’m right in front of you, why should I believe that you’ll pay any attention to my survey. But too many companies jam this request for feedback on their customers without doing the spadework required to build a relationship first.

Worse, because compensation is increasingly being tied to feedback results, you get the “please say you’ll love me” pleading on the sales floor. See if this sounds familiar: “You’ll be receiving a survey from head office asking me how I’ve done. I don’t get a bonus unless you give me top marks in each category. So if there’s anything I can do better, please tell me now.” There are so many things that are just plain wrong with this that I don’t know where to start. It’s smarmy and disingenuous. It also puts the customer in a very awkward position. When it’s happened to me, I just murmur something like, “No, you’ve been great,” and run with all speed to the nearest exit.

The next thing we have to realize is that not all purchases are created equal. Remember the Risk/Reward matrix I talked about in last week’s column about how our brains process pricing information? While this applies to our motivational balance going into a purchase, it also provides some clues to the emotion landscape that exists post-purchase. If the purchase was in the low risk/low reward quadrant, like the home improvement supplies I picked up at Home Depot this weekend, it’s a task that has been crossed off my to-do list. It’s done. It’s over. The last thing I want to do is prolong that task by filling out a survey about said task. But, if it’s something that falls into the high risk/high reward quadrant, such as a major vacation, then I am probably more apt to invest some time to give you some feedback. The Rule of Thumb is: the higher the degree of risk or reward, the more likely I am to fill out a survey.

The final thing to remember about customer surveys is that you’re capturing extremes. The people who fill out surveys are usually the ones that either hate you or love you. So you get a very skewed perspective on how you’re doing. What you’re missing is the vast middle of your market that may not be sufficiently motivated to toss you either a brick or a bouquet.

I’m all for getting to know your customers better. But it has to be part of a total approach. It begins with simple things, like actually listening to them when you’re engaging with them.

How Our Brains Process Price Information

On-Off-Switch-For-Human-BrainWe have a complex psychological relationship with pricing. A new brain scanning study out of Harvard and Stanford starts to pick apart the dynamics of that relationship.

Uma R. Karmarkar, Baba Shiv, and Brian Knutson wanted to see how we evaluate a potential purchase when the price is the first piece of information we get as opposed to the last piece of information. They used both fMRI scanning and behavioral tracking to see how the study participants responded. Participants were given $40 dollars to spend and then were presented with a number of sample offers. In all cases, the price represented an attractive bargain on the product featured. But one group was given the price first, and the second group was given the price last.

There was another critical difference in the evaluation process as well. In the first phase of the study, participants were shown products that they would like to buy, and in the second phase, they were shown products that they would have to buy. The difference between the two was how they activated the reward center of our brain – the nucleus accumbens. I’ve been talking for years about the importance of understanding the balance of risk and reward in our purchase decisions. This study provides a little more understanding about how our brain processes those two factors.

In the first phase, participants were shown a variety of products that they would consider rewarding. These would fall into the first quadrant of the risk/reward matrix I introduced in my column from 5 years ago. The researchers were paying particular attention to two different parts of the brain – the nucleus accumbens and the medial prefrontal cortex. For a layman’s analogy, think of you and a five year old walking down the toy aisle in a department store. The nucleus accumbens is the five year old who starts chanting, “I want it. I want it. I want it.” The medial prefrontal cortex is the adult who decides if they’re actually going to buy it. In the study, the researchers found that the sequence in which these two parts of the brain “lit up” depended on whether or not you saw the price first. If you saw the product first, the nucleus accumbens started its chant – “I want it.” If you saw the price first, the prefrontal medial cortex kicked into action and started evaluating whether the offer represented a good bargain. In the case of the reward products, although the sequence varied, the actually purchase process didn’t. In most cases, participants still ended up making the purchase, whether price was presented first or last.

But things changed when the researchers tried a variety of products that fell into the second quadrant of the risk reward matrix – low risk and low reward. These are the everyday items we have to buy. In the study, they included things like a water filtration pitcher, a pack of AA batteries, a USB drive, and a flashlight. There was nothing here that was likely to get the nucleus accumbens starting to chant.

Now, it should be noted that this follow-up study did not include the fMRI scanning, but by tracking purchasing behaviors we can make some pretty educated guesses as to what’s happening in the respective brains of our participants. Here, presenting prices first resulted in a significant increase in actual purchases over instances when price was presented last. If price comes first, we can imagine that the prefrontal cortex is indicating that it’s a good bargain on a needed product. But if a relatively boring product is presented first for evaluation to the nucleus accumbens, there’s little to excite the reward center.

An important caveat to this part of the study comes with knowing that the prices presented represented significant savings on the products. After the simulated purchases, participants were asked to indicate a price they would be willing to pay for the product. When the price was the lead, the named prices tended to be a little lower, indicating that if you are going to lead with price, especially for quadrant two products, you’d better make sure you’re offering a true bargain.

If anything, this study provides further proof of the value of knowing a prospect’s mental landscape. What are the risk and reward factors that will be motivating them? Will the media prefrontal cortex or the nucleus accumbens be calling the shots? What priming effects might an early introduction of price introduce into the process?

When I wrote about the risk/reward matrix five years ago, one commenter said “a simple low-high risk/low-high reward graph is not very useful for driving just in time and location based offers, discounts, etc.” I respectfully disagree. While more sophisticated models are certainly possible, I think even a simple 2X2 matrix that helps map out the decision factors that are in play with purchases would be a significant step forward. And this isn’t about driving real time variations on offers. It’s about understanding the fundamentals of the buyer’s decision process. There’s nothing wrong with simplicity, especially if it drives greater usage.

An Eulogy for “Kathy” – The First Persona

My column last week on the death of the persona seemed to find a generally agreeable audience. But prior to tossing our cardboard cutouts of “Sally the Soccer Mom” in the trash bin, let’s just take a few minutes to remind ourselves why personas were created in the first place.

Alan Cooper – the father of usability personas – had no particular methodology in mind when he created “Kathy,” his first persona. Kathy was based on a real person that Cooper had talked to during his research for a new project management program. Cooper found himself with a few hours on his hands every day when his early 80’s computer chugged away, compiling the latest version of his program. He would use the time to walk around a golf course close to his office and run through the design in his head. One day, he engaged himself in an imaginary dialogue with “Kathy,” a potential customer who was requesting features based on her needs. Soon, he was deep in his internal discussion with Kathy. His first persona was a way to get away from the computer and cubicle and get into the skin of a customer.

There are a few points here that important to note. “Kathy” was based on input from a real person. The creation of “Kathy” had no particular goal, other than to give Cooper a way to imagine how a customer might use his program. It was a way to make the abstract real, and to imagine that reality through the eyes of another person. At the end we realize that the biggest goal of a persona is just that – to imagine the world through someone else’s eyes.

As we transition from personas to data modeling, it’s essential to keep that aspect alive. We have to learn how to live in someone else’s skin. We have to somehow take on the context of their world and be aware of their beliefs, biases and emotions. Until we do this, the holy grail of the “Market of One” is just more marketing hyperbole.

I think the persona started its long decline towards death when it transitioned from a usability tool to a marketing one. Personas were never intended to be a slide deck or a segmentation tool. They were just supposed to be a little mental trick to allow designers to become more empathetic – to slip out of their own reality and into that of a customer. But when marketers got their hands on personas, they do what marketers tend to do. They added the gloss and gutted the authenticity. At that moment, personas started to die.

So, for all the reasons I stated last week, I think personas should be allowed to slip away into oblivion. But if we do so, we have to find a way to understand the reality of our customers on a one to one basis. We have to find a better way to accomplish what personas were originally intended to do. We have to be more empathetic.

Because humans are humans, and not spreadsheets, I’m not sure we can get all the way there with data alone. Data analysis forces us to put on another set of lenses – ones that analyze – not empathize. Those lenses help us to see the “what” but not the “why.” It’s the view of the world that Alan Cooper would have had if he never left his cubicle to walk around the Old Del Monte golf course, waving his arms and carrying on his internal dialogue with “Kathy.” The way to empathize is to make connections with our customers – in the real world – where they live and play.  It’s using qualitative methods like ethnographic research to gain insights that can then be verified with data. Personas may be dead, but qualitative research is more important than ever.

The Persona is Dead, Long Live the Person

First, let me go on record as saying up to this point, I’ve been a fan of personas. In my past marketing and usability work, I used personas extensively as a tool. But I’m definitely aware that not everyone is equally enamored with personas. And I also understand why.

Personas, like any tool, can be used both correctly and incorrectly. When used correctly, they can help bridge the gap between the left brain and the right brain. They live in the middle ground between instinct and intellectualism. They provide a human face to raw data.

But it’s just this bridging quality that tends to lead to abuse. On the instinct side, personas are often used as a short cut to avoid quantitative rigor. Data driven people typically hate personas for this reason. Often, personas end up as fluffy documents and life sized cardboard cutouts with no real purpose. It seems like a sloppy way to run things.

On the intellectual side, because quant people distrust personas, they also leave themselves squarely on data side of the marketing divide. They can understand numbers – people not so much. This is where personas can shine. At their best, they give you a conceptual container with a human face to put data into. It provides a richer but less precise context that allows you to identify, understand and play out potential behaviors that data alone may not pinpoint.

As I said, because personas are intended as a bridging tool, they often remain stranded in no man’s land. To use them effectively, the practitioner should feel comfortable living in this gap between quant and qual. Too far one way or the other and it’s a pretty safe bet that personas will either be used incorrectly or be discarded entirely.

Because of this potential for abuse, maybe it’s time we threw personas in the trash bin. I suspect they may be doing more harm than good to the practice of marketing. Even at their best, personas were meant as a more empathetic tool to allow you to thing through interactions with a real live person in mind. But in order to make personas play nice with real data, you have to be very diligent about continually refining your personas based on that data. Personas were never intended to be placed on a shelf. But all too often, this is exactly what happens. Usually, personas are a poor and artificial proxy for real human behaviors. And this is why they typically do more harm than good.

The holy grail of marketing would be to somehow give real time data a human face. If we could find a way to bridge left brain logic and right brain empathy in real time to discover insights that were grounded in data but centered in the context of a real person’s behaviors, marketing would take a huge leap forward. The technology is getting tantalizingly close to this now. It’s certainly close enough that it’s preferable to the much abused persona. If – and this is a huge if – personas were used absolutely correctly they can still add value. But I suspect that too much effort is spent on personas that end up as documents on a shelf and pretty graphics. Perhaps that effort would be better spent trying to find the sweet spot between data and human insights.

Some Second Thoughts on Mindless Media

When I read Tom Goodwin’s Online Spin last week, I immediately jumped on his bandwagon. How could I not? He played the evolutionary psychology card and then trumped that by applying it to the consumption of media. This was right up my ideological alley.

addict_f1pjr6Here’s a quick recap: Humans evolved to crave high calorie foods because these were historically scarce. In the last century, however, processed food manufacturing has ensured that high calorie foods are abundantly available. The result? We got fat. Really fat. Tom worries that the same thing is happening to our consumption of media. As traditional publishing channels break down, will we become a society of information snackers?

“We’re rewarding pieces that are most-clickable or most easily digested, and our news diet shifts from good-for-us to snackable.”

Goodwin also mourns the death of serendipitous discovery – which was traditionally brought to us by our loyalty to a channel and the editorial control exercised by that channel. If we were loyal to the New York Times, then we were introduced to content they thought we should see. But in the age of “filter bubbles” our content becomes increasingly homogenized based on algorithms, which are drawing an ever-narrowing circle bounded by our explicit requests and our implicit behavior patterns. We become further insulated from quality by mindless social media sharing – which tends to favor content pandering to the lowest common denominator.

But the more I thought about it, the more I wondered if this wasn’t a little paradoxical? Tom’s very thoughtful column, which hardly qualifies as intellectual fast-food, didn’t come to us through traditional journalism. Tom, like myself, is not a professional journalist. And while MediaPost does provide some editorial curation, it’s purpose it to provide a fairly transparent connection between industry experts like Tom and other experts like you. Tom’s piece came to us through a much more transparent information marketplace – the very same marketplace that Tom worries is turning us into an audience of mindless media junkies. And I should add that Tom’s piece was shared through social circles over 200 times.

So where is the disconnect here? The problem is that when it comes to human behaviors, there are no universal truths. How we act in almost any given situation will eventually distribute itself across a bell curve. Let’s take obesity, for instance. If we talk trends, Tom is absolutely correct. The introduction of fast food in North America coincided with an explosion of obesity, which as a percentage of the US population rose from about 10% in the 1950’s to almost 35% in 2013. But if we accept the premise that we all mindlessly crave calories, we should all be obese. Obesity rates should also continue to be going up until they reach 100% of the population. But those two things are just not true. Obesity rates have plateaued in the last few years and there are indications that they are starting to decline amongst children. Also, although fast food is now available around the world – obesity rates vary greatly. Japan has one of the highest concentrations of McDonald’s outlets per capita (25 per million) in the world but has an obesity rate of 3.2%, the lowest in all OECD countries. The US has a higher concentration McDonald’s (45 per million) but has an obesity rate 10 times that of Japan. And my own country, Canada, almost matches the US McDonald for McDonald (41 per million) but has an obesity rate half that of the US (14.3%).

My point is not to debate whether we’re getting fatter. We are. But there’s more to it than just the prevalence of fast food. And these factors apply to our consumption of media as well. For example, there is a strong negative correlation between obesity levels and education. There is also a strong negative correlation between obesity and income. Cultural norms have a huge impact on the prevalence of obesity. There are no universal truths here. There are just a lot of nebulous factors at play. So, if we want to be honest when we draw behavioral comparisons, we have to be accepting of those factors.

Much as I believe evolution drives many of our behaviors, I also believe that more open markets are better than more restrictive ones. As the mentality of abundance takes hold, our behaviors take time to adjust. Yes, we do snack on crap. But we also have access to high quality choices we could have never dreamed of before. And the ratio of consumption between those two extremes will be different for all of us. Consider the explosion of TV programming that has happened over the last 3 decades. Yes, there is an over-abundance of mindless dreck, but there is also more quality programming than ever to choose from. The same is true of music and pretty much any other category where markets have opened up through technology.

The way to increase the quality of what we consume, whether it be food, information or entertainment, is not to limit the production and distribution of those consumables through more restrictive markets, but to improve education, access and create a culture of considered consumption. Some of us will choose crap. But some of us will choose the cream that rises to the top. The choice will be ours. The answer is not to take those choices away, but rather to create a culture that encourages wiser choices.

The Secret of Successful Marketing Lies in Split Seconds

affordanceThe other day, I was having lunch in a deli. I was also watching the front door, which you had to push to get in. Almost everyone who came to the door pulled, even though there was a fairly big sign over the handle which said “Push.” The problem? The door had the wrong kind of handle. It was a pull handle, not a push. The door had been mounted backwards. In usability terms, the door handle presented a misleading affordance.

I suspect the door had been there for many years. I was at the deli for about 30 minutes. In that time, about 70% of the people (probably close to 50) pulled rather than pushed. Extrapolating this to the whole, that means over the years, thousands and thousands of people have had to try twice to enter this particular place of business. Yet, the only acknowledgement of this instance of customer pain was the sign that had been taped to the door – “Push” – and I suspect there was an implied “(You Idiot)” following that.

I suspect most marketing falls in the same category as that sign. It’s an attempt to fight the intuitive actions that customers take – those split-second actions that happen before our brain has a chance to kick in. And we have to counteract those split-second decisions because the path we have created for our customers was built without an understanding of those intuitive actions. After we realize that our path runs counter to our customer’s natural behaviors do we rebuild the path? Does the deli owner pay a contractor to remount the door? No, we post a sign asking customers to push rather than pull. After all, all they have to do is think for a moment. It seems like a reasonable request.

But here’s the problem with that. You don’t want your customers to think. You want them to act. And you want them to act as quickly and naturally as possible. The battles of marketing are won in those split seconds before the brain kicks in.

Let me give you one example. A few years ago I did a study with Simon Fraser University in Canada. We wanted to know how the brain responded in those same split seconds to brands we like versus brands we have no particular affinity to. What we found was fascinating. In about 150 milliseconds (roughly a sixth of a second) our brain responds to a well-loved brand the same way we respond to a smiling face. This all happens before any rational part of the brain can kick in. This positive reaction sets the stage for a much different subsequent mental processing of the brand (which starts at about 450 milliseconds, or half a second). And the power of this alignment can be startling. As Dr. Read Montague discovered, it can literally alter your perception of the world.

If you can rebuild your path to purchase to align with your customer’s intuitive behaviors, you don’t need to put up “push” signs when they stray off course. You don’t have to make your customers think. Here’s why that is important. As long as we operate at the intuitive level, humans are a fairly predictable lot. Evolution has wired in a number of behaviors that are universal across the population. You would not be risking your vacation fund if you placed a bet that the majority of people would try to pull a door with a door handle that suggested your should pull it, even if there was a sign that said “push.” As long as we operate on auto-pilot, we can plot a predicted behavioral course with a fair degree of confidence (assuming, of course, we’ve taken the time to understand those behaviors).

But the minute we start to think, all bets are off. The miracle of the human brain is that it has two loops of activity – one fast and one slow. The fast loop relies on instinct and evolved behavioral habits. It’s incredibly efficient but stubbornly rigid. The slow loop brings the full power of human rationality to bear on the problem. It’s what happens when we think. And once the prefrontal cortex kicks it, we are amazingly flexible but we pay the price in efficiency. It takes time to think. It also brings a massive amount of variability into the equation. If we start thinking, behaviors become much more difficult to predict.

The longer you can keep your customers on the fast path, the closer you’ll be to a successful outcome. Plan that path carefully and remove any signs telling them to “push.”

The Messy Part of Marketing

messymarketingMarketing is hard. It’s hard because marketing reflects real life. And real life is hard. But here’s the thing – it’s just going to get harder. It’s messy and squishy and filled with nasty little organic things like emotions and human beings.

For the past several weeks, I’ve been filing things away as possible topics for this column. For instance, I’ve got a pretty big file of contradicting research on what works in B2B marketing. Videos work. They don’t work. Referrals are the bomb. No, it’s content. Okay, maybe it’s both. Hmmm..pretty sure it’s not Facebook though.

The integration of marketing technology was another promising avenue. Companies are struggling with data. They’re drowning in data. They have no idea what to do with all the data that’s pouring in from smart watches and smart phones and smart bracelets and smart bangles and smart suppositories and – okay, maybe not suppositories, but that’s just because no one thought of it till I just mentioned it.

Then there’s the new Google tool that predicts the path to purchase. That sounds pretty cool. Marketers love things that predict things. That would make life easier. But life isn’t easy. So marketing isn’t easy. Marketing is all about trying to decipher the mangled mess of living just long enough to shoehorn in a message that maybe, just maybe that will catch the right person at the right time. And that mangled mess is just getting messier.

Personally, the thing that attracted me to marketing was its messiness. I love organic, gritty problems with no clear-cut solutions. Scientists call these ill-defined problems. And that’s why marketing is hard. It’s an ill-defined problem. It defies programmatic solutions. You can’t write an algorithm that will spit out perfect marketing. You can attack little slivers of marketing that lend themselves to clearer solutions, which is why you have the current explosion of ad-tech tools. But the challenge is trying to bring all these solutions together into some type of cohesive package that actually helps you relate to a living, breathing human.

One of the things that has always amazed me is how blissfully ignorant most marketers are about concepts that I think should be fundamental to understanding customer behaviors: things like bounded rationality, cognitive biases, decision theory and sense-making. Mention any of these things in a conference room full of marketers and watch eyes glaze over as fingers nervously thumb through the conference program, looking for any session that has “Top Ten” or “Surefire” in it’s title.

Take Information Foraging Theory, for instance. Anytime I speak about a topic that touches on how humans find information (which is almost always), I ask my audience of marketers if they’ve ever heard of I.F.T. Generally, not one hand goes up. Sometimes I think Jakob Nielsen and I are the only two people in the world that recognize I.F.T. for what it is: “the most important concept to emerge from Human-Computer Interaction research since 1993.” (Jakob’s words). If you take the time to understand this one concept I promise it will fundamentally and forever change how you look at web design, search marketing, creative and ad placement. Web marketers should be building a shrine to Peter Pirolli and Stuart Card. Their names should be on the tips of every marketer’s tongue. But I venture to guess that most of you reading this column never heard of them until today.

None of these fundamental concepts about human behavior are easy to grasp. Like all great ideas, they are simple to state but difficult to understand. They cover a lot of territory – much of it ill defined. I’ve spent most of my professional life trying to spread awareness of things like Information Foraging Theory. Can I always predict human behavior? Not by a long shot. But I hope that by taking the time to learn more about the classic theories of how we humans tick, I have also learned a little more about marketing. It’s not easy. It’s not perfect. It’s a lot like being human. But I’ve always believed that to be an effective marketer, you first need to understand humans.

How Activation Works in an Absolute Value Market

As I covered last week, if I mention a brand to you – like Nike, for instance – your brain immediately pulls back your own interpretation of the brand. What has happened, in a split second, is that the activation of that one node – let’s call it the Nike node – triggers the activation of several related nodes in your brain, which is quickly assembled into a representation of the brand Nike. This is called Spreading Activation.

This activation is all internal. It’s where most of the efforts of advertising have been focused over the past several decades. Advertising’s job has been to build a positive network of associations so when that prime happens, you have a positive feeling towards the brand. Advertising has been focused on winning territory in this mental landscape.

Up to now, we have been restricted to this internal landscape when making consumer decisions by the boundaries of our own rationality. Access to reliable and objective information about possible purchases was limited. It required more effort on our part than we were willing to expend. So, for the vast majority of purchases, these internal representations were enough for us. They acted as a proxy for information that lay beyond our grasp.

But the world has changed. For almost any purchase category you can think of, there exists reliable, objective information that is easy to access and filter. We no longer are restricted to internal brand activations (relative values based on our own past experiences and beliefs). Now, with a few quick searches, we can access objective information, often based on the experiences of others. In their book of the same name, Itimar Simonson and Emanuel Rosen call these sources “Absolute Value.” For more and more purchases, we turn to external sources because we can. The effort invested is more than compensated for the value returned. In the process, the value of traditional branding is being eroded. This is truer for some product categories than others. The higher the risk or the level of interest, the more the prospect will engage in an external activation. But across all product categories, there has been a significant shift from the internal to the external.

What this means for advertising is that we have to shift our focus from internal spreading activations to external spreading activations. Now, when we retrieve an internal representation of a product or brand, it typically acts as a starting point, not the end point. That starting point is then to be modified or discarded completely depending on the external information we access. The first activated node is our own initial concept of the product, but the subsequent nodes are spread throughout the digitized information landscape.

In an internal spreading activation, the nodes activated and the connections between those nodes are all conducted at a subconscious level. It’s beyond our control. But an external spreading activation is a different beast. It’s a deliberate information search conducted by the prospect. That means that the nodes accessed and the connections between those nodes becomes of critical importance. Advertisers have to understand what those external activation maps look like. They have to be intimately aware of the information nodes accessed and the connections used to get to those nodes. They also have to be familiar with the prospect’s information consumption preferences. At first glance, this seems to be an impossibly complex landscape to navigate. But in practice, we all tend to follow remarkable similar paths when establishing our external activation networks. Search is often the first connector we use. The nodes accessed and the information within those nodes follow predictable patterns for most product categories.

For the advertiser, it comes down to a question of where to most profitably invest your efforts. Traditional advertising was built on the foundation of controlling the internal activation. This was the psychology behind classic treatises such as Ries and Trout’s “Positioning, The Battle for Your Mind.” And, in most cases, that battle was won by whomever could assemble the best collection of smoke and mirrors. Advertising messaging had very little to do with facts and everything to do with persuasion.

But as Simonsen and Rosen point out, the relative position of a brand in a prospect’s mind is becoming less and less relevant to the eventual purchase decision. Many purchases are now determined by what happens in the external activation. Factual, reliable information and easy access to that information becomes critical. Smoke and mirrors are relegated to advertising “noise” in this scenario. The marketer with a deep understanding of how the prospect searches for and determines what the “truth” is about a potential product will be the one who wins. And traditional marketing is becoming less and less important to that prospect.

 

The Spreading Activation Model of Marketing

“Beatle.”

I have just primed you. Before you even finished reading the word above, you had things popping into your mind. Perhaps it was a mental image of an individual Beatle – either John, Paul, George or Ringo. Perhaps it was a snippet of song. Perhaps it was grainy black and white footage of the Ed Sullivan show appearance. But as the concept “Beatle” entered your working memory, your brain was hard at work retrieving what you believed were relevant concepts from your long-term memory. (By the way, if your reaction was “What’s a Beatle?” – substitute “Imagine Dragons.”)

1-brain-neural-network-pasiekaThat’s a working example of spreading activation. The activation of your working memory pulls associated concepts from your long-term memory to create a mental construct that creates your internal definition of whatever that first label was.

Now, an important second step may or may not happen. First, you have to decide how long you’re going to let the “Beatle” prime occupy your working memory. If it’s of fleeting interest, you’ve probably already wiped the slate clear, ready for the next thing that catches your interest. But if that prime is strong enough to establish a firm grip on your attention, then you have a choice to make. Is your internal representation complete, or do you require more information? If you require more information then you have to turn to external sources for that information.

Believe it or not, this column is not intended as a 101 primer in Cognitive Psych. But the mental gymnastics I describe are important when we think about marketing, as we go through exactly the same process when we think about potential purchases. If we can understand that process better, we gain some valuable hints about how to more effectively market in an exceedingly fluid technological environment.

Much of advertising is built on the first half of the process – building associative brand concepts and triggering the prime that retrieves those concepts into working memory. Most of what isn’t working about advertising lies on this side of the cognitive map. We’ve been overly focused on the internal activation, at the expense of the external. But thanks to an explosion of available (and objective) information we’re less reliant on using our internal knowledge when making purchase decisions. Itamar Simonson and Emanuel Rosen explain in their book “Absolute Value”: “A person’s decision to buy is affected by a mix of three related sources: The individual’s Prior preferences, beliefs, and experiences (P) Others. Other people and information services (O) and Marketers (M).”

Simonson and Rosen say that with near perfect information available for the consumer, we now rely more on (O) and less on (P) and (M). Let’s leave (M) and (O) aside for the moment and focus on the (P) in this equation. (P) represents our internal spreading activation. After we’re primed, we retrieve a representation of the product or service we’re thinking of. At this point, we make an internal calculation. We balance how confident we are that our internal representation is adequate to make a purchase against how much effort we have to expend to gather further information. This calculation is largely made subconsciously. It follows Herbert Simon’s principle of Bounded Rationality. It also depends on how much risk is involved in the purchase we’re contemplating. If all the factors dictate that we’re reasonably confident in our internal representation and the risk we’re assuming, we’ll pull out our wallets and buy. If, however, we aren’t confident, we’ll start seeking more information. And that’s where (O) and (M) come in.

Simonson and Rosen lay out a purchase behaviour continuum, from (O) Dependent to (O) Independent. It’s at the (O) Dependent end, where internal confidence in retrieved beliefs and experience is low, that buying behaviors are changing dramatically. And it’s there where conventional approaches to advertising are falling far short of the mark. They are still stuck in the mythical times of Mad Men, where marketers relied on a “Prime, Retrieve (Internal beliefs), Purchase” path. Today, it’s much more likely that the Prime and Retrieve stages will be followed by an external spreading activation. We’ll pick up that thread in next week’s Online Spin.